Australia aims for ‘responsible’ budget following Truss chaos in UK

Australian PM says King Charles III will ‘focus on Commonwealth’

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Treasurer Jim Chalmers has claimed Australia’s budget next week will look to be “responsible” following a turbulent few weeks for Liz Truss and the Tory Party in the United Kingdom. Labor’s budget will come almost six months after Anthony Albanese defeated ex-Prime Minister Scott Morrison in the 2022 Australian federal election last May.

In a briefing on Friday, Mr Chalmers said: “The lesson for us is we do what’s right, responsible, solid, sensible and suited to the times because the stakes are relatively high at a time when the global economy is a pretty uncertain place.”

“So a premium for us is getting that balance right.

“I think we got things pretty nicely lined up between fiscal policy and monetary policy in the document I’ll release on Tuesday night, and I hope markets think the same.”

Speaking to reporters, he added: “I think every friend of the UK wants to see some stability there.

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“We don’t comment on the domestic politics or internal machinations of parties in countries with which we have a great relationship and a great friendship.

“I’m sure on a personal level, it’s very difficult for Liz Truss and when it comes to economic policies in the most recent times, I think it is a sign of the times, frankly, in the UK that I’ve only been the treasurer here for five months and I’ve already had four UK counterparts.”

According to Reuters, Chalmers’ assurances have calmed investors, with no hint of a reaction akin to that which followed Liz Truss and Kwasi Kwarteng’s tax-cutting mini-budget announcement last month.

Mr Chalmers, who was first elected to the Australian Parliament as the MP for Rankin in 2013, also took aim at the previous Liberal-National Government.

He suggested Mr Morrison’s administration had “booby-trapped” the budget with more than A$6billion (£3.36billion) in unfunded spending.

Such spending was set to be covered in the deficit which was due to be announced on October 25.

However, the size of the deficit is expected to be much smaller than previously anticipated.

The deficit will become smaller courtesy of high prices for many of Australia’s major commodity exports and a surprisingly strong labour market which saw unemployment fall to 3.4 percent.

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The deficit for the year to June 2022 will now come in at A$32billion (£17.9billion), which is less than half of the projection from March.

Stephen Halmarick, chief economist at CBA, said: “For the years ahead, a budget deficit of one percent to 1.5 percent of GDP will be an important part of fiscal policy working hand-in-hand with monetary policy to help the economy through the period of surging inflation and slower global economic growth.

“Small budget deficits will also help net debt decline as a share of GDP, adding comfort to Australia’s AAA credit rating.”

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