Zaneta Mascarenhas (Swan, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Treasurer. What are some of the pressures currently facing the budget, and what are some of the options to help Australians deal with the cost of living?

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

I thank the member for Swan for her question about the budget and the cost of living. When the parliament next sits after this week, it will be to hand down the October budget. What we have tried to do is to level with Australians about the serious challenges facing the economy, global and domestic, and the substantial pressures which are hitting the budget as a consequence of that.

One of the biggest pressures on the budget is the interest costs on the trillion dollars of debt that we inherited from those opposite when they were in office. With higher interest rates, that debt will now cost the budget more and more to service over the years. To give the House a sense of what we're looking at, the interest bill on the pre-election projections for government debt will be around $16 billion higher over the forward estimates and $125 billion higher over the next decade from higher bond yields alone. What that means, to give honourable members an example, is that the interest bill in 2025-26 is expected to now be about $34 billion; the interest bill in 2032 will be about $65 billion.

We'll update those figures in the usual way in our October budget, in line with the revised budget and economic forecast, with all of the conditions that exist at budget time. But it does underscore that the pressure on the budget from this interest bill on the trillion dollars of debt that those opposite racked up will only intensify over time. That's on top of the areas we need to fund that were due to expire under the previous government, weren't budgeted for or weren't delivered on time—for example, the additional $1.4 billion to continue our COVID-19 response that the health minister announced last week; more than $3.5 billion that hasn't been spent for road and rail projects that have been delayed in my colleague's portfolio here; and what will likely amount to around $2 billion or more in support of flood affected communities.

Just as there's pressure on the Commonwealth budget, there is pressure on Australians as well from the skyrocketing cost of living, falling real wages and rising interest rates. That's why, within the budget constraints that I've just run through for the benefit of the House, the task of the budget will be to provide responsible cost-of-living relief that has an economic dividend. That's why cheaper child care is so important with an economic dividend, as are cheaper TAFE fees, cheaper medicines and getting wages moving again, beginning with the lowest paid Australians. That's why this is so important. I think Australians understand that the new government are doing what they can to responsibly provide cost-of-living relief to Australians. They know that the mess that those opposite left us can't be fixed in one budget alone.