EDITORIAL: Chalmers’ only inflation strategy is to shift the blame

Things which are to blame for the cost-of-living crisis squeezing the life out of Australian households, according to Jim Chalmers: COVID, the war in Ukraine, Philip Lowe, fragmentation of the global supply chain, Michele Bullock, the supermarkets, the banks, big business as a whole, and now, conflicts in the Middle East.

Things which bear absolutely no responsibility at all for the cost-of-living crisis, according to Jim Chalmers: Jim Chalmers.

In a speech to global economic leaders in Washington, the Treasurer continued his campaign to deflect blame for persistent inflation and said an escalation in hostilities would put upward pressure on oil prices, exacerbating cost pressures on the global middle class.

“In seeking ceasefire and de-escalation we are focused on the human catastrophe but there are economic consequences too,” he said.

“We know that more bloodshed is one of the biggest threats to the global economy. None of us will escape the economic consequences of an escalating war.”

The Labor Government is just an innocent bystander to all this, buffeted by forces it is powerless to resist.

But Dr Chalmers was an outlier in that room of finance ministers and treasurers.

For the most part, their economies have already managed to get a handle on inflation.

The latest figures have inflation at 2.4 per cent in the US, 2.2 per cent in New Zealand, 1.7 per cent in Britain and the Euro area, and 1.6 per cent in Canada. Accordingly, central banks in those jurisdictions have already begun cutting interest rates and are expected to continue loosening their monetary policy as pressures continue to ease.

Underlying inflation remains comparatively high in Australia, at 3.4 per cent in August.

And the International Monetary Fund expects things are going to get even worse.

Its 2025 projections have Australia as a global inflation laggard, languishing at the back of the pack of 42 developed nations with inflation of 3.6 per cent.

Only Slovakia is expected to fare worse, with a forecast inflation rate of 4.8 per cent.

There’s no getting around the fact that Australia’s inflation problem is largely homegrown, as much as Dr Chalmers may try.

It is the result of a Government that continues to pump money into the economy through tax cuts, electricity rebates, infrastructure spending and artificially inflated wages.

It’s the result of a Government that has consistently sought to undermine and undo the work of the Reserve Bank.

It is the result of a Government that has strangled productivity through onerous industrial relations regimes and burdensome red and green tape.

And it’s the result of a Government which knows only how to blame-shift and spin, and is unwilling or unable to come up with a plan to get us out of this mess of its own making.