Journalist:
Treasurer, reports of further tax breaks for businesses in the Budget. Do you have any concerns this extra stimulus could be inflationary?
Jim Chalmers:
A couple of things about that. I mean, first of all, obviously I’m not going to pre‑empt budget announcements. You’ll know all about the Budget on Tuesday night. There’s a lot of ambition and a lot of detail in the Budget that I hand down on Tuesday night with Katie Gallagher and I’m looking forward to speaking to you about that then. Obviously there’s always lots of speculation before budgets. Some of it turns out to be right, some of it turns out to be wrong. You don’t have long to wait before you see the Budget in its entirety.
On the question of inflation, people shouldn’t expect there to be a whole lot of stimulus added to the economy. I’ve said this in the last couple of days. This is a really responsible Budget because we take the inflation challenge in our economy very seriously because we know people are under pressure. So the Budget will be a very, very responsible budget. It will take the inflation challenge seriously and for that reason people shouldn’t expect there to be some massive amount of stimulus injected into the economy.
Journalist:
Many countries around the world, including the UK and the US, they haven’t had an interest rate rise since mid‑2023. What are we doing wrong in Australia, given the RBA has just lifted rates?
Chalmers:
Well, inflation’s going up in all of the economies of the US, the UK, Europe, Japan, I think, and elsewhere. And so we’re seeing right around the world an inflation spike. If you want to make the comparison between Australia and those other economies, you’ve got to make the full comparison. We’ve got very low unemployment. We had faster economic growth than every major advanced economy to close out 2025. And so to make that comparison, you’ve got to make the full comparison. We’ve got faster growth than most of our peers. We’ve got very low unemployment. We’ve also got lower debt to GDP than any major advanced economy. And so every country’s got a different set of circumstances, but the common denominator here is inflation rising because of the war in the Middle East.
Now, some people want to pretend that war is not happening. Obviously, Australia is hostage to a lot of uncertainty coming out of the war in the Middle East. But the primary consequence of that is much higher inflation in those figures that we saw in March. And once again, this inflation challenge in our economy, which existed before the war in the Middle East, but which is made much tougher by decisions taken in DC and Tehran, that is obviously a primary influence on the Budget that we’ll hand down. It’s a key reason why this Budget will be so responsible.
Now we don’t know when the war will end. We see encouraging signs coming out of DC and elsewhere about the end to the war, but we know that the costs and consequences of this war will linger for longer and potentially for much longer. And so the Budget takes seriously these pressures from the war in the Middle East on people in the here and now. It balances that with an ambitious agenda to meet our intergenerational obligations as well. I’m looking forward to telling you all about it on Tuesday night.
Thank you.