The Associated Press stated that Australia’s new government had plans for increased spending on families, the elderly, defence, and its Pacific neighbours as the country’s economy slows due to higher interest rates, inflation, and severe floods.

Treasurer, Jim Chalmers unveiled the first annual budget for the fiscal year that started in July on behalf of his centre-left Labor party. It is the first budget presented by a Labor administration in nine years, and it coincides with Australia’s efforts to address the record-breaking debt levels that have risen as a result of the pandemic.

Chalmers claimed that his economic strategy was heavily influenced by rising inflation. By December, inflation is anticipated to reach a peak of 7.75 percent and then remain higher for longer than anticipated.

Some compromises will be required if the budget is to be passed by the parliament.


The former Conservative government predicted a deficit of $78 billion (US$49 billion) for this fiscal year in its last budget, which was released in March.


That prediction was cut in half by the current government to $36.9 billion (US$23.3 billion), primarily due to exceptionally high prices for raw materials like coal and iron ore. However, when commodity prices return to normal, the shortfall is predicted to increase once more.


Prior to contracting to 1.5 percent in 2023–24, or one percentage point less than projected in March, as rising interest rates have a negative impact on consumer spending, the economy is predicted to grow by 3.25 percent in the current fiscal year. In 2024–2025, the gross domestic product will increase by 2.25 percent, and then by 2.5 percent following that.

The economy is forecast to grow 3.25 percent in the current fiscal year before pulling back 1.5 percent in 2023-24, or one percentage point less than March forecasts, as rising interest rates have a negative impact on consuming spending.


In 2024–2025, the gross domestic product will increase by 2.25 percent, and then by 2.5 percent following that.


After six consecutive monthly rate increases this year, Chalmers said decreasing consumer spending was a “very troubling development” and predictable.


By raising childcare subsidies and gradually increasing paid parental leave from 18 to 26 weeks by 2026, the proposed budget will assist families in managing rising costs.


The budget also proposed for $213 million Australian dollars (US$135 million) in additional defence spending for Ukraine over the following 5 years in addition to $900 million (US$570 million) in aid for the Pacific region and $470 million (US$297 million) for Southeast Asia.

The Australian economy took a further hit after months of rain that flooded much of the country’s southeast, hurting farm export earnings and increasing inflation due to fruit and vegetable
shortages.

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