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Australian Treasurer Jim Chalmers says the budget deficit is $6 billion better than forecast and debt is $10.6 billion lower, while defending his economic record on the eve of an expected fourth rate rise of 2026.
Australia n Treasurer Jim Chalmers has defended his economic record on the eve of what is widely expected to be the fourth interest rate rise of 2026, as the Reserve Bank remains concerned about persistent inflation.
RBA Set for Fourth Rate Rise
The RBA board is poised to hike the cash rate from 4.35 per cent to 4.6 per cent on Tuesday. That would be the fourth increase in 2026 and push typical home loan interest rates to 6.5 per cent. Chalmers announced on Monday that the budget deficit for the year just finished is $6 billion better than forecast. Debt also came in $10.6 billion lower than expected.
He noted the government had delivered a couple of surpluses previously but acknowledged there is more work to do, especially given higher borrowing costs globally. He said bond yields are rising worldwide due to expectations of higher inflation and higher interest rates. Chalmers said the mid-year budget update towards the end of the year will take these factors into consideration.
Speaking on the ABC's 7.30 program, Chalmers responded to questions about the Reserve Bank's expected rate hike and its potential impact on the economy. Host Sarah Ferguson noted a rate hike is widely expected tomorrow, which could take rates to their highest level since 2011. She asked how Chalmers could defend his economic record if that occurs. Chalmers declined to predict the Reserve Bank's independent decision.
He highlighted Australia's extremely low debt compared with other countries and economic growth that he described as the equal fastest among major advanced economies. Chalmers emphasised the factors contributing to inflation, saying Australia was performing well considering what was going on in the world, particularly in the Middle East.
Inflation Challenges Amid Global Turmoil
He said: We have a lot going for us and we have got a lot of work to do to make sure that in these difficult global circumstances Australia continues to out-perform the world. We have a big inflation challenge in our economy. It is made much worse by decisions taken on the other side of the world.
From an economic point of view this war in Iran has been an absolute disaster for Australian families, because they have been asked to pay a hefty price. He also mentioned a productivity challenge and emphasised the importance of the government's economic plan in the budget, covering fuel security, cost of living and budget repair. Ferguson asked whether the Reserve Bank Governor's calculation that unemployment may need to reach 5 per cent to tame inflation is accurate.
Chalmers declined to speak for the Governor but said that in the past, inflation has been brought down while maintaining very low unemployment. He noted that under the current government, average unemployment has been the lowest of any government in the last 50 years, though it ticked up to 4.6 per cent in recent data. He reiterated that the Reserve Bank and the government share the same objectives of low unemployment and moderating inflation but have different responsibilities.
Unemployment and Inflation Outlook
He said it remains to be seen whether unemployment needs to reach 5 per cent. Chalmers stressed that the inflation challenge has been made much worse by decisions taken overseas, particularly the war in Iran. He described it as an absolute disaster for Australian families from an economic point of view because they have been asked to pay a hefty price. The Treasurer's comments come as the Reserve Bank board meets to decide on interest rates.
A rate hike would be the highest since 2011, reflecting persistent inflation. Chalmers emphasised that Australia continues to outperform the world despite difficult global circumstances. Separately, Larissa Waters is standing down as Greens leader. She said last night that a kidney disease she has been managing has recently worsened and that she needs to stand down.
Reaction is expected as it comes in this morning, along with the latest on who might replace her.
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GuardianAus:This story was compiled and edited by the HeadTopics newsroom and HT AI from the reports above.
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