Katy Gallagher (ACT, Australian Labor Party, Minister for the Public Service) Share this | Hansard source

I thank Senator Green for her interest in the economic situation across Australia and the Treasurer's ministerial statement that he made earlier today. It's true that we are facing a very challenging set of economic circumstances, both domestically and internationally, and the Treasurer in his address to the House of Representatives today delivered that message but also importantly the message that the Australian economy is growing but that there are some challenges that need to be managed in the near term. We have been upfront with Australians about that since coming to government, and we will continue to be upfront and honest as new challenges emerge.

Today, in the latest update of Treasury forecasts, the Treasurer outlined that economic growth has been revised down by half a percentage point for the next three years. Inflation is expected to peak at 7¾ per cent by the end of the year, and the inflation challenge will obviously have an impact on the outlook for real wages and real wages growth. The forecasts also show with inflation and with real wages it will get worse before it gets better but that it will get better. The current expectation is that inflation will indeed get worse this year, moderate next year and normalise the year after. The Treasury forecasts also show that real wages are expected to stabilise mid next year before growing again in 2023-24.

When it comes to the budget, the final results for the 2021-22 financial year are likely to show a better-than-expected improved outcome compared to what was released at PEFO. However, temporary factors like supply chain disruption, capacity constraints and extreme weather have delayed some spending, and low unemployment and volatile commodity prices boosted revenue. The short-, medium- and longer term pressures on the budget are— (Time expired)