Australia’s Treasurer Expects Smaller Boost from Community Budget in May

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Chalmers expects a lesser impact on the government’s budget from higher commodity prices compared to the increase seen in October.

Jim Chalmers, Australian Labor Party’s Treasurer, revealed that in the previous budget, the government had chosen to bank 99 per cent of the revenue boost from high commodity prices as a budget repair measure and an ongoing commitment to budget restraint. He also mentioned that the Treasury is investigating conservative price assumptions for commodities to ensure accurate estimates.

“Even though we expect that our revenues will benefit substantially from elevated commodity prices and low unemployment, the boost … to this budget in May is unlikely to be as big as it was in October,” he told the Business Council of Australia audience at a closed event in Canberra.

According to Chalmers, the financial instability overseas, market uncertainty, and inflation rates would impact the budget.

The Australian Government’s report on the global economic outlook has indicated that there has been a significant increase in volatility in the global economic environment in recent months, which has resulted in a substantial recession in global growth which led to increasing uncertainty.

The report notes that one of the major causes of this disruption has been Russia’s illegal invasion of Ukraine, which has significantly impacted the global energy supply. This event, combined with the ongoing effects of the COVID-19 pandemic and strained supply chains, has led to increased energy costs and inflation in the cost of living for households across the world.

“It is still the defining challenge in the global economy,” Chalmers said in an interview with Bloomberg television. “It’s still the defining challenge in the Australian economy.”

Like any other nation, Australia is facing the difficult issue of assisting its heavily indebted citizens, experiencing increased expenses without causing a long-term issue of high inflation.

Despite these issues, Dr Chalmers stated that the May budget would focus on eight key areas, including the responsible cost of living relief, investment in growth and productivity, funding national security priorities such as AUKUS, and enhancing the care economy and essential services.

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