With the next federal budget now roughly three months away, the opposition has argued that a clear path to a surplus is critical to reducing interest rates and inflation in Australia.
Speaking to reporters on Monday, Shadow Treasurer Angus Taylor accused Labor of abandoning the long-held government goal of achieving a budget balance.
“It really defies gravity to have a government that has given up on a pathway to budget surplus if they are focused on cost of living,” he said.
“If you want to take pressure off interest rates, if you want to take pressure off inflation, you have to have a government that has a goal of getting back to and staying in budget surplus. This is economics 101.”
Asked whether the government needed to be taking more direct action against the risks posed by higher rates, Mr Taylor said that strong economic management is key.
“Now we have an independent Reserve Bank but there is a lot that the government can do that makes a real difference in taking pressure off interest rates and inflation,” he stated.
“Right at the top of the list is to get back to a position that we’ve been in since Costello was Treasurer where the government had a goal of budget balance.”
Responding to the generally positive evaluations of the Australian economy offered by the International Monetary Fund (IMF) and global ratings agency S&P over the past week, the Shadow Treasurer assessed that the government had inherited an “extremely strong economy”.
“We’re seeing very strong commodity prices, we’re seeing a very strong jobs market and you know, an extraordinary outcome they inherited, close to the sort of, or in a position we could never have anticipated during the latter years or later months of the pandemic. So this is, you know, it is a wonderful outcome that they’ve inherited,” he suggested.
“The real question for them is that they’re going to convert that then to a position that takes [the] pressure off the challenges that Australians are facing, those rising interest rates, high inflation and that’s the question for the government. Right now, we’re not seeing the actions that we need to see if we’re going to take pressure off interest rates and inflation.”
The IMF’s assessment of Australia was notably critical in one area: the impact of the $254 billion Stage 3 tax cuts. The organisation warned that these tax cuts could harm budget revenue.
Addressing the National Press Club on Sunday, Treasurer Jim Chalmers indicated that inflation remains the Albanese government’s main economic focus.
“It was in our first budget in October, and it will be in our second in May, as Katy Gallagher and I work closely with our colleagues to put it together,” he said.
“The major priorities will be providing cost of living relief without adding to inflation; growing the economy in a more inclusive and more sustainable way; and repairing our budget so we can fund what we value and cherish”.
Meanwhile, Mr Taylor expressed a desire for a government with the proper priorities, focused on helping Australians effectively manage their household budgets.
“A government that’s focused on bringing taxes down over time so that Australians know when they work harder they can keep more. A government that recognises that having a sensible budget is good for all Australians and particularly good for household budgets and business budgets,” the Shadow Treasurer suggested.
“That’s what we want to see over the course of this year. We’ve got a budget in May but in the lead-up to that, there’s an opportunity for this government to get its priorities right. That’s not what we saw over the summer. It’s what we want to see in the coming weeks and months.”
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.