Treasurer Jim Chalmers has mounted a defence of Labor's economic management, insisting government spending is not the primary driver of inflation.
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spending → mount → inflation
In a combative appearance on ABC's Insiders on Sunday, Chalmers repeatedly argued the war in the Middle East, housing shortages and weak productivity growth were among the main pressures.
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war → argue → pressures
There's a whole bunch of other things going on,' Chalmers told host David Speers.
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Chalmers → be → Speers
He acknowledged government spending forms part of aggregate demand, but argued private sector activity was putting far more upward pressure on prices.
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activity → acknowledge → prices
'Nobody's ever contested that,' he said when asked whether public demand was contributing to inflation.
'
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demand → contest → inflation
It means it's part of the aggregate demand calculation.
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it → mean → calculation
Nobody's ever contested that, but the important point here.
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Nobody → contest → that
'If you compare the last year of demand in our economy compared to the year before, what you'll see is that public demand has halved over the last year, while private demand has tripled.'
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demand → compare → year
Chalmers also acknowledged that Australia faced a significant productivity challenge, an issue Reserve Bank Governor Michele Bullock has repeatedly highlighted when discussing the inflation outlook.
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Bullock → acknowledge → outlook
Jim Chalmers (pictured) said government spending was not 'the primary driver' of inflation
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spending → picture → inflation
We have a productivity challenge in our economy,' he said.
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he → have → economy
The Treasurer said inflationary pressures were being exacerbated by global events, particularly the ongoing conflict in the Middle East.
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pressures → say → East
'I think it's clear whatever the reasons were for going in, from an economic point of view, the war in the Middle East has been a disaster,' Chalmers said.
'
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Chalmers → think → East
He said the conflict was placing ‘very substantial upward pressure on inflation’ globally and warned that the economic impact would worsen if the war dragged on.
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war → say → inflation
Chalmers defended Labor's record after economists, former Treasury secretaries and former Reserve Bank governor Philip Lowe called for governments to pursue tighter fiscal policy, pointing to savings announced since Labor took office.
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Labor → defend → office
'The last budget of our predecessors had no savings.
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budget → have → savings
We found almost $180 billion in savings,' he said.
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he → find → savings
Michele Bullock (pictured) has warned that low productivity is a driver of inflation
Asked whether he should be aiming for another budget surplus, Chalmers declined to commit, arguing that a surplus alone would not eliminate inflationary pressures.
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surplus → picture → pressures
'When I handed down two surpluses at the start of this government, we saw inflation coming up at the same time, which shows there are other factors at play,' he said.
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he → hand → play
The Treasurer confirmed Labor was preparing another round of savings ahead of the mid-year economic and fiscal outlook.
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Labor → confirm → outlook
'There will be more savings in the mid-year update,' he said.
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he → say → update
However, he warned that rising global bond yields were putting fresh pressure on the budget.
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yields → warn → budget
'We've got almost $1trillion of debt in the budget.
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We → get → budget
When some of that cheaper debt rolls off, it needs to be replaced with more expensive debt.
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it → roll → debt
Chalmers said higher borrowing costs would add 'some billions of dollars' in additional pressure to government finances.
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costs → say → finances
Shadow Treasurer Tim Wilson accused Chalmers of contributing to the inflation Labor had pledged to tackle.
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Labor → accuse → inflation
Tim Wilson (pictured) said that the Albanese government's spending was stoking inflation
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spending → picture → inflation
We all know that my view on that is no, Andrew,' Wilson told News24 when asked whether Chalmers should remain Treasurer.
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Chalmers → know → News24
'This is a man who's actively stoked inflation because it gives him a windfall tax revenue because he can't manage his budget, and Australian households are poorer because he has been a disaster as Treasurer.'
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he → stoke → Treasurer
Wilson accused Chalmers of exaggerating the government's fiscal restraint.
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Wilson → accuse → restraint
'He's saving $2 then goes on and spends $3.
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He → save → 3
He's actively stoked inflation and he's fundamentally undermined the success of this country,' he said.
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he → stoke → country
The Coalition frontbencher also turned to productivity, claiming Labor's spending policies were making the economy less efficient and driving up prices.
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economy → turn → prices
'We have a government that's at a 40-year high of expenditure outside of a pandemic or crisis,' Wilson said.
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Wilson → have → pandemic
'The government continues to spend with abandon.
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government → continue → abandon
They have little concern for the impact that they're spending on the Australian taxpayer and, more importantly, how it's actively stoking inflation.
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it → have → inflation
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'When we have these problems, they ultimately go through and feed inflation as well as being an abuse of taxpayers' money.'
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they → have → money
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