Australia to deliver 2024 budget as it battles worsening housing crisis, rising cost of living

SYDNEY: Australian Treasurer Jim Chalmers will reveal the country’s 2024 budget on Tuesday (May 14) as concern grows over issues including an earlier surge in inflation, rising cost of living, high interest rates, and a worsening housing crisis.

Dr Chalmers, who will hand down his second full-year budget, has signalled a “restrained” and “responsible” fiscal policy for the year ahead.

With barely a year to go before elections, the Labor government is also looking to appeal to voters. 

It will be a difficult balancing act for Mr Chalmers, who is hoping to reveal a budget surplus for the second year in a row.

“The reason we’re still trying to land a surplus – and we won’t know for a while yet whether we’ll be able to achieve that – is because we think running a tight ship on the budget is an important way of putting downward pressure on inflation,” he told Sydney-based think tank Lowy Institute on May 1.

MAIN GOAL: TO LOWER INFLATION

Lowering inflation, which is currently at 3.6 per cent, has become the government’s all-consuming goal.

Wages have also not been keeping up with the pace of inflation, and the job market is showing signs of weakening.

Economist Chris Richardson from Rich Insight told CNA: “It’s a really tricky time. Basically, inflation is the everything of the budget - it has not come down as fast as the central bank would like.”

Nevertheless, Mr Richardson said the government must be careful “not to poke the inflationary bear” and not to “add too much extra money into the economy”.

While Australia’s Reserve Bank has decided to keep interest rates on hold for the moment, growing global uncertainty and a huge increase in immigration, is only adding to the country’s woes.

Close to 548,000 immigrants arrived in the 12 months leading up to September last year, and 105,000 arrived this February alone. 

Many are international students seeking rental accommodation, while others are short and long-term visa holders.

The government aims to cut arrivals by 50 per cent to ease the severe accommodation shortage.

With the rise in interest rates, home seekers have found it more expensive to borrow money. Property prices are also increasing after a big drop in real estate values during the COVID-19 pandemic.

In the Sydney suburb of Edensor Park, a couple who were looking to downsize recently sold the home they had built nearly four decades ago for US$1.36 million.

Auctioneer Michael Garofolo said: “Quality property on good blocks next to amenities, schools, shops and parks are just going for great prices.”

However, such satisfied home sellers remain the minority in Australia. The government remains under intense pressure to bring down the cost of living that has affected a large number of its citizens.