Treasurer Assures No Spending Cuts Planned: ‘Not the Time for Slashing and Burning’

Australian Treasurer Jim Chalmers has stated that there will not be significant spending cuts in the upcoming federal budget.

“This is not the time for scorched earth austerity. This is not the time to slash and burn in the budget when people are doing it tough and when growth in our economy is weaker than we would like it to be,” he said on May 6.

“Some extra spending is unavoidable. Some of it is automatic. Some of it is desirable. All of it is warranted.”

However, the treasurer emphasized that there will be “spending restraint” and savings in the budget.

“There’s no shortage of opinions at this time of year about the budget position. We see that in the papers almost every day. And we welcome that because it helps us to chart a responsible middle course between those who want us to slash and burn in the budget, and those who think that it should be some kind of free-for-all of spending,” he said.

“We are charting a responsible middle path. We are striking the right balance in the budget that we will hand down in eight day’s time.”

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Simultaneously, Mr. Chalmers discussed the possibility of achieving a second surplus following the $22 billion (US$14.5 billion) surplus in 2022.

“The second [surplus] is in reach, and if we achieve it, this would be the first back-to-back surplus in almost two decades,” he said.

However, the treasurer mentioned that some deficits in the upcoming budget would exceed previous forecasts.

“Some of the deficits will be a little bigger. Some of them will be a little better,” he added.

“And you will see that on the night, but overwhelmingly, what you will get is a sense of the really quite substantial progress that we have made.”

The treasurer has openly admitted that interest payments on Australia’s loans are one of the fastest growing line items on the country’s budget. Additionally, programs like the National Disability Insurance Scheme (NDIS) have proven challenging to control.

The paper urged state and federal governments to reduce spending to alleviate the burden for future generations.

Finance Minister Says It’s Harder to Find Savings in Budget

Nevertheless, Finance Minister Katy Gallagher stated that it was becoming more difficult to identify savings in the May 2024 budget.

“In relation to savings, you will see savings in this budget. They are getting harder to find. Don’t pretend otherwise,” she said.

Ms. Gallagher highlighted the $1 billion savings achieved by reducing the use of external labor consultants and contractors.

“You’ll see an extension of that saving in this budget but also an additional saving through the 2024-25 [financial] year and across those years because we believe that whilst we’re making investments in the public service, we’re restoring the balance and reducing the reliance on external labor,” she said.

Furthermore, the finance minister explained the necessity of “unavoidable” spending in the budget.

“This is necessary spending, but it builds upon the spending that we’ve had to do cleaning up the mess of our predecessors around terminating programs, funding cliffs, permanent programs that had no ongoing funding built into the budget,” she said.

Ms. Gallagher added that some spending was directed towards sustaining essential services like MyGov and healthcare programs.

More Cost of Living Help

Mr. Chalmers mentioned that the government would concentrate on providing cost-of-living relief to Australians primarily through the tax system and other measures to reduce inflationary pressures.

“We do more than acknowledge that we have been rolling out substantial cost of living help. There will be more in the budget,” he said.

“The centerpiece of that cost of living help will be a tax cut for every Australian taxpayer.”

Nevertheless, the treasurer acknowledged that cost of living pressure would persist for some time.

“I think these cost of living pressures are acute. They are still substantial,” he said.

Opposition’s Response

Following the press conference, Shadow Treasurer Angus Taylor blamed the Labor government for Australia’s high inflation situation.

“Today’s announcement is a glaring admission from Labor that real wages have been going backwards under their government.

“The policy announced will provide marginal relief to Australians struggling to pay down their debts with the rising cost of living.”

Pointing to the significant rise in student debts due to indexation, Mr. Taylor attributed it to Labor’s homegrown inflation.

“The best way to address growing HECS (Higher Education Contribution Scheme) debts is to combat Labor’s homegrown inflation at its source by reining in spending and implementing strong budget management,” he said.

“Instead, Labor has allowed spending and inflation to spiral out of control to the extent that inflation is now stubborn, sticky, and homegrown.”