In a pre-budget address this afternoon, Chalmers discussed new forecasts from the Treasury indicating that inflation could range from the high 4 percent range to as high as 5.5 percent, contingent on oil prices remaining at $100 per barrel or surging to $120 per barrel.

“The possibility of inflation peaking in the high fours, or potentially even higher this year, is very real,” he emphasized.

Australia’s economic growth, measured by GDP, might experience a 0.2 percent dip by mid-year but is expected to recover swiftly. However, there is a possibility it could decline by 0.6 percent by 2027.

Chalmers noted that even before the current conflict, inflation levels were concerning and productivity growth had stagnated over the past two decades. While the global economy was managing to push through, and Australia had shown resilience, the global landscape was already fraught with volatility.

“Recent developments in the Middle East underscore the urgency of tackling these three challenges,” Chalmers remarked.

In light of these conditions, Chalmers concluded that the rising global uncertainties necessitated “more reform, not less,” to adequately address the pressing economic challenges.

“It’s a reason to go further, not slower,” he said

He touted his fifth budget, which will be handed down in May, as an “ambitious” one.

It will deliver three key packages on tax, savings and productivity and investment. 

In his speech today, the treasurer confirmed the budget will include major tax reform that will be guided by how the “outdated” system weighs on younger and future generations.

“Any changes would have a substantial focus on our intergenerational responsibilities,” he said.

Chalmers said the reform would also make the tax system simpler and more sustainable and drive business investment but only “if we can afford to”. 

“We’re working on more tax reform in the budget,” he said.

“How much of that we can do in May depends a bit on fiscal considerations, international developments, and also, of course, cabinet deliberations.”

The budget will also rein in government spending and work with the states, territories and the private sector to build productivity and increase investment.

Chalmers said all three packages have been calibrated for the volatile global economy and will help the nation succeed through it.

“It will be an ambitious budget because ours is an ambitious government, and this is an ambitious country,” he said.

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