Treasurer urges countries to not ’retreat inward’ ahead of US election
Jim Chalmers has warned that ‘battening down the hatches and retreating inward’ will hold back the creation of more productive and modern economies, amid protectionism concerns ahead of the US election.
Jim Chalmers has warned that “battening down the hatches and retreating inward” will hold back the creation of more productive and modern economies, amid concerns a Donald Trump victory on November 5 will ramp up protectionism and fuel a damaging US-China trade war.
Less than two weeks from the US election, as Mr Trump and Vice-President Kamala Harris intensify campaign battles in key swing states, the Treasurer has raised concerns about “fragmentation” risks driven by conflict and global uncertainty.
Dr Chalmers – who has been in Washington DC this week for International Monetary Fund, World Bank and G20 annual meetings – on Saturday (AEST) used an IMF leaders’ summit to push Australia’s economic case for a Middle East ceasefire.
Writing in The Weekend Australian, Dr Chalmers said “conflict cannot be allowed to undo all the progress we’ve made together since the pandemic … or distract us from grasping the opportunities presented by the energy transformation, or technological and demographic change”.
“This won’t be achieved by battening down the hatches and retreating inward. More productive, more modern economies will only be created with more engagement, not less. “This is what we’re advocating for on the world stage – but we know the risk of further fragmentation remains,” Dr Chalmers wrote. “That’s why the Albanese government’s primary focus on responsible economic management to build our buffers against global uncertainty is so important.
“Our economic plan is all about fighting inflation and easing the cost of living at the same time as we invest in a more productive and resilient economy and repair the budget, and we’re making some welcome progress on these fronts.”
There are internal Albanese government concerns about the potential effects on Labor’s economic, climate change, defence, trade and foreign policies if Mr Trump wins the election, pivots US focus to domestic issues and triggers a trade war with China. In August, Dr Chalmers revealed Treasury was undertaking economic scenario modelling to assess how the Australian economy could be affected if Mr Trump reclaims the US presidency.
Dr Chalmers, who is meeting US Treasury Secretary Janet Yellen, Federal Reserve chair Jerome Powell and Japanese, South Korean and Canadian counterparts, told finance ministers in Washington DC the Albanese government had halved inflation and delivered two budget surpluses.
Government monthly financial statements for September released by Finance Minister Katy Gallagher on Friday indicate the nation is falling back into the red, with the budget running a deficit of $14.2bn across the first three months of 2024-25.
Financial statements show total payments to September 30 were $3.2bn higher than projected in the May budget, with receipts up by $6.7bn. Net debt increased to $534.1bn.
With Treasury projecting long-term deficits from 2024-25, the Albanese government is understood to be firming against proceeding with its scheduled March 25 budget and mulling the potential timing for a March or April election.
Anthony Albanese and senior Labor ministers will launch a nationwide blitz next week promoting the government’s economic and health policies. In the absence of detailed Coalition economic, energy and health policies, the government is moving to ramp-up its policy push in response to the cost-of-living and housing crisis.
Ahead of the release of new consumer price index figures on Wednesday, Dr Chalmers has warned that escalating conflict in the Middle East and around the globe threatens higher oil prices and prolonged inflation.
Dr Chalmers’ economic case for ceasefires in the Middle East was criticised by opposition foreign affairs spokesman Simon Birmingham for creating a “distraction from the real task and responsibility that lies on Jim Chalmers’ shoulders”.
Deputy Opposition Leader Sussan Ley said Dr Chalmers was using “smoke and mirrors” in suggesting “the inflation that we’re seeing at home is because of factors overseas … the problem is that the UK, the US, Canada, New Zealand are all seeing inflation and interest rates come down”.
Education Minister Jason Clare, whose western Sydney seat of Blaxland is home to almost 60,000 Muslim Australians, said the government had been calling for a ceasefire in the Middle East for more than 12 months.
“I think the point Jim’s making is, it has an economic impact. Whenever there’s a war it has an economic impact. Russia’s invasion of Ukraine has done that. We’re now seeing evidence of that here too in terms of oil prices.
“I think almost every country in the world now … is calling for an end to the war. We want an end to innocent people being killed in the Middle East, whether it’s in Gaza or now in Lebanon.”
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