Treasurer Jim Chalmers: Budget

Mr Chalmers was joined by his three children – seven-year-old Leo, five-year-old Annabelle and three-year-old Jack – to pose for pictures in his Brisbane office.

Mr Chalmers said apart from his own family, Australian families affected by the rising cost of living and ongoing natural disasters would be a central part of the budget.

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In an address on Friday, he told reporters that the government’s economic approach will take into account that many Australians are doing it tough.

A reduction in the cost of living would be a feature, but those considering the changes should also be “very, very cautious” about the risk of pushing inflation even higher than it is, Mr Chalmers said.

The main influence on the budget was named by the treasurer as the increase in inflation.

“Over the past few weeks I have tried to explain the complex balancing act of trying to ensure that we deliver cost of living relief in a responsible way that delivers economic dividends and is not counter-productive when it comes to the discretion of the independent Reserve Bank,” said Mr n Chalmers.

The Reserve Bank of Australia’s monetary policy targets an inflation rate of two to three percent, but at the moment it is closer to seven percent.

Another expected feature of Tuesday’s budget will be an effort to restore wages to workers, which have been at the same level for the past 10 years.

“As we put the finishing touches on the budget, we think wages are also affected by the cost of living,” Mr Chalmers said.

“We have had wage stagnation for almost ten years. Because it was a purposeful feature of the economic policy of our predecessors. We have a different approach.”

During his speech, Mr Chalmers also focused on the effects of prolonged widespread flooding, which his department estimates will shave about a quarter of a percentage point off GDP growth in the December quarter.

“It’s too early for us to determine the exact cost of the flooding we’re seeing across such large areas of Australia,” he said.

“Here we have to remember that we are talking about some of the best lands in the world that produce many products for domestic consumption as well as for export.

“I think what’s happening here with these areas is particularly brutal given how close many of these farms were to producing what was expected to be a bumper crop.”