/ 26 October 2022

No budget party for Team Albanese

Australia is staring down the prospect of a 3rd global downturn within 15 years. “This time not a financial crisis or a pandemic, but a war driving high prices and higher interest rates here and around the world, and the risk of another global recession,” said Treasurer Jim Chalmers as he delivered the Albanese Government’s first budget. He’s outlined the many and varied challenges and what the new administration intends to do about some of them. And the government has reserved judgement on some other strong headwinds that threaten Aussies’ quality of life.

You’re right – it’s a good place to start. So the good news is the deficit for this financial year – aka how much more the government is spending than taking in via taxes and other payments – will be $36.9 billion. That’s much less than the $78 billion projected before the election, and it comes down to surging commodity prices and low unemployment. After that, it’s choppy waters… We’re set to deliver deficits for years into the future, and Australia’s gross debt is set to exceed $1 trillion next year, which comes with a huge interest bill. And there are some other difficult numbers to stare down: economic growth is expected to slow to 1.5% next financial year (from 3.9% in 2021-22); inflation is expected to peak at 7.75% this year (note: the target is 2-3%); and unemployment is set to rise as real wages go backwards over 2023. That all adds up to a concerning picture

Actually, there was – just not on anything flashy or fun. Cost of living relief was a centrepiece last night – that covers $7.5 billion for lower cost of childcare and medicines, making housing more affordable, expanding paid parental leave, and supporting pay increases for low-income and aged care workers. But Team Albanese hasn’t got a response to rising energy cost increases yet… Electricity prices are set to go up by 56% over the next 2 years – and gas prices by 44% in the next 18 months. And another big ticket item that got some attention last night was the National Disability Insurance Scheme. It’s set to cost “hundreds of billions of dollars” over the coming decade, and Chalmers acknowledged that’s unsustainable. What is covered under the scheme and how it’s being paid for is also up for discussion. Today, we can expect much to be said about this not being much of a victory lap by the new government – and stay tuned for Coalition leader Peter Dutton’s response tomorrow night.

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