Government spending at highest level since 1986-87 as Chalmers refuses to cap it
Federal spending reached 26.9% of GDP last year, the highest outside the pandemic since 1986-87, while the deficit ballooned to $22.2 billion.
Treasurer Jim Chalmers has refused to set a limit on government spending despite pressure from economists and the opposition to cut costs and fight inflation. Spending as a share of the economy hit 26.9 per cent in the year just ended, the highest level outside the pandemic since 1986-87.
The budget deficit reached $22.2 billion and is expected to grow to $31.5 billion this financial year. Chalmers said those calling for cuts should say which programs they would slash.
He argued the government must balance pressures on welfare, healthcare and defence. The mid-year budget update in December may include some savings, but the treasurer has not committed to hard spending caps.
- 26.9% of GDP
- Spending share
- $22.2 billion
- Current deficit
- $31.5 billion
- Forecast deficit
- Jim Chalmers
- Treasurer
Why it mattersUncontrolled government spending risks keeping inflation high, which could force interest rates up further and squeeze household budgets and business investment.
AustraliaRising inflation and interest rates hit Australian wages, mortgages, and savings while pressuring small business. The government's refusal to cap spending may mean more rate rises before the economy cools.
✓ Claims checked against the source. checked 7 h ago
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