Chalmers’ Responsible Budget Emphasise Sense and Stability

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The Australian Labor government recently published its first federal budget. The budget promises strong spending controls to prepare for forecasted deficits. Treasurer Jim Chalmers emphasises that the budget is geared to be sensible and stable.

Chalmers kept to his election promises, and the approach to fiscal settings was heavily restrained to help the Reserve Bank of Australia better manage inflation. Chalmers adds, 

“We now confront the prospect of a third global downturn in a decade and a half. The budget provides the cost of living relief which is responsible, not reckless – to make life easier for Australians, without adding to inflation.”

The budget was designed to improve certain aspects of the cost of living of Australians. The Expanded Child Care Subsidy would raise subsidy rates for 96% of Australian families using childcare. While the Gender-Neutral Paid Parental leave will help both parents as opposed to just the birth parent.

Another addition to the budget was the allocation of $1.7 billion to improve women’s safety initiatives and lessen gender-based violence. The budget also notes that budgeting will be gender-responsive, ensuring that gender is incorporated into their decision-making process.

The forecasted deficit for this year until June 2023 is also significantly lower than the last update during the pre-election season. From $77.9 billion, it is now forecasted to be $36.9 billion. High commodity prices are also helping as they deliver high windfall in the budget. S&P Global ratings predict that it will improve the country’s fiscal outcomes.

“We believe the budget won’t greatly add to inflationary pressures. The budget reprioritises previously allocated funding to the new government’s policy agenda and limits new spending in the immediate future,” notes Anthony Walker, director at S&P.

Vice President at Moody’s Investors Service Martin Perch adds that the budget was the first positive step to repair the country’s economy. 

“In this context of substantial long-term spending pressures and higher costs of debt servicing, lifting Australia’s relatively weak productivity performance will be critical to the fiscal repair supporting Australia’s credit outlook.”

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