Treasurer Jim Chalmers says it’s “useless to pretend” Australia will be immune to a global slowdown as he details the inflated cost of servicing Australia’s national debt ahead of the government’s first budget.
Speaking to Radio National earlier this morning, Chalmers said an additional $6 billion in unfunded spending that was uncovered by the Treasury – which involves COVID-related costs and delayed grants among other costs – should be accounted for. .
“But probably the biggest new pressure, certainly one of the fastest growing areas of spending in the budget that I will present next month, will be the interest charges on the $1 trillion debt.” , said the Labor MP.
“Because what happens is that when interest rates go up the way they have been, as every Australian homeowner knows, it also means that servicing the debt that is in the budget costs more dear.
“In the last budget, the cost of servicing the debt was projected to be approximately $17.5 billion. At the end of this budget period, they expected it to be $26 billion. It is now $33 billion.
Chalmers added that the global economy was deteriorating, with the United States and the United Kingdom facing serious challenges.
“These challenges are intensifying rather than dissipating. And we will not be completely immune to this. We expect the Australian economy to continue to grow, but so will the challenges facing the Australian economy.
“But there is no point in pretending that we would be completely spared a global slowdown. And the world situation is getting worse instead of better. There is no point in pretending that we don’t have an inflation challenge or a real wage challenge, and that rising interest rates won’t sting the Australian economy and the Australian people.
Asked about the much-talked-about Stage Three tax cuts, Chalmers said that instead of scrapping them – as crossbench members have demanded – the government will instead tax multinationals so they can fund additional services.