Jim Chalmers’ economic statement will be the most important account from a treasurer in steeling the nation for hardship since Josh Frydenberg’s dire warnings of the looming Covid recession in June 2020.
He says it will be “confronting” news for Australians, with the economy treading a precarious and potentially perilous path.
Precarious in the sense that the central bank while tackling inflation must move carefully not to crash the economy.
Perilous in the global outlook for economic growth which Chalmers says Australia is not immune from.
But just as the RBA needs to walk a fine line, so too does Chalmers need to be careful with the language of doom.
The outlook is genuinely grim. People are understandably confused at what is happening and what the future holds.
Chalmers is being honest in his assessment, being careful to avoid painting such a grim picture that the economy wills itself into a recession it doesn’t have to have.
His statement will make for sober reading. But it’s not without political intent. It will present a case for optimism set against the stark reality.
Economic growth will be revised down, unemployment will likely rise and real wage growth will fail to keep pace with rising prices in the near term, all as interest rates continue to climb.
Chalmers has injected a tone of empathy into his address, acknowledging the real world impact on Australians in his description on Wednesday of some people being forced to choose between paying rent or buying vegetables.
Yet he know he needs to manage expectations about what and how much the government can do about it.
The Treasurer says he also doesn’t want to “stuff people around” with false hope of short-term cost-of-living relief. The budget simply can’t afford it.
His clear preference is for no extension of the fuel excise cut which expires in September. Although, he left enough wriggle room for that decision to be reversed.
The statement will be primarily one of the economic outlook, but Chalmers will also lay down markers for the October budget.
Implicit in his talk of downgraded revenue expectations and an even tighter fiscal position, is a warning to state governments and his own ministry to put their hands back in their pockets. Beyond meeting Labor’s election commitments, there is no more money to go around.
It is a balancing act for the new treasurer who will continue to face pressures from internal sectoral interests, while pursuing a political strategy that apportions blame to forces not of its doing. All this with a view to ensuring the government’s economic integrity with a budget that credibly addresses the new stresses on the balance sheet.
Chalmers will argue that the set of economic circumstances the new government is now dealing with are vastly worse than compared with what was set out before the election.
But in doing so he needs to succeed in assuring people that a Labor government knows what it is doing and won’t add to the problem.
Join the conversation
Jewish leaders: put Greens last on ballot
Two of the nation’s leading Jewish groups have sought public commitments from Anthony Albanese and Peter Dutton for the major parties to preference each other over the Greens at the next election.
Read more
Diplomat’s partner in post-rugby slur at cops
Footage has emerged of an Australian diplomat’s partner apparently yelling a homophobic slur at police during his arrest after the Bledisloe Cup rugby match in New Zealand last month.
Read more