Australian Treasurer Jim Chalmers has rejected opposition claims that Labor government spending is fuelling inflation, ahead of an expected interest rate rise from the Reserve Bank. He labelled criticism from the Liberal and National parties as hypocritical, noting that inflation was falling last year when the bank cut rates three times. Chalmers highlighted $20bn in savings from the December budget update as evidence of fiscal responsibility.
In an interview with Guardian Australia, Chalmers said the May budget would aim to tackle inflation and strengthen the economy against shocks from Donald Trump’s policies. He confirmed the government is “open” to tax reform and will focus on intergenerational inequity in Labor’s second term. A new intergenerational report, due mid-year, will include a greater focus on geopolitics, reflecting the “defining and dangerous” 2020s.
Chalmers praised a speech by Canada’s Prime Minister Mark Carney but stopped short of endorsing a coalition of middle powers, saying Australia would navigate between China as its top trading partner and the US as a key ally. On productivity, Chalmers said he is “impatient for reform, but not impetuous,” pointing to initiatives like an independent review of thin capitalisation rules to prevent tax avoidance.
With inflation rising to 3.8% in December, up from 3.4%, expectations of a Reserve Bank rate hike have strengthened. Chalmers acknowledged the short-term challenge but emphasised longer-term priorities: improving productivity, building more homes, and addressing intergenerational inequity. He said the government views the housing market as a defining element of this challenge.
