Treasurer Jim Chalmers has warned that Australia's July economic update will contain 'confronting' news, including lower growth projections and higher inflation that will cut real wages. Speaking in Canberra, Chalmers said the global economy is in a 'difficult if not dangerous place' due to high debt and rising interest rates.
The update, due on 28 July, comes as the Reserve Bank of Australia (RBA) has begun hiking rates from emergency levels, with further rises expected. Chalmers noted that the cost of government debt is increasing, with the interest bill set to rise from over $1bn this year to more than $5bn in four years.
Chalmers stated that there is 'no credible economic forecaster in Australia who thinks wages growth will keep up with inflation', and that the spike in inflation will worsen the real wages situation before it improves. He attributed inflation to supply-side problems including food and energy costs, not wages.
Despite the challenges, Chalmers said Labor has the 'right plan' to provide responsible cost-of-living support and make productive investments. He highlighted existing pledges to cut the cost of medicine and childcare, and noted that the petrol tax cut, due to expire in September, is likely too expensive to continue.
Chalmers ruled out a windfall profits tax but said the government will find further savings in the budget and make responsible changes on multinational tax and tax compliance.
