Chalmers condemned for ‘rewriting history’ on tax, budget pressures

The opposition has accused the government of painting a bleak picture of the economy and budget position to prime the electorate for changes to the Stage 3 tax cuts.

Oct 07, 2022, updated Oct 07, 2022
Treasurer Jim Chalmers. (AAP Image/Lukas Coch)

Treasurer Jim Chalmers. (AAP Image/Lukas Coch)

Treasurer Jim Chalmers on Friday will reveal how much spending in the areas is expected to grow when he speaks at an investment event hosted by the Queensland government.

Debt repayments have been flagged as one of five key areas of spending ahead of the October 25 budget, alongside aged care, disability care, hospitals and defence.

Opposition spokesman Simon Birmingham said the treasurer was trying to “rewrite history” in a bid to soften up voters for trimming the Stage 3 tax cuts.

The tax cut debate has resurfaced this week, with the government refusing to rule out making changes to the legislated measures.

“We have Jim Chalmers delivering his speech that attempts to be a rewrite of history in pretending that spending pressures on the NDIS, aged care, defence are new news, whereas all of those spending pressures were well known and accounted for in budget papers pre-election,” he said.

“And he’s pretending that global inflationary pressures are new news, whereas in fact, we were talking about global inflationary pressures pre-election.”

Birmingham said the Stage 3 tax cuts were needed more than ever as pressures on household budgets continued to grow.

While there’s talk of paring back the Stage 3 tax cuts rather than scrapping them altogether, the Greens want them ditched entirely.

“The simplest thing to do would be to stop them from coming into existence in the first place,” Greens leader Adam Bandt said.

“They start in a couple of years’ time. So rather than tinkering around the edges, the most straightforward thing to do would be to just stop them from happening in the first place.”

Abolishing the tax cuts would save $240 billion that could otherwise be spent on cheaper childcare, Medicare-covered dental and building affordable homes, Mr Bandt said.

At the event on Friday, Chalmers will provide forecasts of five major areas of expenditure.

The cost of servicing government debt is expected to grow by 14 per cent each year, outpacing increases in the other big-spending areas.

Chalmers says spending on the NDIS will grow by 12.1 per cent each year, health by 6.1 per cent and aged care by five per cent.

Defence spending will grow by 4.4 per cent per year, on average, over the next four years.

The government has also downgraded its forecasts for global growth and warns the Australian economy and budget will not be spared from the turbulence.

The treasurer expects global growth to be 0.75 per cent less than anticipated by 2022 and one per cent lower in 2023 than previously forecast.

Chalmers will also note aggressive rate hikes from central banks worldwide – particularly the US Federal Reserve – have put pressure on the value of the Australian dollar.

“Weakness in the currency means that some of the things we buy from overseas become more expensive, making the already hard job of the Reserve Bank of Australia harder,” he says.

On Tuesday, the RBA became the first major central bank to shift to a slower pace of tightening, with a 25-basis point rise confounding expectations of a 50-point rise.

The updated predictions will be released in full in the October 25 budget.

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