STERN WARNING ON BUDGET; FARM RECORD
Treasury chief warns on cost, budget measures
Treasury Head Dr Steven Kennedy has delivered a dose of reality in a major post-Budget address, forecasting that inflation was likely to rise to, and stay above, six per cent for the remainder of 2022. In his address to the Australian Business Economists, Dr Kennedy said domestic inflation – recorded at an annual rate of 5.1 per cent in April – was being fuelled by three shocks: disruption to global supply chains; a rise in energy, oil and food prices during the Ukraine invasion; and a return to Covid-19 lockdowns in China. He warned that Australia needed to rebuild fiscal buffers to keep debt on a sustainable path over the longer term. The Treasury chief nominated two courses of action: identify structural savings in the budget or raise additional tax revenues.
Chalmers commits to tax cuts
Meanwhile, Federal Treasurer Jim Chalmers has committed to the legislated tax cuts introduced under the former government. Dr Chalmers told Melbourne radio that the priority was to trim spending in the nearer term, while growing the economy without adding to inflation. The Treasurer said initiatives in training, child care and the NBN were “part of the solution” in addressing inflation. He said Labor had, before the May 21 election, already identified at least $11.5 billion in budget improvements.
Farm exports tipped to hit record $65 billion
Agricultural exports out of Australia are poised to hit a record $64.9 billion in 2022-23, as the world grapples with supply disruptions and rising food prices. The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) has forecast that the gross value of total agricultural production next financial year will be $80.4 billion, down slightly on the record $83.1 billion for 2021-22. ABARES forecasts that crop exports will comprise almost $40 billion, or 61 per cent, of total agricultural exports, despite rising fertiliser prices and global supply chain disruptions.
Marles embedded in Defence HQ
New Defence Minister and Deputy Prime Minister Richard Marles has decided to establish his permanent office within the Department of Defence headquarters in Canberra, believed to be the first defence minister to do so. Normally ministers operate out of Parliament House, but Mr Marles said he did not want to be seen as separate from the department. In a media interview, he said of his new Defence location: “These are the people that I want to get to know, rub shoulders with, see me around and understand their work better.”
Australia settles with France over submarines contract
Prime Minister Anthony Albanese has pledged to work with the French Government on Indo-Pacific stability after agreeing to a compensation deal with the Naval Group for the cancelled submarines contract. The PM said Australia had reached a settlement of $830 million, which he said was fair and equitable, and brought the total cost of the former submarines policy to $3.4 billion. Mr Albanese confirmed his government’s support for the AUKUS partnership and the use of nuclear-propelled submarines.
Review of Port of Darwin lease
While visiting the Northern Territory, Prime Minister Albanese confirmed that his government would review the lease of the Port of Darwin. The port was leased in 2015 to the Landbridge Group, a private company based in China. The PM referred to his support while in Opposition for the Foreign Relations Bill, believing that the Federal Government should be in charge of the nation’s foreign relations and that it would take the advice of the Department of Foreign Affairs and Trade. Mr Albanese and Industry and Science Minister Ed Husic were in Darwin to announce that US space agency NASA would conduct three rocket launches in the NT, the first such NASA rocket launches in Australia since 1995. The NASA missions would investigate heliophysics, astrophysics and planetary science phenomena only observable from the southern hemisphere.