CANBERRA, Australia (AP) — Australia’s new government will propose an economic plan Tuesday to steer the nation through rising inflation and interest rates while reigning in debt.
Treasurer Jim Chalmers will deliver his center-left Labor Party’s first annual budget for the fiscal year that began in July. It will be the first budget by a Labor government in nine years and must contend with unprecedented levels of debt as a result of the COVID-19 pandemic.
Chalmers said rising inflation was the primary influence on how he drafted his economic blueprint.
“The budget will be solid, sensible and suited for the times. It will recognize that in a time of extreme global uncertainty, our best defense is a responsible budget at home,” Chalmers told reporters.
“The budget has three objectives: responsible cost-of-living relief, strengthening the economy and beginning the hard yards of budget repair,” he added.
The previous conservative government had forecast in its last budget in March a deficit of 78 billion Australian dollars ($49 billion) in the current fiscal year.
The new government’s forecast more than halves that deficit to AU$36.9 billion ($23.3 billion), thanks mainly to higher prices for commodities including iron ore and coal.
However, slowing economic growth was expected to add to the longer-term difficulty of repaying debt.
The March budget forecast that gross debt as a share of the economic growth would peak in mid-2025 at 44.9%, or AU$1.12 trillion ($709 billion).
The budget will help families by increasing child care subsidies and gradually increasing paid parental leave entitlements from 18 to 26 weeks, the government said.
Prime Minister Anthony Albanese said the budget would provide cost-of-living relief for families without fueling inflation.
“The priority will be on measures that boost the economy, that boost productivity. Cheaper child care does just that. So does paid parental leave,” Albanese said.
The government will need to get its budget measures through the Parliament, where compromises may need to be made.