Sunrise host Nat Barr grills Treasurer Jim Chalmers over spending ahead of likely rate rise

The Treasurer has been grilled over government’s hand in inflation, ahead of an expected rate rise later on Tuesday.

Jim Chalmers took partial responsibility for inflation on the chin, but made a push for perspective by pulling past tax rates and global living standards into the discussion about the nation’s economic situation.

WATCH THE VIDEO ABOVE: Nat Barr grills Jim Chalmers ahead of RBA meeting.

Australia’s current 4.35 per cent cash rate is expected to be hiked up to 4.6 per cent, which would put the nation’s rate at the second highest in the developed world.

Government spending has also hit 26.9 per cent of the GDP.

“That is the highest level, outside of the pandemic, since about 1986, do you concede that (government) spending is contributing to our inflation crisis?” Sunrise host Nat Barr asked the Treasurer on Tuesday.

The Treasurer said that people struggling in Australia understand that war in the Middle east has made existing inflationary matters “much worse”.

“That’s not an opinion, that’s a fact.”

Chalmers said that the nation will see that in the inflation numbers on Wednesday.

“When you see whats happening with global oil prices, when you see whats happening with the re-escalation of the war in the Middle East, that is obviously, factually, one of the big drivers of that inflation.”

He detailed his Labor’s efforts to bring government spending down over the years, as Barr pressed him further and cited claims from the RBA and economists that government spending is also contributing to inflation.

“Do you accept that it’s still too high, and you’re the guy?” Barr said.

Chalmers responded with an acknowledgement “that there is always more work to do to get the budget in even better nick.”

But after a Barr-age of further questioning, conceded: “We accept responsibility for our part in this fight against inflation.”

“When it comes to government spending, we’ve been able to get that down quite substantially since we’ve come to office.

“Spending as a share of the economy has come down considerable in the last four or five years.

“If you look at that final budget outcome we released yesterday, the budget deficit for this year is around half of what we inherited when we came into office.

“It means that even in that one year ... the budget is $6 million stronger, debt is $10 billion lower.”

On the world stage

If the cash rate hits the forecasted figure, it will be the second highest cash rate among developed nations, sitting below Iceland and above Norway.

Barr pushed the Treasurer to clarify why Australia is in the position it is globally, but Chalmers hit back with calls for a more holistic analysis.

“If you wanna make comparisons to other countries, you’ve gotta make the full comparison,” Chalmers said.

“We’ve got stronger economic growth that almost every other major advanced economy, stronger jobs growth ... much, much lower debt than the major advanced economies.”

Barr insisted that regardless of the numbers, people are still feeling the pinch.

“People don’t feel that though. I can promise you that. People on the text line are saying of all the figures, that’s great, but at the kitchen table, this is my problem,” Barr said.

Chalmers shared his understanding of the situation for people trying to by day-to-day, and said he gets the same feedback when he engages with his own community.

“We know that when interest rates go up, that adds to the pressure that people feel already,” Chalmers said.

A look back for ‘perspective’

Barr pushed on as Chalmers offered messaging about party savings and what policies they have allowed, noting the strengthening of Medicare, and the expansion to bulk-billing.

“You are on target to become the highest taxing Treasurer in Australian history, that’s what people are feeling,” Barr said.

Chalmers stressed that Labor is cutting taxes despite opponent threats to appeal the cuts, and compared his current tax policies to those of the nation’s longest serving Treasurer.

“Our tax levels are lower than they were under Peter Costello,” Chalmers said, pointing to the former Deputy Leader of the Liberal Party and Treasurer from 1996 to 2007.

“A lot of people on the other side of politics point to Peter Costello as a model, he had higher taxes in his budgets than I have in mine.

“I think that’s an important piece of perspective.”