From The Australian. Here's what's on the front. I'm Christinamiot. It's Thursday, December nineteenth. Alan Jones will plead not guilty to thirty four indecent assault charges relating to incidents that are alleged to have taken place over nearly two decades. I will not be engaging in a running commentary in the media, but.
I want you to understand this. These allegations are all either baseless or they distort the truth.
The veteran broadcaster was swamped by media and protesters outside Sydney's Downing Center Local Court on Wednesday, but he won't return for future proceedings after New South Wales Chief Magistrate Michael Allen excused him from appearing in person. That exclusive story is live right now at the Australian dot com dot au. The government was spend almost sixty billion dollars this financial year and it could drag out the central banks fight against inflation. The Treasurer says the cash splash
is unavoidable. But what does that actually mean. That's today's episode.
Well, we're rolling out very substantial cost of living help, you know, because people are doing it tough.
On Wednesday, Jim Chalmers made it rain.
That's the motivation for the tax cuts, the energy bill relief, the cheaper medicines, cheaper earlier childhood education, the student debt relief, the rent assistance, and getting wages moving again. We've been able to find room in our budgets for cost of living relief.
In his mid year Economic and Fiscal Outlook Update, also known as my IFO, the Treasurer announced government spending will surge by just over fifty eight billion dollars in this financial year.
This is a bit of a truth tonic. It tells us where our economy is heading, and particularly it gives us a really strong profile of the sea of red that awaits any government over the next ten years.
Tom Ducivic is The Australian's Policy editor, so this is.
A pretty bracing set of numbers for anybody to look at. Our revenue miracle of the past few years is over, and now some of the forever spending pressures are coming home.
These new numbers will bump the government's share of GDP that's gross domestic product, up to a level we haven't seen since the recession of the early nineteen eighties and the coronavirus pandemic, and it means we're staring down the barrel of a decade of record budget deficits totally more than one hundred and forty billion dollars. But this uptick in spending does doesn't include Labour's Future Made in Australia Net zero investment scheme, or it's sixteen billion dollar plan
to slash student debt. So what is the government splashing all that cash on. One of the most expensive items on the list is reforms to the National Disability Insurance Scheme, which the Treasurer says is unavoidable. There's also funding for welfare payments and pensions, plus an unexpected jump in demand for government services like medicare.
One of the big drivers of the extra spending in the budget update today, as you know, and which is uncontested, is indexation of things like the age pension, working age payments and the like.
And there's a sneaky five point five billion dollar election war chest which will be used for cost of living relief measures likely to be announced in the run up to the next federal election. Jim Charmers deployed another of his trusty catchphrases to explain the government's fifty eight billion dollar blowout.
Even if you look at the net policy decisions, you know, seventeen and a half billion dollars in net policy decisions. We think something like ninety four percent of that is a combination of genuinely unavoidable already provisioned cost of living or supported in a bipartisan way.
But what does that actually mean.
It's unavoidable in the sense that governments make choices, and once they make those choices, they decide on certain forever programs basically payments on social welfare for programs, and some of those are linked to inflations, so it means that
you have to do indexation. Sometimes you win on indexation in the sense that you've got to return a certain amount to the people receiving those payers, but at the other end, it punishes every wage urner through what we call bracket creep or fiscal drag, where wage inflation just basically pushes our average tax rates up, and so the governments tend to be winners from that, and they get a really big boost from revenue, so the two things
net each other out. But in this case, Charmers is just using a big excuse to try and point to those factors outside of his control as driving it. But that's not the full picture. The full picture is that in the main the government's own decisions on spending is what is driving this blowout in the budget.
Of course, labor is still waging a war against stubborn inflation and desperately hoping the Reserve Bank will cut interest rates before the next election in a bid to win back the trust of voters struggling under a cost of living crisis. It says pumping an additional fifty eight billion dollars into the economy won't exacerbate the problem or prolong the agony.
The Reserve Bank governor has herself said that public demand is not the main game when it comes to inflation and interest rates. And what we've been able to do with the very responsible way we've been managing the budget is we've seen inflation come off substantially. When we came to office, it was money.
But history tells us that the more money you put into people's pockets by way of bill relief and subsidized services, the more they'll spend on necessities like food and rent. But the more we pump into the economy, the harder it is to bring inflation down.
So what gives the government here is been coy and not quite telling the full truth on this because it's own spending in this year, after you account for inflation is going to go up by five point seven percent. That's the kind of thing you do when you're in a recession or facing a crisis.
But we're not there. Our unemployment rate is low, the economy is still growing. We've got new people coming into the country and making the size of the economy larger. But what you've also got is state and territory governments, some of them who've faced elections, have been spending like crazy on all sorts of things like public transport concessions, energy bill relief. Those sorts of things just pumps more
money into an economy. So as the Great Chris Richardson says, that's more dollars chasing the same amount of goods in an economy, and prices rise, and that pushes up inflation, and that keeps interest rates high.
Coming up the treasurer is chickens come home to roost. Since winning government in twenty twenty two, Jim Chalmers has been quick to take credit for Australia's economic wins.
For the first time in almost two decades, our Labor has delivered back to back budget surpluses. This is a really important demonstration of them.
And he hasn't hesitated to blame the opposition for leaving the government's books in what he says is a bad way the Labor government.
When we came to office, these were two big liberal deficits and we've managed to turn them into two big labor surpluses.
But deficits projected to plague the budget over the next several financial years means it's getting harder for Jim Chalmers to shirk responsibility.
After three budgets and potentially a fourth if Labor do hand down a budget on March twenty five next year, Charmers can no longer blame the coalition.
Jeff Chambers is the Australian's chief political correspondent.
I think for voters and business owners and others doing it tough out there, this is now Labour's cost of living crisis and housing affordability crisis to own, and it's going to be one of his great political challenges is
to respond to that. So there's all types of high level players going on, but people should be expecting from both sides some really big promises, and the pressure for the coalition is to, instead of sitting in that rhetorical space, to actually put some meat on the bones and talk about where they will find savings. And Angus Taylor today, again concerned about the political blowback, says it's not about austerity, it's about restraint.
Ahead of Wednesday's MAIFO announcement, the treasure that characterized Labour's almost sixty billion dollar blowout as slippage.
If this is Jim Chalmers's final budget announcement before a federal election, he'll be going to an election without being able to champion those surpluses, but rather defending a decade of deficits and higher spending under labor. So they're saying that they need to spend on unavoidable automatic spending. Some of that is highly questionable given the links to labor policy, but it comes down to a matter of whether or not the government has the courage politically to rain in
some of that structural spending. It seems like they don't have that appetite and that's where the pressure goes towards the coalition to see what their plan is. But ultimately today's my AFA was a really difficult one for Jim Charmers to shine some positive light on.
Jeff Chambers is The Australian's chief political correspondent and Tom Ducivic is our policy editor. You can read all our reporting and analysis of the government's media budget update right now at the Australian dot com dot au