POST-BUDGET PRICE PAIN; NO GST RISE
Highest inflation rate for three decades
Less than 24 hours after the Federal Budget warned on rising price pressures, official figures showed that in the September quarter Australia recorded its highest annual inflation rate for more than 30 years. The Australian Bureau of Statistics revealed that the Consumer Price Index (CPI) rose 1.8 per cent during the quarter, or 7.3 per cent over 12 months. Rising food, housing and gas prices contributed to the jump in inflation. Annual CPI-measured inflation was highest in Hobart (8.6 per cent) and Adelaide (8.4 per cent) and lowest in Perth, at six per cent.
Export prices reverse for first time in two years
In another post-Budget portent, Australia’s international trade surge has eased, with official price indices for exports in the September quarter falling for the first time in two years. ABS figures show that export prices fell by 3.6 per cent due to weaker demand for iron ore and metallurgical coal, partially offset by higher export demand for gas. Import prices rose by three per cent in the quarter, attributed to higher prices for electrical machinery, inorganic chemicals and plastics. Through the year to the end of September, however, export prices rose by almost 26 per cent, and import prices by 19.3 per cent.
Chalmers rules out GST rise
Federal Treasurer Jim Chalmers has rejected reform of the goods and services tax to help reduce spending pressures on the Budget. In a post-Budget address, Dr Chalmers said the Government would neither broaden the base nor lift the rate of the GST, in a tradeoff with the states to ease spending in areas such as the National Disability Insurance Scheme. The Treasurer said if the GST rate were increased, “every cent would go to the states”; he also worried about the distributional impacts of increasing the GST. But Dr Chalmers said that tax reform generally had a “role to play” in putting the Budget on a more sustainable footing.
Andrews seeks third term for Labor in Victoria
Victoria goes to the polls on November 26, with Premier Daniel Andrews seeking a third term and a shot at becoming the state’s longest-serving Labor Premier. The Andrews Government will defend a 55-33 seat majority in the Victorian Legislative Assembly in an election where swings are expected to be anything but uniform. Labor is facing challenges in its inner-metropolitan seats, where the Greens are confident of improving on their current three seats. In the May Federal Election, Labor also suffered sizeable swings in traditionally safe seats in the outer northern and western suburbs. Meanwhile, the Coalition under Matthew Guy must claw back seats it lost to Labor in 2018 and defend formerly-safe metropolitan and regional seats against Teal-style independents. Labor has embarked on a major program of transport infrastructure, but the state’s latest economic and fiscal update has net debt rising sharply in coming years, with a $9.7 billion budget deficit forecast for 2022-23.
Australia bans anti-satellite missile tests
Australia’s defence, foreign and industry ministers have committed to a ban on the use of direct-ascent, anti-satellite missile testing in space. The Federal Government said the missile tests threatened satellites and other space objects. Australia joins its Five Eyes allies – the United States, United Kingdom, Canada and New Zealand – as well as Japan, Germany and the Republic of Korea, in its commitment to reduce the space threats.
Buyback plan for Northern NSW flood zone
In a joint funding initiative, the New South Wales and Federal governments will establish a $800 million program to assist residents in flood-prone areas of the NSW Northern Rivers region to secure their homes. Around 2000 homeowners will be eligible to raise, repair or retrofit their homes, or in the most vulnerable areas, to have their homes voluntarily bought back. The program will support residents in seven local government areas of the Northern Rivers. The Perrottet Government will provide $100 million to acquire land and open up new flood-safe locations for future development.