Australia's budget to keep spending in check while reducing growth

Australia's Labor government will unveil its first budget on Tuesday as economic growth slows both at home and abroad, emphasizing that its spending will focus on easing the cost of living crisis without sparking already high inflation.

Treasury Secretary Jim Chalmers, seeking to avoid Britain's recent mini-budget fiasco, said officials were working to ensure fiscal and monetary policies were aligned in the budget to support the Reserve Bank of Australia's fight against rising inflation. In an interview with ABC Radio Brisbane on Monday, Chalmers reiterated that fiscal prudence will underpin spending plans. "There will be cost of living reductions in the budget, but it will be done in a very responsible and measured way and the best way to reduce the cost of living is to do it in a way that has other benefits for the economy," Chalmers told the radio station. "And that's the way to do it without exacerbating the inflation problem we have in the economy by pushing prices higher." Chalmers recently warned that a slowing global economy, particularly a stalling Chinese real estate sector, would hit growth in Australia, which has the lowest unemployment rate since the 1970s. Domestically, the slowing growth also reflects very high inflation rates around the world, which are reducing household spending and overall consumption. Budget documents will show that gross domestic product (GDP) growth for the fiscal year ending June 30, 2024, will be cut to 1.5% from April's estimate of 2.5%. GDP growth will also be cut from 3.5% to 3.25% for 2022-2023, according to draft figures from the Treasury on Monday. In an interview with ABC Radio, Chalmers said the budget will include some important measures on childcare, paid parental leave and wage growth. The budget deficit will be much smaller than first feared, thanks to high prices for many of Australia's major commodity exports and a surprisingly strong labor market. Analysts expect the 2022/23 budget deficit to range between A$25 billion and A$45 billion, or around 1-1.5% of gross domestic product, and to be relatively frugal by international standards. Follow Global Economic Developments on Social Media! Click here to follow Ieconomy official Facebook account! Click here to follow Ieconomy official Instagram account! Click here to follow Ieconomy official Twitter account!