Treasurer Jim Chalmers has defended his government’s performance despite the latest GDP growth figures being the lowest since 1991-92.
The Labor minister attributed the situation to “global uncertainty, price pressures, and higher interest rates.”
Chalmers addressed the media after the Australian Bureau of Statistics released the numbers, saying consumption had gone backwards and discretionary spending had fallen.
“We saw around the same growth in the year as we usually see in a single quarter when it comes to consumption,” he said.
Despite facing criticism for not handling rising inflation and cost of living, Chalmers pointed out the government’s achievements.
“Almost a million jobs have been created on our watch. Inflation is halved from its peak in the year that we were elected. Real incomes are growing. Tax cuts are rolling out, and we’re helping with the cost of living.”
The treasurer did acknowledge that the economy was “soft and subdued,” and that people were struggling.
“That’s why the cost of living remains our highest priority,” he added.
Chalmers also justified the increase in government spending.
“Without government spending, there’d be no growth in the economy at all, and the main contributors to that are health spending,” he said. The taxpayer funded National Disability Insurance Scheme (NDIS) has been one of the biggest job creation projects in the country.
“This justifies the way we’ve managed the economy—responsibly fighting inflation as our primary concern, but doing so without slashing and burning the budget,” Chalmers asserted.
He also defended the government’s decision to continue spending, saying that the numbers vindicate the Labor government’s approach.
An ‘Undeclared Recession’
Yet some experts have questioned the government’s narrative and warned the country was undergoing an “undeclared recession.”Graham Young, executive director of the Australian Institute for Progress, argued major limiting factors could not be blamed simply on “global economic uncertainty,” but self-induced policy harms.
“We need to increase national productivity, but almost everything this government has done, and a lot of what previous governments have done, has led to reduced productivity,” Young told The Epoch Times.
He said the federal government should examine rolling back the country’s policies to the 2007 framework, or even earlier.
“Growth in government spending is actually just cutting the pie differently so that business gets less and certain types of consumers get more.”
Daniel Wild, deputy executive director of the Institute of Public Affairs, took a strong view of the numbers and said Australians were living in an undeclared recession.
He said the Institute had found Australia’s economy has undergone a fundamental shift from sustainable, productivity-led growth towards population-led growth.
“Throughout the 1990s, population growth only accounted for one-third of total economic growth. In 2023, population growth accounted for 85 percent of total economic growth. For too long, the political class has relied on the lazy approach of mass migration, rather than productivity growth, to drive the economy forward,” Wild said in a statement.
Young echoed a similar view.
Government Spending Works, If You Spend it Right: Young
Regarding government spending, Young said this was only helpful if it were directed at projects that can generate a positive return.“Unfortunately, the current government’s record shows that even when it spends money on assets, it is most likely to direct increased expenditure into activities that destroy wealth rather than creating it, like the Capacity Investment Scheme where the government undertakes to subsidise renewable generation because it is unprofitable without a subsidy,” Young said.
“Figures show that the personal savings we were spending during the last few years are almost exhausted. We need a pause while the economy realigns.”
He also said the newly passed industrial relations laws that force businesses to deal with unions rather than employees would eventually raise costs and lower productivity for large businesses.
He further argued that the government’s energy transition would divert resources to renewable projects, resulting in less power at a significantly higher price.
Young also said decisions like the one to axe the Blayney gold mine would discourage foreign investment needed for large projects with long lead times.
“All of this has led to the Reserve Bank deciding to leave rates higher for longer.”
