Sunrise host Nat Barr has confronted Treasurer Jim Chalmers over Australia’s elevated interest rates, government spending and tax burden as mortgage holders prepare for another rise in repayments.
Barr asked why Australia was heading towards one of the highest official cash rates among advanced economies, with the Reserve Bank widely expected to increase the rate from 4.35 per cent to 4.60 per cent on Tuesday.
She noted that only Iceland was expected to have a higher rate, while the United States, United Kingdom, New Zealand, Canada, Denmark, Sweden and Singapore were all set to maintain lower rates.
“Why are we performing so poorly by international standards? We have the second-highest cash rate in the developed world,” Barr said, challenging Chalmers to explain the figures.
Chalmers rejected the narrow comparison, saying Australia’s broader economic performance also needed to be taken into account.
“Inflation and interest rates are rising across the world,” the Treasurer said.
He added that any comparison with other nations had to consider the full range of economic indicators rather than interest rates alone.
Nat Barr has challenged Treasurer Jim Chalmers over Australia’s high interest rates, government spending and rising tax pressures as households face mounting mortgage costs.
Chalmers pushed back against claims that the government had let spending get out of control.
“Australia has stronger economic growth than almost every other major advanced economy,” Chalmers said.
He also pointed to stronger employment growth and substantially lower debt than most comparable developed countries.
Chalmers said those factors were essential to any fair assessment of Australia’s economic position.
Barr responded that headline economic statistics offered little relief to families dealing with larger home-loan repayments and the rising cost of everyday essentials.
“People don’t feel that,” Barr said. She pointed to messages from viewers who argued that strong national figures did not change the financial pressure they were experiencing at their kitchen tables.
The host then turned to government spending, asking whether increased public expenditure was adding to inflationary pressures and making the Reserve Bank’s task more difficult.
Barr cited government spending equivalent to 26.9 per cent of GDP, saying it was the highest level outside the pandemic period since around 1986, and asked Chalmers whether it was contributing to the inflation crisis.
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The Treasurer again disputed the suggestion that the government had allowed spending to surge unchecked.
Australia is facing one of the highest cash rates among developed economies.
Chalmers said government spending had fallen substantially as a share of the economy since Labor came to office.
He said spending had declined considerably over the past four to five years, despite ongoing pressure on households and the broader economy.
Barr pressed him again, pointing to concerns raised by economists and the Reserve Bank about government spending and demand in the economy.
‘But you’ve got economists and even the RBA Governor saying your high government spending is contributing to this. Do you accept that it’s still too high?’
Chalmers said there was more work to be done on the budget.
‘I accept that there is always more work to do to get the budget in even better nick, to build on the very substantial progress that we have made already,’ he said.
‘If you look at that final budget outcome we released yesterday, the budget deficit for this year is around half what we inherited when we came to office.
‘It means that even in that one year, even since the budget, the budget’s $6 billion stronger, debt is $10 billion lower.’
Barr then turned to tax, telling Chalmers: ‘You are on target to become the highest-taxing treasurer in Australian history. That’s what people are feeling.’
Chalmers disputed the characterisation and pointed to tax levels under former Coalition treasurer Peter Costello.
‘Well, our tax levels are lower than what they were under Peter Costello. That’s an important point that I think people are missing, reacting to those stories today,’ he said.
‘But even that story today acknowledges that taxes were higher under Peter Costello.
‘A lot of people from the other side of politics point to Peter Costello as a model. He had higher taxes in his budgets than I have in mine.
‘So I just think that’s an important bit of perspective.’