Treasurer Jim Chalmers on Tuesday framed the budget as “responsible”, citing global economic uncertainty, cost-of-living pressures and inflation as key challenges. He also warned that escalating trade tensions and US-imposed tariffs could have serious economic consequences for Australia.
While disaster recovery funding following Cyclone Alfred added to the fiscal strain, Chalmers stressed that broader global and domestic pressures would shape the government’s strategy.
“This is a new world of uncertainty, and the pace of change in the world when it comes to rewriting the rules of global economic engagement has quickened since the new administration took office in the US,” Chalmers told ABC.
“Some of these developments, they’re not surprising, but they are seismic, and for Australia, we have a lot at stake as a trading country, and so what we need to do is, first of all, understand the impacts, direct and indirect; the indirect impacts are far more concerning.
“Our strategy in the budget and in our economic plan is not to go for retaliation but to go for resilience, to make our economy more resilient at a time of very serious global economic uncertainty.”
Treasurer Chalmers warned that Australia’s beef and pharmaceutical exports could be caught in the next wave of US tariffs, adding to global economic uncertainty ahead of the federal budget.
While reports in The Australian Financial Review suggest potential tariffs on Australian goods may range between 2 and 8 per cent – far lower than the 25 per cent imposed on other nations – Chalmers insisted any additional trade restrictions would be “self-defeating” and a drag on global growth.
“The point that I’m trying to make today in this speech, when I talk about the major influences on the budget, particularly these global influences, is what’s happening over in the US is obviously very important, but also what’s happening right around the world is introducing a new level of uncertainty, and in that context, despite all of that global economic uncertainty, the Australian economy is performing quite well, the Australian economy’s turned a corner,” he said.
“We’ve got growth up now, inflation down, real wages growing, unemployment low, interest rates have started to come down, and that puts us in a better, more resilient position to deal with everything that’s coming at us from around the world.”
Reflecting on the OECD’s latest forecast, which maintained Australia’s 2024 gross domestic product growth outlook at 1.9 per cent but sharply downgraded its 2026 projection from 2.5 to 1.8 per cent, Chalmers acknowledged the concerns but highlighted the nation’s economic resilience.
“Growth has rebounded solidly in the Australian economy, the private sector has started to take its rightful place as the key driver of growth in our economy, at the same time as we’ve got inflation down from higher than 6 per cent and rising when we came to office to now in the bottom half of the Reserve Bank’s target band,” he said.
“We’ve made a lot of progress together as Australians. We don’t want to put that progress at risk.”
As global uncertainty mounts, Chalmers insisted “this will be a responsible budget”.
“It will be all about making our economy more resilient in uncertain times. It will be about cost‑of‑living help and building Australia’s future and continuing to clean up the mess that we inherited a few years ago.”
The government is due to deliver its pre-election budget on 25 March.
