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Wednesday, August 17, 2022

View from The Hill: Chalmers warns he will deliver bad news in first week of parliament

There will be some disappointing news in the first week of the new parliament, with treasurer Jim Chalmers on Monday softening the community for expecting a “confrontational” statement on the economy.

Chalmers said he would make his statement on Thursday, July 28. This will include updated forecasts and bad news on real wages.

While the debate on the government’s climate law will provide much of the color and movement of the first parliamentary fortnight beginning on July 26, Chalmers’ statement will be the fine nitty-gritty of how difficult the economic outlook is – and therefore the financial juggernaut of many. Be there in the coming months.

A day before the statement, inflation data for the June quarter will be released, revealing another spike. The most recent inflation number for the March quarter was 5.1%.

Reserve Bank Governor Philip Lowe and The Conversations Poll of Economic Forecasters have predicted 7% by the end of the year.

On Monday, New Zealanders learned that their inflation rate had risen to 7.3%.

A week after Chalmers’ statement, the Reserve Bank may raise interest rates again.

Chalmers said at a news conference on Monday: “When it comes to our expectations of inflation, when it comes to the effect of the interest rate on growth, when it comes to what this increase in inflation means for real wages, it has some There will be aspects. Ministerial statements that people will have to face”.

Putting pressure on real wages, he said: “It will face in the case of real wages because there is no reliable economic predictor in Australia right now that thinks wage growth is going to keep up with inflation.

“And we will revise our expectations for inflation. And that will make the real wage situation worse before it gets better.”

He said rising interest rates would have an impact on growth “and I’ll talk about that in an update”.

“I will provide a suite of economic forecasts and an indication of what this means for the state of the budget. When it comes to updates my inclination is to be as broad and as complete as I can. But He said he would not announce the new policy.

As the government searches for savings in its October budget, Chalmers stressed that the burden of rising interest rates will fall on government debt repayments.

“Each additional dollar in the budget is a borrowed dollar and rising interest rates now cost us more to pay back.

“And if you think about the consequences of those rising interest rates on the budget — over a billion dollars this year, over $5 billion in the final year of the forward, $13 billion accumulated on the forward, $13 billion in 2032-33.” 18 billion is no small amount.”

The government added to the budget burden over the weekend when it decided to restore COVID pandemic leave pay for workers forced to isolate without sick leave. The measure, which runs through the end of September, will cost an estimated $780 million, though states have agreed to pay half.

Chalmers said he would talk about supply-side issues in speeches this week. “We need to recognize that the reason we have high and rising inflation is not just a story of too much demand in the economy – it is also a story of supply shutting down.

“And that’s why almost every element of our economic plan is about making our supply chains more resilient.

“We can lift the speed limit on the economy, while making sure we can get the workers we need, making sure we can get goods to market.”

Chalmers said the world economy is “a difficult, if not dangerous place right now. This combination of inflation and rising interest rates and slow growth and food and energy insecurity, along with the amount of debt raised by countries, is a cause of concern in the global community.” reason.

Also on the economic front, Chalmers is set to announce a panel and terms of reference for a far-reaching investigation at the Reserve Bank.

The treasurer said he would consult shadow treasurer Angus Taylor on the terms of reference of the investigation, but said he expected no problems with him. They shall be broad enough to cover any person’s concerns about the operation of the Bank and the arrangements governing the Bank.

Thursday’s economic statement for the week will contain Treasury forecasts on the interest unemployment rate, which, at 3.5%, has already fallen from the Coalition’s March budget forecast of 3.75%, and inflation forecasts, which were in the March budget. It is projected to hit only 4.25% in the year to June 2022.

The Finance Department’s latest monthly update for May shows the budget deficit at $60.5 billion for the 2021-22 fiscal year as compared to a budget profile deficit of $33.4 billion by May 2022, much lower than forecast in March. shows losses.

World Nation News Desk
World Nation News Deskhttps://worldnationnews.com/
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