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Is the government looking at deeper spending cuts as recommended by the IMF? (In a global sense, it did not single Australia out)

Jim Chalmers:

Katy Gallagher and I are looking for ways to trim spending in the Budget, as you know. And that begins with the audits of rorts and waste, which we’ve spoken about before, but it doesn’t necessarily end there.

If there are other opportunities to remove duplication in the Budget or to sensibly trim spending, then we’re obviously prepared to do that and we’ve been engaged with colleagues, ministerial colleagues, about this for some time and they’ve been constructive about it in welcome ways.

But what we need to balance here is we have had in this country a wasted decade of missed opportunities and messed-up priorities where we haven’t seen the investment in the economy that we need to see and that has made us more vulnerable to the sorts of shocks we’re going through now, whether it’s global, inflation or both.

And [so we may] responsibly trim spending that’s not providing an economic dividend and redirect it in ways that does provide an economic dividend in some of the areas we’ve talked about – cleaner and cheaper, more reliable energy, childcare, investment in skills, investment in industries which will be big employers.

And so even in the event that we find substantial savings, we recognise that at least some portion of that will need to go towards funding our priorities, which is so important to getting the right kind of growth into the future.

Chalmers: not possible with budget constraints to fund every cost of living relief measure

Q: Where does the government stand now on tying the minimum wage to inflation, given that inflation has outstripped the minimum wage increase once again?

Jim Chalmers:

We were very pleased with the decision taken by the Fair Work Commission and our encouragement to give low-income Australians a decent pay rise that allowed them to keep up with the skyrocketing cost of living.

We said then, and we have said subsequently, that each time the Fair Work Commission minds to determine the minimum wage, that should take into consideration the whole range of economic conditions.

And so we will make our submission when the time comes, we have only just been through a wage review round. When the time comes, we will factor in the cost of living and all of the other considerations when we make our submission and that [the FWC] will make their decision independently.

On the broader steps to ease the pressure on people during this cost of living crisis, it is not possible with our budget constraints to fund every good idea that people might have about cost of living relief.

We need to tread a pretty careful path here when it comes to budget, we inherited a budget heaving with $1tr in Liberal party debt, and we need to make sure that everything we do ticks more than one box – [brings] cost of living relief and also has [an] economic dividend.

I focus on childcare relief, which is incredibly important, and also relief in the cost of medicines.

There are good ideas and other things we might contemplate, but we are intent on being responsible economic managers and we are operating under some pretty severe constraints.

So the main message there is – strap in.

That does not bode well for those who were hoping Labor would be more generous in its budget than it had indicated during the election. It sounds as though it is going to be a very tight budget which is handed down in October.

Chalmers: ‘inflation will get worse before it gets better’

Jim Chalmers finishes his pre-question spiel with:

I will finish on the set of points. We have a lot going for us in Australia, we had good prices for commodities on global markets, we have unemployment historically low which is obviously very welcome.

One of the things, or one set of things that we have going for us is, and [that] I detected around Australia and the broader community is that there is an appetite for real talk about our economic position, there is a hunger after a decade of division for Australians to come together around the economic challenges.

There is an understanding that is not possible to clean nine years of mess in nine weeks.

It will take time for us to get on top of these issues as I’ve described them. We will get on top of them.

Inflation will get worse before it gets better. They will get better, some of these other challenges, with the right policies and right mindset and the right approach and with some degree of patience will turn around for us as well.

It will be a difficult time ahead and the inflation numbers show that as to the new forecast for the IMF.

Chalmers: expect ‘enduring challenges’ in tomorrow’s forecast

Jim Chalmers:

The ministerial statement tomorrow will provide you the forecast for inflation, the wages and economic growth, for unemployment, and some of the related measures.

It will also begin to describe … the budget in October when it comes to the bottom line.

Many of you have followed closely the monthly release of the financial statements, which show that we have been very fortunate in the last budget year and the beginning of this budget year because of commodity prices and lower-than-expected [figures] on employment.

We have had some things going for us in the budget, but what I will explain tomorrow and describe tomorrow is that the things that have been working for us in the budget are temporary, highly temporary, and some of the challenges are more enduring.

Part of those enduring challenges in the budget will be the impact of some of the revisions that we will have to do to our economic forecasts as well.

Ministerial statement on inflation expected tomorrow

Jim Chalmers then moves on to what this will mean in a wider sense:

The IMF is reacting to those pressures and other pressures in sensibly downgrading expectations for global growth. If you look at the release as some of you have, they are downgrading the output for global growth this year to 3.2%; it was 3.6%.

They expected the global [contraction] in the second quarter of this year and they expect global growth in 2023 to further slow to something like 2.9%, which is two-thirds of a percentage point down since the April outlook.

That is giving you a sense of the concerns of the IMF and that we share here in Australia, given the potential impact on our own economy.

My ministerial statement tomorrow will show the combined impacts of rising interest rates, and slowing global growth on our own economic growth here in Australia.

It will be primarily focused on the economic forecasts, rather than the budget forecast.

It will focus on the above occasions of this high inflation, which brings rising interest rates and … the global situation that the IMF has described and what all that means for Australians and the economy as well.

It will be confronting, in the sense that what you can expect to see in the ministerial statement tomorrow is inflation revised up substantially, growth revised down, and all of the implications that that brings.

That is not so different to the message Josh Frydenberg delivered when he was treasurer and inflation began to rise.

Chalmers: government ‘very focused’ on domestic factors for inflation

Jim Chalmers:

The inflation in the economy is primarily but not exclusively global. There are domestic factors as well. That is why we are focused, as a government, in dealing with some of the supply chain issues which are pushing up inflation here in Australia, whether it be the issues around labour shortages [or] the issues around a lack of resilience in the supply chains.

I think Australians understand when they’re at the supermarket, when prices are going through the roof, that this challenge is partly global and there are domestic components of this challenge as well. I wanted to reassure them that the government is very focused on those domestic factors.

Jim Chalmers is in the blue room (the second-fanciest government press conference locations) where he is responding to the the 6.1% CPI figure the ABS reported today.

(That is just a fancy way of saying the cost of living has increased by 6.1% in the aggregate.)

The inflation outcome today mirrors the lived experience of Australians who are doing it tough right now. If you look at the release from the ABS when it comes to inflation, you know it rose by 1.8% in the June quarter to be 6.1% higher through the year.

This is the highest rate of annual inflation since June 2001, the equal highest inflation in the inflation targeting period.

It should be pointed out the Indue card was the brainchild of Andrew Forrest, who included it as a recommendation in the “Creating Parity” report he handed to the Coalition government in 2014.

There has never been any evidence the card does anything to address inequality, or help, and in fact, had added to inequality and robbed “participants” of dignity.

The auditor general was particularly critical of it last month following two independent evaluations.

Labor moves to repeal cashless debit ‘Indue’ card

As previewed by Josh Butler, Amanda Rishworth is now moving to repeal the cashless debit card (also known as the Indue card).

Jim Chalmers is about to hold his press conference following the inflation data – the highest it’s been in more than three decades.