Australian treasurer signals tighter budget as debt costs rise

Treasurer Jim Chalmers has warned that Australia faces intensifying pressure from higher borrowing costs, saying the government will pursue further savings rather than promise broad new cost-of-living measures. Chalmers said a savings package would be included in the mid-year budget update, due in mid-December. He said the government needed to run a “tight ship” as pressure mounted on public finances in Australia and elsewhere.

Prime Minister Anthony Albanese had indicated this week that additional help for households could be on the way. Chalmers, however, downplayed expectations of further relief, saying the government’s response would be shaped by the need to address inflation responsibly. He said the government wanted inflation to ease so that real wages could begin growing again and pressure on households could lessen.

He also said additional spending had been concentrated in areas including bulk billing. The comments followed a decision by the Reserve Bank of Australia to raise interest rates to a 15-year high. Governor Michele Bullock has warned that inflation was not solely the result of conflict in the Middle East.

Chalmers said the war was nevertheless placing substantial pressure on the Australian economy. He also warned that the cost of servicing the government’s trillion-dollar debt would rise by billions of dollars as cheaper borrowing was replaced by more expensive debt. The Coalition has accused the government of spending too much and contributing to inflation.

Shadow treasurer Tim Wilson called Chalmers a “disastrous treasurer” and urged him to resign.