Jim Chalmers accuses Coalition of being desperate for a recession

Treasurer Jim Chalmers has accused the Coalition of being desperate for Australia to go into recession amid an ongoing stoush over the soft economy.

The Opposition turned its parliamentary focus onto the Government’s handling of the economy, with deputy Liberal leader Sussan Ley accusing it of bullying the Reserve Bank with last week’s heightened rhetoric.

Dr Chalmers said high interest rates were “smashing” the economy while former treasurer Wayne Swan rounded out the week by saying the central bank was “punching itself in the face” and pursuing economic dogma over sensible policy.

“Why does the Albanese Labor Government think it’s acceptable to bully the independent RBA in this way when they’re all doing is cleaning up Labor’s economic mess?” Ms Ley asked.

“Why is the Government fighting the Reserve Bank of Australia while Australian families go backwards?”

Last week’s national accounts revealed the economy grew just 0.2 per cent in the June quarter amid falls in household and private sector consumption as the effects of sustained inflation and interest rate rises bite.

Disposable income fell in real terms by 0.3 per cent in the year to June.

Only government spending stopped the economic growth going backwards.

But Dr Chalmers pointed to the anemic growth when other OECD nations have had at least one negative quarter as a demonstration the Government was managing the economy sensibly.

“We understand the economy is particularly soft right now. It would be even softer if those opposite had their way,” he said.

“Those opposite were desperate for the economy to go into recession. They desperately want higher interest rates, they desperately want the economy to go backwards because it serves their political purposes.”

He said Ms Bullock had made it clear the Government and Reserve Bank were aligned in the fight against inflation.

Prime Minister Anthony Albanese insisted easing cost of living pressures was the Government’s top priority.

“Whilst we’re putting that downward pressure on inflation, while it’s continuing to moderate, what we’ve been doing is making sure that people aren’t left behind in that process — that we don’t just let it rip, with $315 billion of cuts which is what those opposite are suggesting,” he said.

Impact Economics chief economist Angela Jackson said there were a lot of voices in the debate over inflation at the moment, which was not always helpful.

But she said the national accounts showed the Government had “traversed that very narrow pathway, at least until this point, relatively deftly” in the balance between quashing inflation and keeping the economy afloat.

“These latest figures showed that if they’d gone harder, we would have had a recession,” she said.

“But that doesn’t take away from the fact it is very hard and increasingly hard for households.”