‘Serious economic challenges’: Treasurer Jim Chalmers blames previous government for financial failings

Treasurer Jim Chalmers has blasted the former government and raised concerns about the US and China as he revealed details of the national accounts.

Treasurer Jim Chalmers has blamed the previous government for failings that have left the national economy facing “serious” challenges while also flagging concerns about China and the US.

Mr Chalmers said inflation and interest rates were higher since the end of March, petrol prices were up 12 per cent since the end of April, and wholesale electricity and gas prices were also significantly higher.

“We do have labour shortages and we do still have Covid absenteeism, and the international environment has become more challenging as well,” he told reporters on Wednesday.

“There is no point tiptoeing around these serious economic challenges. There is no point mincing words about the sorts of conditions that we have inherited.

“We have inherited high and rising inflation and rising interest rates, we’ve inherited falling real wages and we’ve inherited $1 trillion in debt.”

Treasurer Jim Chalmers has blamed the previous government for a series of failings. Picture: NCA NewsWire/Andrew Taylor

Mr Chalmers noted the economy was weaker in the March quarter than was forecast at election time.

Growth at 0.8 per cent was still much weaker than what was expected for the corresponding period in the pre-election fiscal outlook, he added.

“Consumption, dwelling investment, new business investment, exports and nominal GDP were all weaker in the March quarter than was anticipated by our predecessors,” he said.

“These national accounts are a glimpse of the mess that the former government left behind for us to clean up.

“Obviously, we want the economy to recover strongly. Obviously, we want household consumption and other key elements of the national accounts to be as strong as possible.

“But even when, on the surface, they might look stronger than they have been during the worst of Covid, they are still short of what the government was hoping for.”

On energy in particular, Mr Chalmers said there was a “perfect storm” of challenges in the energy market.

“These are the costs and consequences of almost a decade now of a government with 22 different energy policies failing to land the necessary certainty to improve the resilience of our energy markets,” he said.

The Treasurer says Labor inherited a financial mess from former prime minister Scott Morrison. Picture: NCA NewsWire/Tracey Nearmy

“This is the chickens coming home to roost when it comes to almost a decade now on climate change and energy policy failure from our predecessors.

“Our first responsibility in times like these is to implement our powering Australia plan so we can boost renewables and boost storage but most of all boost certainty so that we can get that investment flowing that we desperately need to make our energy markets more predictable, more resilient, and so we can get more cleaner and cheaper energy into the system.

“This perfect storm of energy price spikes is doing enormous damage to our employers, to our households and to our national economy.”

Regarding the minimum wage, Mr Chalmers said the lowest paid workers should not be going backwards in this cost of living crisis.

“Minimum wage workers were in many cases the heroes of the pandemic. They shouldn’t be going backwards in this cost of living crisis,” he said.

“It’s now more important than ever that we get an outcome out of the Fair Work Commission, which goes to the fact that people on the lowest wages in this country are facing skyrocketing costs of living and they shouldn’t be falling further and further behind.”

Mr Chalmers also raised concerns about China.

Asked about concerns the US economy could be going into a recession and the risk that Australia could follow, Mr Chalmers said he would not “get into that kind of speculation” with the domestic economy.

“But the international environment is difficult too and becoming more so,” he said.

“In the US, I think, a lot of people are watching very closely the impact of tightening of monetary policy in the US and there’s a lot of commentators who have fears for the American economy on the basis of its reaction to that tightening of monetary policy.

“So that is obviously a risk in our outlook as well.”

Mr Chalmers said the other big concern was China’s management of Covid-19.

“As China does its best to try and manage Covid outbreaks, in some cases affecting large parts of the population, their approach to Covid does pose a risk as well to our domestic economy,” he said.

Originally published as ‘Serious economic challenges’: Treasurer Jim Chalmers blames previous government for financial failings