Jim Chalmers is trying to stop budget red ink

Chalmers said infrastructure projects promised by the previous government could be canceled as Labor tried to conduct some “control” into the budget.

“We want the treasury and finances to go through the budget line by line. We want to separate commitments that may be worthwhile and useful from those that may not, and we can, as with Hell’s Gate, postpone some projects, ”he said.

Kennedy’s briefing for Chalmers was expected to cover the budgetary and economic issues the new government will face.

A growing problem in the Treasury is Australia’s persistently low productivity, which has been inconsistent with the department’s forecasts for almost as long as its wage growth forecasts.

Another problem is that several of the key economic forecasts underlying the March 29 budget have proved overly optimistic.

Loading

In the budget, the Ministry of Finance projected inflation at 4.25% in 2021-22 and then 3% in the next fiscal year. Wages were expected to grow by 2.75 percent this fiscal year and rise to 3.25 percent in 2022-23.

But inflation, currently 5.1 percent and, according to the RBA, will reach 6 percent by the end of the year, running much faster than expected.

Now, according to RBA forecasts, household consumption, which accounts for 60 percent of the economy, will work slower than the Ministry of Finance predicted in the budget.

The budget result is supported by high prices for basic Australian commodities including iron ore, coal and some agricultural commodities. According to the Ministry of Finance, if the high prices for iron ore and coal remain high for another six months, they will bring an additional $ 29.5 billion to the budget over the next three years.

On the other hand the book, however, interest budget expenditures are growing much faster than even expected in March.

Chalmers said the pressure on the cost of living was a key part of Labor’s victory in the election as it was the biggest domestic problem facing the new government.

“I think that the combination of inflation and wage growth is really a defining problem that we inherit,” he said. “I think the international perspective will obviously be a serious problem.”

The executive director of the Australian Chamber of Commerce, Andrew McKellar, said the new government would have to work quickly to address issues such as the country’s “acute” shortage of labor and skills.

Loading

He also supported Labor’s proposed employment summit.

“Joining unions and employers’ groups in cooperation will be an important opportunity to reform our sick system of enterprise negotiations, increase productivity and increase wages,” he said.

Chalmers said he would work closely with future Prime Minister Anthony Albanez and Labor Labor Minister in the summit’s plans, adding that it would be more than just a labor market discussion.

He said issues such as wage stagnation and gender roles in the labor market would be part of the agenda.

“The focus of the summit will be wider than just the labor market. It should be, ”he said.

The Morning Edition newsletter is our guide to the most important and interesting stories, analysis and understanding of the day. Register here.