.
Jim Chalmers and Katy Gallagher are hunting for budget savings, which means somewhere in Canberra, a minister is quietly hiding their department’s credit card.
The pressure is building after annual inflation rose to 4.3 per cent in September, up from 4 per cent in August. Housing and transport were the biggest contributors, with higher world oil prices pushing up fuel costs.
Apparently, filling the car now involves choosing between unleaded and your long-term financial goals.
The Reserve Bank’s chief economist, Sarah Hunter, says federal and state government spending is also contributing to demand pressures. Meanwhile, the RBA’s outlook points to subdued growth and a gradual rise in unemployment as inflation is brought under control.
That’s the uncomfortable balancing act: cool the economy enough to slow price rises without putting households in the economic freezer.
Gallagher says no spending area is exempt from scrutiny ahead of December’s mid-year budget update. But neither she nor Chalmers has promised that savings will outweigh new spending.
So the government is looking everywhere for savings, while carefully avoiding a promise that the final bill will actually shrink.
Anyone who’s visited Bunnings for one washer understands the concept.
There are real pressures behind those numbers, though. Gallagher points to health, aged care and other commitments. Cutting spending means deciding which services, subsidies or projects receive less, and who feels the consequences.
Chalmers acknowledges inflation is too high, while pointing to international pressures. Fair enough: Canberra doesn’t set world oil prices. But voters still expect a plan for the bills arriving here.
Another interest-rate rise is widely anticipated ahead of Tuesday’s RBA decision, though it isn’t a done deal.
That’s Melbourne Cup day: a nation watching the horses while mortgage holders nervously watch the Reserve Bank. One race lasts a few minutes. The repayments take considerably longer.
Craig Hill is a Brisbane-based author, journalist, teacher, business consultant and social justice campaigner. He is the General Manager of the Australian Book and Language Studio.
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