The federal Treasurer Jim Chalmers has said inflation and the global economic downturn have cut half a percent off Australia’s economic growth this year and next.
During his economic update to federal parliament the Treasurer described Australia as a “growing economy with growing challenges.”
“Some of these conditions have been building for a long time and were entirely avoidable,” said Chalmers as he began a blistering attack on the former government.
“A decade of energy policy paralysis with not enough investment in cleaner and cheaper and more reliable energy and not enough certainty for investors that's pushed up power bills,” he said.
The Treasurer accused the former government of using low wages as a “deliberate design feature of the economy.” He said that’s contributed to a decade of stagnant pay.
“Inflation is high and in the near term it will get higher but the primary cause of this is not higher wages, nowhere near,” he said.
Chalmers said inflation is forecast to peak at 7.75% in the December quarter.
“The pre-election forecast for GDP growth in 2022-23 was 3.5%,” he said. “This has now been revised down to 3% growth and growth is expected to slow further in 2023-24 at 2% down from the 2.5% that was previously predicted.”
He said reduced consumption, lower exports and lower dwelling investment are key parts of overall weaker growth.
Australia’s inflation rate has already gone up by 6.1% during the last 12 months according to the Australian Bureau of Statistics (ABS). Yesterday, the ABS released its quarterly Consumer Price Index (CPI) update. The rise is the highest for 21 years.
