Jim Chalmers is betting he can get the balance right between curbing inflation in the short term while promoting growth in the longer term.
Additional revenue from continuing high commodity prices and personal income and corporate taxes allows the treasurer at least a temporary buffer for this, although a $9.3 billion budget surplus quickly returns to a forecast deficit next financial year and well beyond.
Treasury is still forecasting inflation will return to the RBA’s target range by the end of this year. Michele Bullock may politely disagree. Nor can Treasury’s budget forecasts based on market pricing assume any “gradual” decline in the cash rate before mid-2025. Arguments from market economists that such measures still add to demand and inflation elsewhere in the economy don’t deter a government focused on the next election and persuading a sceptical middle Australia it’s on the right track.In his speech, Chalmers reiterated the government’s number one priority was helping Australians with the cost of living. Rinse and repeat.
To bolster its economic growth credentials rather than just its spending, the government emphasises the private sector investment it expects as part of its Future Made in Australia policies.
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