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October 4, 2026 \u2014 11:39am<\/p>\n
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Remove items from your saved list<\/a> to add more.<\/p>\n AAA<\/p>\n Treasurer Jim Chalmers has signalled Labor would run a \u201cpretty tight ship\u201d in its mid-year budget update, again warning a spike in bond yields will add billions of dollars to the federal budget and is likely to rule out significant new cost-of-living relief.<\/p>\n Chalmers said rapidly rising borrowing costs in Australia and other major economies would put \u201cadditional pressure\u201d on the budget, with federal government debt recently passing $1 trillion.<\/p>\n The RBA\u2019s decision last week to raise the cash rate to a 15-year high of 4.6 per cent<\/a> has heaped further pressure on Chalmers to curtail federal government spending, which is at its highest level in four decades outside the pandemic.<\/p>\n Speaking on ABC\u2019s Insiders, Chalmers said Australia\u2019s domestic inflation challenge had been \u201cmade much worse by the war in the Middle East\u201d, but maintained that his assessment was consistent with that Reserve Bank governor Michele Bullock.<\/p>\n \u201cIf you compare the last year of demand in our economy compared to the year before, what you will see is that public demand has halved over the last year while private demand has tripled,\u201d Chalmers said.<\/p>\n Related Article \u201cSo what that shows is there are other factors at play here because public demand growth has been coming down at the same time as inflation has edged up.\u201d<\/p>\n Economists have warned that the issue with public demand was not growth in government spending but the level, which currently sits at 26.9 per cent as a share of the economy. Australia\u2019s 3.6 per cent underlying inflation rate<\/a> is among the highest in the developed world, behind only Iceland, Lithuania and Puerto Rico.<\/p>\n Chalmers said it was imported to remember there was a \u201cwhole range of factors at play\u201d and that budget settings were not the primary driver of prices in the economy. But he said the government was working on a new savings package for the mid-year update, due in about 10 weeks.<\/p>\n \u201cAnd that\u2019s all to recognise that even though the budget settings aren\u2019t the primary drivers of prices in our economy \u2013 especially now, at a time of all of this global turmoil \u2013 we can, and we will, continue to play a helpful role in the fight against inflation, and that\u2019s our focus,\u201d he said.<\/p>\n Chalmers said whether those savings would improve the budget bottom line remained to be seen because of uncertainty over government borrowing costs, driven by fluctuations in bond yields.<\/p>\n The US 10-year Treasury yield reached its highest level since 2002 last week while the Australian government bond yield also hovered around 5.4 per cent, near its highest level since mid-2011.<\/p>\n Assistant Science Minister Andrew Charlton \u2013 widely viewed within the federal government as a potential successor to Chalmers in the role \u2013 said productivity growth was critical to bringing inflation and interest rates down, conceding domestic pressures were a major driver of price growth<\/a>.<\/p>\n \u201cWe need higher productivity to get interest rates and inflation down. Productivity is like the speed limit on our economy. If productivity is low, then your economy can\u2019t grow without creating inflation,\u201d he told News24.<\/p>\n Charlton dismissed recent media speculation that Chalmers\u2019 performance in the role was subject to internal unrest, saying he was doing an \u201cextraordinary job in very difficult global circumstances\u201d.<\/p>\n Related Article Coalition treasury spokesman Tim Wilson called for Prime Minister Anthony Albanese to sack Chalmers, accusing the treasurer of stoking inflation and misleading Australians about government spending.<\/p>\n \u201cThis is a man who\u2019s actively stoked inflation because it gives him windfall tax revenue because he can\u2019t manage his budget. And Australian households are poorer because he has been a disaster as treasurer,\u201d Wilson said.<\/p>\n Get a note directly from our foreign correspondents on what\u2019s making headlines around the world. Sign up for our weekly What in the World newsletter<\/a>.<\/p>\n Save<\/p>\n You have reached your maximum number of saved items.<\/p>\n Remove items from your saved list<\/a> to add more.<\/p>\n![\"Treasurer](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/10\/1791085694_949_1bbaac12bee0fec81307bf0496079eb31783ca99.jpeg\")
Treasurer Jim Chalmers.Louie Douvis<\/p>\n![\"Anthony](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/10\/50abe1fceed71573259d0b4770af3edfc2781094.jpeg\")
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Rob Harris<\/a> is the national correspondent for The Sydney Morning Herald and The Age based in Canberra. He is a former Europe correspondent.Connect via email<\/a>.From our partners<\/p>\n","protected":false},"excerpt":{"rendered":"October 4, 2026 \u2014 11:39am Save You have reached your maximum number of saved items. Remove items from…\n","protected":false},"author":2,"featured_media":915392,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[64,63,99,164],"class_list":["post-915391","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-au","tag-australia","tag-business","tag-economy"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/915391","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=915391"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/915391\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/915392"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=915391"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=915391"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=915391"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}