Spikes in inflation are often blamed on government borrowing to deliver cash handouts. But it’s more complicated than that. The real issue lies in borrowing without a plan to balance the books.
Peter Martin, Crawford School of Public Policy, Australian National University
Only one-third of the top economists surveyed give Jim Chalmers’ third budget an A or a B, down from two-thirds in 2023. Many say it left big issues unaddressed.
Investors, homebuyers and central bankers all have reason to be irritated by the latest data, and inflation isn’t licked just yet. But the numbers also show reason for optimism.
Tuesday’s budget will show there has been an improvement of $10.5 billion in the bottom line. The update forecasted a deficit of $1.1 billion for 2023-24.
Although it’s rooted in legitimate grievances, the ‘Steal from Loblaws Day’ campaign is not only illegal, but also fails to achieve its intended objective and risks undermining economic stability.
New Zealand’s history of inflation, recessions and unemployment offer clues to what might happen next. Coupled with global events, the outlook is not promising.
Next month’s budget is an opportunity for the government to move beyond its ‘I feel your pain’ rhetoric to a HomeKeeper-style policy for this particular group of temporarily squeezed Australians.