Mary Doyle (Aston, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Treasurer. What are the impacts of the global inflation challenge, and how is the Albanese Labor government's budget and economic plan helping address price pressures in our economy?

Jim Chalmers (Rankin, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

I thank the member for Aston for her question. Also, I thank her community for sending someone of her character and calibre to work with us on their behalf here in the people's house of the parliament.

We know that a lot of Australians are under the pump. We know that inflation remains the biggest challenge facing our economy. It is the main focus of the Albanese government's economic plan. That's why we delivered a responsible budget—so that the government isn't adding to inflationary pressures in our economy. That includes returning 87 per cent of revenue upgrades across two budgets to the budget bottom line. It's why we showed spending restraint. It's why we have gone about managing the budget in a responsible way. It's why we have designed our cost-of-living relief—whether it's cheaper medicines, cheaper early childhood education or energy bill relief—to help people under the pump without adding to the inflation challenge in our economy.

Our cost-of-living package will directly reduce the inflation rate by three-quarters of a percentage point in 2023-24 and not add to broader inflationary pressures in our economy. This is the point that the Treasury secretary was making in Senate estimates earlier today. Treasury's advice is that our fiscal policy is working with monetary policy to tackle inflation in the near term. Secretary Kennedy said at the estimates hearing today that fiscal policy was contractionary and that, when it comes to monetary policy, it's important that fiscal policy doesn't make that job any harder. I don't believe it is in this budget. He talked about the net effect of the cost-of-living package to lower headline inflation. Lowering headline inflation is a useful outcome, let alone helping those people who are suffering from those higher prices at this time. So we think the net effect is a downward impact on inflation. He said later on: 'We don't believe the budget as a whole is inflationary or adding to inflationary pressures.' Given the choice between taking the advice of the Treasury secretary or taking the advice of the member for Hume, I think we made the right call.

This side of the House understands that the primary causes of the inflation challenge are pressure on our supply chains combined with a war in Ukraine. We know that headline inflation peaked in quarterly terms under those opposite. We know in annual terms it peaked below most major advanced economies, lower than the UK, the US, Italy, Germany and Canada.

Tomorrow we receive the monthly CPI indicator from the ABS. We know that this is a volatile measure. It can bounce around from month to month, as the secretary said today. But we know that the peak in inflation is behind us. We have seen some moderation since last year and, while it will be higher than we would like for longer than we would like, it will continue to moderate over the year and years ahead. We take seriously our responsibility to people doing it tough, and the budget reflected that.