August 2, 2022

Albanese Government Economic Policy

Summary of the new Albanese government's economic policy including pre-election promises and post-election policy direction.
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  • The economy is the key political issue both domestically and globally as inflation continues to grow and fears of a recession heighten.
  • The Consumer Price Index (CPI) has reached a 40-year high at 6.1%, this is expected to worsen in the coming months.
  • Treasurer Jim Chalmers delivered his July economic update on July 28, in this speech he detailed a three point economic plan.
  • The Albanese government’s first budget is expected to be handed down in mid October.
  • The Coalition’s main line of attack in the first sitting week revolved around the economy.
  • Shadow Treasurer Angus Taylor accepted that economic woes are largely imported from global factors, however claimed that Labor does not have a “plan” to minimise their impact.
  • Labor has responded by claiming they have “inherited a mess” from nine years of Coalition government, claiming that improvements to productivity and energy policy would create domestic solutions to global economic issues.
  • The Jobs & Skills Summit on September 1-2 will mark the first big policy event of the Albanese government, productivity reform is expected to be announced.
  • The fuel excise halvening will end on the 28th of September, this will likely see a 35-40 cent per litre increase in petrol prices. Labor has confirmed that this will not be extended due to fiscal pressures.
  • The Producer Pricing Index (PPI) has increased to 5.6% — a 1.4% change from last quarter.
  • The mismatch between PPI and CPI shows that some businesses are pushing through further increases than their input prices, due to a range of factors not exhaustively including the expectation of future inflation, potential opportunism, payback for historical inability to push prices up, and menu cost issues.
  • Treasurer Jim Chalmers has been critical of the opportunism of corporations with price increases.

Pre-election promises

  • $15 billion of capital to invest in job-creating projects through loans, equity, agriculture transport, medical science, defence capability, renewables and low emissions technologies.
  • Labor supported the Coalition's one-off $420 tax cut and $250 welfare payment.
  • Labor did not commit to an extension of the fuel excise halvening. This is scheduled to end at 11:59 pm on the 28th of September.
  • Prime Minister Anthony Albanese stated he would support a 5.1% wage increase in the minimum wage. In June, the Fair Work Commission announced a 5.2% increase in the minimum wage.
  • Dealing with the Liberals’ wasteful spending including by trimming spending on contractors, consultants and labour hire in the public service.
  • Conducting a waste and rorts audit.
  • Closing down loopholes which allow multinationals to avoid their tax obligations to Australians.
  • Increasing fee-free TAFE courses and university places.

Post-election statements

Treasurer Jim Chalmers delivered the July economic update on July 28. In this speech he outlined a three point plan to help lift the economy:

  1. Help Australians with the costs of living by cutting childcare costs for approximately 1. 6 million families and reducing barriers for parents, overwhelmingly women, to work additional hours and by cutting the cost of medicines on the PBS by up to $12.50 a prescription. 
  2. Grow wages over time by successfully arguing for a decent pay rise for the lowest paid.
  3. Unclog and untangle our supply chains and deal with the supply change of the inflation challenge by investing in cleaner and cheaper and more reliable energy.

Watch Treasurer Jim Chalmers’ three point plan here.

Other key takeaways from the July economic update:

  • Inflation is expected to peak at 7.75% according to the Treasury.
  • Unemployment will remain below 4% for the foreseeable future.
  • Interest rates will likely increase to at least 2.5%.
  • Wage growth is expected to stay low.

Other key statements:

  • Treasurer Jim Chalmers has been adamant that wage increases are not responsible for increases in inflation. Implying that Labor will continue to be supportive of wage growth, even if this risks inflationary consequences.
  • Labor is still committed to aged care reform, even with the high associated costs.
  • Finance Minister Katy Gallagher has stated that investing in cheaper energy, childcare, medicine, and cost of living relief is important to helping the economy.
  • The budget deficit is not looking as bad as projected, likely due to high Iron Ore prices.
  • Treasurer Jim Chalmers has claimed there are a number of “booby traps”  in the budget, with spending that is set to expire as Labor takes office.
  • The September 1-2 Jobs & Skills Summit is likely to see the first major economic policy announcements of the Albanese government.

Most vocal representatives

“Cost of living”  - Jim Chalmers

“Fuel excise” - Claire Chandler

“Interest rates” - Angus Taylor

“Wage growth” - Tony Burke

“Inflation”  - Tony Sheldon

Insights sourced from the GovConnex Platform.

Key upcoming events

August 2 - RBA interest rate decision

September 1-2 - Jobs & Skills Summit

September 6 - RBA interest rate decision

September 29 - Fuel excise cut ends

Mid-October - Federal Budget

October 26 - Q3 inflation figures announced

Key stakeholders

  • Jim Chalmers - Treasurer
  • Katy Gallagher - Finance Minister
  • Stephen Jones - Assistant Treasurer and Minister for Financial Services
  • Angus Taylor - Shadow Treasurer
  • Philip Lowe - RBA Governor
  • Steven Kennedy - Secretary to the Australian Treasury
  • Standing Committee on Economics
  • Economics Legislation Committee
  • Education and Employment Legislation Committee
  • Economics References Committee
  • Fair Work Commission

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