After his new ministers were sworn in on Wednesday, Anthony Albanese couldn’t stop smiling as he posed for selfies with them outside Government House.
However, just 7 kilometers away, in Parliament House, new Treasurer Jim Chalmers addressed a somber press conference, warning that the economy is facing “dire” issues.
Rent, groceries, energy, and petrol prices are all on the rise in Australia, resulting in increasing inflation.
When the Reserve Bank meets on Tuesday, they will almost certainly be smacked with a second interest rate hike in two months, as well as several additional hikes before Christmas.
With economic growth nearly stagnant at 0.8 per cent in the first three months of the year, Dr Chalmers wasted no time in blaming the Coalition for leaving him a ‘mess’ to clean up.
‘Consumption, dwelling investment, new business investment, export and the nominal GDP were all weaker in the March quarter than what was anticipated by our predecessors in the budget,’ he said.
Of course, this was a political attempt to shield the new government from blame if the economy goes south – but in some ways it was justified.
It was reported this week that Scott Morrison ignored Treasury advice when he decided to splash $8.6 billion on three cost-of-living measures in the March Budget in an ‘economically dumb’ bid to get re-elected.
Despite claiming to be the better economic managers, the Coalition forecast gross debt to hit $1trillion in 2024, up from about $250billion when Tony Abbott won power in in 2013.
‘We have inherited worst fiscal position of any incoming government since at least World War II,’ Dr Chalmers said.
The record low unemployment rate of 3.9 per cent is important but cold comfort to working Aussies struggling to pay their bills.
With supply chain and energy price pressures showing no sign of decreasing as Russia’s war in Ukraine and resulting sanctions continue, and worker shortages holding back businesses – things are going to get worse before they get better.
And in September drivers will also be slugged with a 22-cents-a-litre rise in the cost of petrol when the halving of the fuel excise ends.
Squeezed motorists will forget that Mr Morrison also said he would not extend the measure and Labor will cop the blame.
The Albanese government knows times are tough but believes its plans to boost wages, build more renewable energy sources and make huge investments in manufacturing and childcare will help ease pressure on households.
The problem for the new PM is that most of these measures will take time and he will have a relentless Peter Dutton pouncing on his every move and hammering him over the cost of living.
Australia’s economy is in for a bumpy 12 or 18 months – but if Mr Albanese is smart he will be able to ride the storm and benefit as good times return in the lead up to the 2025 election.