Treasurer Jim Chalmers says there’s “there’s no use pretending” Australia will be immune to a global downturn as he details the ballooning cost of servicing Australia’s national debt ahead of the government’s first budget.
Speaking to Radio National earlier this morning, Chalmers said an extra $6 billion in unfunded spending that was discovered by Treasury – which involves COVID-related costs and delayed grants among other costs – would have to be accounted for.
“But probably the most substantial new pressure, certainly one of the fastest growing areas of spending in the budget that I hand down next month, will be the interest costs on the $1 trillion debt,” the Labor frontbencher said.
“Because what happens is when interest rates go up as they have been, as every Australian homeowner knows, it also means it costs more to service the debt that’s in the budget.
“In the last budget, it was expected that the cost of servicing debt would be about $17.5 billion. By the end of this budget period, they expected it would be $26 billion. It’s now $33 billion.”
Chalmers added that the global economy is deteriorating, with the US and UK facing serious challenges.
“Those challenges are intensifying rather than dissipating. And we won’t be completely immune from that. Our expectation is that the Australian economy will continue to grow, but so will the challenges to the Australian economy.
“But there’s no use pretending that we would be completely spared a global downturn. And the global situation is getting worse, not better. There’s no use pretending that we don’t have an inflation challenge or real wage challenge, and that rising interest rates won’t sting the Australian economy and the Australian people.”
Asked about the much-talked-about stage three tax cuts, Chalmers said rather than scrapping them – as members of the crossbench have called for – the government will instead tax multinationals to be able to fund additional services.