Jim Chalmers (Rankin, Australian Labor Party, Treasurer) Share this | Hansard source

I thank the member for Hawke for his question. We are optimistic about the future of our economy and the future of our country. But we need to be realistic as well about our prospects in 2023. We need to be realistic about the challenges that are coming at us from around the world and impacting our people and our economy.

Inflation is the major challenge in the global economy. It's the major challenge in our own economy. It's the major focus of the Albanese the Labor government as well. Honourable members will be aware that 2022 finished with an inflation number at 7.8 per cent. But what they may not be aware of is that the worst quarter for inflation last year was actually the March quarter. The fastest growth in inflation was at the beginning of the year, not at the end of the year. We do know, and we do expect, that inflation has begun to moderate in our economy. Seven point eight per cent is obviously unacceptably high and puts a lot of pressure on families and others in our community, but we expect that inflation is starting to moderate. It will stay higher than we'd like, for longer than we'd like. That is the truth of it. Interest rate rises are an inevitable consequence, as the Leader of the Opposition has previously said, and the Prime Minister quoted him a moment ago. Interest rate rises are an inevitable consequence of inflation being as high as it is in our economy.

The Reserve Bank will take its decision tomorrow independently. Our focus as a government is on the pressures which are coming at us from around the world but being felt around the kitchen tables of this nation. That's why we've got a plan for inflation which has three major parts.

The first part is to provide responsible cost-of-living relief without adding to inflation; responsible cost-of-living relief with an economic dividend. We're doing that with cheaper early childhood education and cheaper medicines, and we're doing that with the electricity bill relief that those opposite voted against.

Second, we're dealing with the supply side issues in the economy, which were left to get worse and worse over the past decade, by addressing the broken energy market, by addressing the skills crisis and by building the resilience of our supply chains, including through the National Reconstruction Fund.

Third, by showing spending restraint in the budget, returning 99 per cent of the revenue upgrades over the next two years to the budget bottom line, when inflationary pressures are most acute. That is unrecognisable to those opposite, who managed to return just 40 per cent of the revenue upgrades in the budget.

This will be a challenging year for our economy, the global economy and our country, but we can do more than just batten down the hatches and ride it out. We will see this inflation moderate, we will keep building our buffers, we will keep building an economy that's strong and we will keep building a better future that Australians deserve.

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