Inflation pressures have
intensified
In recent years, there has been a significant build‑up in underlying inflationary pressures. The fight against inflation requires responsible budgeting that refocuses the Government's spending on measures that increase the economy's supply capacity for the future.
Inflation is high
Prices for many essential items have gone up, putting pressure on the budgets of Australian families.
The build‑up in underlying inflationary pressures is the result of several years of strong growth in demand that has not been met by increases in the supply capacity of the economy.
In response, the Reserve Bank of Australia has lifted official interest rates eight times in just over three years. Australians are feeling the effects of this through their mortgage repayments.
Maintaining sustainable growth
Governments need to avoid wasteful spending that puts unnecessary pressure on the economy and makes the Reserve Bank's job of controlling inflation harder.
Productivity growth has fallen to its lowest rate in over 17 years, so government spending needs to be firmly focused on measures that boost the economy's productive potential. This reinforces the economy's ability to deliver strong and sustainable growth without triggering inflationary pressures.
Government policies
The Government has framed this Budget with these priorities in mind. Tighter monetary and fiscal policies are expected to gradually ease inflation from 16‑year highs.
This Budget delivers for working families and invests in the supply capacity of the economy. Reprioritising spending towards education, health and infrastructure is an investment in Australia's future.
High inflation and low productivity