Jim Chalmers has defended Labor’s management of the economy after Sunrise host Nat Barr accused the government of “spending like crazy”.
The grilling followed the Reserve Bank of Australia’s (RBA) lifting of the cash rate this week, the second consecutive rate rise increasing interest rates by 25 basis points to 4.1 per cent.
Critics, including the Coalition, have claimed Labor’s spending has led to soaring inflation and forced the RBA’s hand to cool the economy by lifting the cash rate, subsequently punishing Australian households.
Labor has repeatedly denied its public spending is to blame.
On Wednesday, Barr put the contentious claim to Mr Chalmers after a back and forth about the latest interest rate rise.
The treasurer had argued Australia’s inflation challenge preceded the escalation of hostilities in the Middle East, but noted it had been exacerbated by pressures triggered by the US-Israeli campaign in Iran.
Barr responded: “But you’re not acknowledging that your government has been spending like crazy.”
“Government spending is … decades-high. Consumer confidence in this country is the lowest since 2020. Do you think you’re accepting your own responsibility for that?” she asked.
Mr Chalmers accepted his part in the “fight against inflation and all aspects” of his job, including Labor’s repair of the budget, he said.
“When we came to office, spending as a share of the economy was up near a third of the economy. We’ve got it down closer to a quarter,’ he said.
Earlier, Mr Chalmers also downplayed fears of an economic downturn and insisted there was no recession forecast for Australia, despite RBA Governor Michelle Bullock warning one could be on the horizon if soaring inflation proved too difficult to contain.
Ms Bullock told reporters on Tuesday: “We don’t want to have a recession, but if it’s hard to get inflation down, then we’re going to have to deal with that, possibly.”
Asked about Ms Bullock’s comments, Mr Chalmers told the Today Show on Wednesday it was “really important” to highlight the RBA had not forecast a recession.
“And we need to be very careful about how we talk this and talk about it in the most responsible way that we can,” he said.
“The Reserve Bank’s forecasts are not forecasting a recession in our economy. Neither are the governments.
“The point that the governor is making is a point that I would be very comfortable making, which is that we have to get on top of this inflation challenge.
“The global environment is highly uncertain and volatile, and our forecast as a Treasury and as a government, consistent with the forecasts of the Reserve Bank, are that neither of us are forecasting or anticipating a recession in our economy.”
Mr Chalmers later told Sky News the upcoming May budget would have a role to play in combating inflation that was “too high” at 3.8 per cent, above the RBA’s target range of 2-3 per cent.
But he refused to be drawn on details of the budget, including whether Labor would scrap the capital gains tax (CGT) as one of its affordability measures.
CGT was subject to a Greens-led parliamentary inquiry which found this week the 50 per cent discount contributed to intergenerational inequality and wealth inequality.
The joint committee that handed down the report included two Labor members, but Mr Chalmers shrugged off speculation this hinted at the government’s position on the Howard-era settings.
“But at the end of the day, decisions on tax reform are a matter for the cabinet, not a matter for the parliamentary committee,” he said.
“I will read the report. I will go through it. I suspect that its conclusions are very similar to the sorts of conclusions which have been reached in my own tax expenditure and insight statement that I release, and we’ll take all of that into consideration.
“But our tax policies haven’t changed. We haven’t taken any decisions.”