Treasurer Jim Chalmers doubled down on remarks this week that a tough budget is on the way after a meeting with world leaders predicting tough times ahead.
Coming out of a meeting with G20 finance ministers and central bank chiefs in Washington, Dr Chalmers told Australians to prepare for some tough decisions ahead of his first budget on October 25.
“Public enemy No. 1 is this inflation that we all face,” Mr. Chalmers told the Today program on Friday morning.
“It’s coming from various places, but particularly from the war in Ukraine, so we have to do what we can.”
“For governments, the most important thing we can do is deliver responsible budgets.”
The US Department of Labor revealed that consumer prices in the US rose 8.2% in the year to September and core inflation rose 6.6%, the biggest increase since 1982.
This led Federal Reserve Chairman Jerome Powell to raise US interest rates.
Dr Chalmers said he wanted to be candid with the people of Australia about the tough economic times the country was heading into.
“I think there’s no point in beating around the bush,” he told the Today show.
“I would rather tell people about the challenges we are going through, but I also tell people that we are going to overcome this.
“I am personally optimistic about the future of our economy, the future of our people and the future of our country, but first we have to navigate what will be quite tricky ground.”
The treasurer said middle to high income earners could rest easy knowing the government planned to keep Stage 3 tax cuts in the budget despite the country’s financial difficulties.
Earlier this week, the treasurer warned that the next federal budget would be written against the “backdrop” of a deteriorating global situation.
“The world is bracing for another global downturn. This is the truth,” he said.
“The outlook for a recession in some of the world’s major economies has shifted from possible to probable and that has obvious implications for us as well.”
Mr Chalmers said the nation was in a strong position to enter recession and that although the budget did not predict a recession for Australia, we would not come out unscathed.
The treasurer said the budget would be designed to deal with a “sharp and brutal” economic landscape and would focus on three factors: inflation, the global economy and spending pressures.
“It won’t be fancy. It won’t be flashy. He will be responsible. It will be solid,” he said.
Mr Chalmers will meet US President Joe Biden’s economic advisers on Friday (AEDT Saturday).