Finance Minister Katy Gallagher says growing pressures on the federal budget mean the Albanese Government cannot promise it will find overall savings in its December update, even as Australians brace for another interest rate rise amid ongoing high inflation. Source: ABC News.
On Wednesday, Treasurer Jim Chalmers also refused to commit to net savings in the mid-year budget update following a worse-than-expected inflation figure of 4.3 per cent over the year to September, which lifted expectations of another rate hike when the Reserve Bank meets tomorrow.
Senator Gallagher told ABC Insiders despite pressure being put on the government to rein in its spending, she would not pre-commit to overall savings.
“I can’t, I don’t want to pre-empt the [Expenditure Review Committee] process. We will go through that … but there is enormous effort being placed, particularly by Jim and myself on the savings side,” she said.
“We are doing a lot of work on the savings side but I can’t get ahead of decisions that haven’t been made yet.”
Senator Gallagher rejected suggestions the pressure to find savings was causing tension inside cabinet, saying it was healthy for ministers to have “robust” debate and bring different perspectives.
She added that the government’s record in each of its previous budgets and mid-year updates had been to deliver overall improvements to the budget, and that in recent budgets its policy decisions had also found more savings than new spending.
The Reserve Bank’s chief economist said last week that government spending remained a contributor to ongoing inflation, even if the government points to the war in Iran as the “primary driver”.
Faced with another high inflation result and the likelihood of a rate hike tomorrow, Treasurer Jim Chalmers calls for “perspective” and points to external factors.
Mr Chalmers has previously warned that the cost of borrowing would add billions of dollars in additional costs to the budget, as long-term expectations that global interest rates would remain higher for longer were priced into bonds.
Senator Gallagher said other pressures on the budget were also growing, including in health and aged care.
She said the government’s spending measures in those pressure areas were necessary to rescue a Medicare system “in freefall” and clear processing backlogs for veterans.
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Government will not promise net savings in budget update, even as rate rise looms (By Jake Evans, ABC News)
