THE SQUIZ
Australia is facing a “once-in-a-generation challenge” as we venture into uncertain economic times, Treasurer Jim Chalmers said yesterday as he delivered his first official economic update to the Parliament. It’s a mixed bag, but there’s a lot to be concerned about if we’re going to avoid a nasty recession and falling living standards. But Chalmers is taking the glass-half-full approach – he says what’s happening with our economy also “represents a once-in-a-generation opportunity for our country”.

SO WHAT’S GOING ON?
To put the challenges into 3 points:

To start with, our nation has a lot of debt… We’re heading towards $1 trillion of it – and that’s in large part due to the pandemic. That situation is getting worse because of the impact of rising interest rates on our repayments.

There’s a heady cocktail of economic hardship brewing here and around the world… For Oz, it’s rising inflation (heading to 7.75% in the last quarter of the year), rising interest rates (expected to go up again on Tuesday), and an anticipated rise in unemployment.

Wages won’t keep up with price rises for a couple of years, and our economic growth forecasts have been cut. Chalmers also accused the Morrison Government of leaving a set of books “bursting with waste and rorts, booby-trapped by expiring measures, and burdened by long-term demographic challenges that come with critical and necessary spending.”

WHAT’S NEXT?
Chalmers says we can get on top of inflation, but Aussies will feel the burn via falling real wages and higher mortgage costs. He also said the government will help with cost of living pressures by cutting childcare costs, backing in wages growth, upskilling workers, and untangling supply chains. “We have it within us to stare down these threats, to steer our way through this difficult period, and seize the opportunities of this new age,” he said. All in all, it’s a good softening up for the Albanese Government’s new Budget to be delivered in October. Shadow Treasurer Angus Taylor says Chalmers has set some tests for the new government by resetting expectations, and the Coalition will “hold him to account on these tests.”