The lowest levels of global economic growth in almost two decades will cast a shadow over the upcoming federal budget, the treasurer has warned.
Jim Chalmers said the 2023/24 budget would include predictions of economic uncertainty in international markets, showing the weakest level of growth since the global financial crisis and the height of COVID.
Dr Chalmers, who has returned from talks in Washington with other financial heads, said the budget would be handed down in difficult circumstances.
“There is still a lot of uncertainty, a lot of volatility, a lot of vulnerability in the global economy,” he said in Canberra on Monday.
“The uncertainty and volatility in the global economy will be a really key influence on the budget that we hand down in May.”
Dr Chalmers said the government would aim to strike a balance for fiscal restraint in the months ahead, but also provide cost of living relief measures, with inflation still at high levels.
“We do have a lot coming at us, but we do have a lot going for us as well: low unemployment, high prices for our exports and both of those things are helping the budget right now,” he said.
“But the pressures on the budget are intensifying after that and that’s obviously a big focus as well as finalise the second budget.”
The treasurer flagged it was likely a key economics advisory committee would call for an increase in payments for single parents before the budget.
But he did not confirm whether the increase would be a feature when the budget was handed down.
“I don’t think that it would be a surprise to people if some version of that was to show up in the recommendations,” he said.
“We will work collectively, methodically, through the recommendations that they provide us. I think that people understand that we can’t do everything at once.”
Dr Chalmers said he had also accepted advice from Treasury on changing assumptions on commodity price estimates for the budget.
Estimates for commodities such as iron ore had been set at very conservative levels in recent years at times when market prices have soared.
Dr Chalmers said while there were “good reasons” to still accept conservative estimates, he would go with the Treasury approach.
“They have a pretty firm view and a clear view that the time is right to change those assumptions,” he said.
– AAP
