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Jim Chalmers has yet to release his budget, but one of his ambitious promises has already been ripped apart in a fiery TV shakedown.


Treasurer Jim Chalmers was ripped apart in a TV interview for suggesting the cost of living crisis could be resolved by Christmas.

His third budget is expected to include new Treasury forecasts that show inflation will return to the Reserve Bank’s 2-3 percent target by the end of 2024.

That’s a year earlier than the Reserve Bank predicted in its latest monetary policy statement released last week.

Nationals frontbencher Barnaby Joyce, a former deputy prime minister and accountant, said it was hard to believe the Labor Party was better at forecasting inflation than the independent Reserve Bank.

«Haven’t we heard this yarn on pretty much everything already?» he told Sunrise anchor Natalie Barr on Monday morning.

Treasurer Jim Chalmers has been ripped apart in a TV interview for suggesting the cost of living crisis could be resolved by Christmas

“You have to make a choice: do you think the RBA got it wrong with their PhDs and all their staff and the Treasury got it right and the Treasurer got it right?

«Did the Labor Party get it right?»

But Environment Minister Tanya Plibersek quipped: «There’s a few PhDs in the Treasury too, Barnaby.»

Mr Joyce replied: «He has a PhD in politics, not economics.»

Dr. Chalmers has a PhD, but his doctorate from the Australian National University was awarded in 2004 by former Labor Prime Minister Paul Keating.

It did not cover Keating’s time as treasurer, when 18 per cent interest rates in 1989 led to a recession in 1991 after a severe inflationary challenge.

Ms Plibersek said the Treasury’s forecasts were based on budgetary measures to reduce inflation, suggesting Dr Chalmers would announce measures including electricity bill relief and childcare rebates on Tuesday.

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«The RBA’s forecasts did not take into account what is happening in this budget,» she said.

“And the whole focus of this budget is to keep pressure on inflation while helping families.

«We know people are doing it hard, we know it’s not a done deal.

Nationals frontbencher Barnaby Joyce (right), a former deputy prime minister and accountant, said it was hard to believe the Labor Party was better at forecasting inflation than the independent Reserve Bank.

Nationals frontbencher Barnaby Joyce (right), a former deputy prime minister and accountant, said it was hard to believe the Labor Party was better at forecasting inflation than the independent Reserve Bank.

The Treasury’s 2024/25 budget forecasts headline inflation to fall to 2.75 percent by June 2025, but fall to a target of 2 to 3 percent by December 2024.

The central bank’s May monetary policy statement meant that inflation would not fall to 2.8 percent until December 2025.

The difference in forecasts could be a problem with Governor Michele Bullock saying last week that she would raise rates again if inflation takes longer to ease.

«If we have to, we will. If we really think inflation is going to be sustained and well above our forecasts, we will tighten again,” she said.

Headline inflation, or consumer price index inflation, was 3.6 percent in the March quarter, an improvement from December’s 4.1 percent year-on-year pace.

But core inflation rates were both higher than 4 per cent when the Australian Bureau of Statistics strips out volatile price items such as petrol and vegetables.

Headline inflation was at 6.1 percent when Labor won the 2022 election, but rose to a 32-year high of 7.8 percent by the end of this year after Russia’s invasion of Ukraine led to sanctions and higher gasoline prices.

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Mr Joyce said voters must ask themselves whether they were better off under Labour.

“Is your life better now than when Labor came to power? And I think the answer is quite simple,” he said.

Since Labor returned to power, the Reserve Bank of Australia has raised interest rates 12 times to a 12-year high of 4.35 percent – the most aggressive pace of monetary tightening since 1989.

The first increase came in May 2022 during the election campaign and since then monthly mortgage repayments have increased by 68 per cent as variable rates started at ‘two’ to ‘six’.

Motorists are also now paying more than $2.30 a liter for premium unleaded petrol, despite oil prices falling since April.

But meat, fruit and vegetable prices are cheaper than a year ago, based on monthly ABS calculations for March.

Labor has been wrong about its economic forecasts before, with former treasurer Wayne Swan having to back off a promise to deliver a budget surplus in 2012.

Dr Chalmers was his chief of staff at the time, but at least he delivered a surplus for 2022/23 – the first for the federal government since 2007 and the first for Labor since 1989.

Inflation has been above 3 percent since the December 2021 quarter as Sydney and Melbourne emerged from long lockdowns that led to supply chain constraints.



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