Treasurer Jim Chalmers issues dire warning as prices surge

With a Labor budget slated for October 25, Treasurer Jim Chalmers had some bad news for households crippled with the rising cost of living pressures.

Federal Treasurer Jim Chalmers hinted that the Government would not be announcing a significant cost of living relief support when it delivers its budget in October.

Speaking at The Australian and Sky News’ Australia’s Economic Outlook conference on Wednesday, Dr Chalmers said he was “not working up, as we speak, a package of household support,” in part, blaming the actions of Scott Morrison’s Liberal government.

Dr Chalmers also announced that he is aiming to hand down his first budget on October 25.

“Our ability to deal with some of these challenges in a way that you might have been able to in 2000 are not what they are now, so I just want people to recognise that,” he said.

Treasurer, Jim Chalmers has flagged October’s budget will not have a package of household support. Picture: John Gass

Part of this was the “serious fiscal constraints” presented by Labor’s unprecedented $1 trillion of inherited debt, which the budget would need to address.

“They will put significant pressure on a budget that already has its share of difficulties, including a relatively significant structural deficit, and now with those higher borrowing costs,” he said.

Previously, Dr Chalmers had hinted at delivering some form of relief measures, saying that cost-of-living concerns would be “central to the October budget”.

“I will hand down a budget in October and a key part of that will be a cost of living package around childcare and medicines, trying to get power bills down, over time, trying to get real wages growing again,” he said previously.

Difficult news for homeowners already facing skyrocketing costs of living, including spiking energy prices. A better future awaits but first we have to navigate together this inflation challenge we inherited, and the rising interest rates that accompany it. #ausecon#auspol

— Jim Chalmers MP (@JEChalmers) June 7, 2022

Prior to his current role, Dr Chalmers worked under former treasurer Wayne Swan during the 2008 global financial crisis. In similar circumstances, inflation had escalated to 5 per cent and the interest rate would peak at 7.25 per cent in August 2008.

In comparison, the current Consumer Price Index (which measures household inflation) increased 2.1 per cent this quarter to 5.1 per cent.

A core part of Labor’s strategy at the time was a combined $52 billion stimulus package, which included support for low-income earners and pensioners and a national building and jobs plan.

This isn’t the first time Dr Chalmers has shared a grim prediction for Australia’s short-term economic future. On Tuesday after the Reserve Bank of Australia blindsided experts and households with a steep interest rate rise of 50 basis points, the Treasurer warned that things “will get harder before it gets easier”.

While it was previously expected the official cash rate would rise by 25 or 40 basis points, the 50 point increase pushes interest rates to 0.85 per cent. This is the highest level it’s been since September 2019 and the first back-to-back rate rise in 12 years.

Speaking in Brisbane, Dr Chalmers said the Government was “constrained” by the budget’s $1 trillion debt left by Scott Morrison and the Liberal Party.

“We need to be honest and upfront with the Australian people about the nature, the severity, the magnitude of this inflation challenge that we confront,” he said.

Originally published as Treasurer Jim Chalmers issues dire warning as prices surge