Taxpayers will find the upcoming government budget update confronting, Treasurer Jim Chalmers says.
Dr Chalmers said his government had inherited the “trickiest set of economic conditions” in memory.
“That’s because [of] rising inflation, those rising interest rates, we have all of that debt,” he said.
“But we do have the right economic plan to deal with it.”
The latest debt forecast will be provided on July 28, as parliament sits for the first time since the May election next week.
“The news in that statement will be in many ways confronting when it comes to our expectations of inflation,” Dr Chalmers said on Monday.
“When it comes to the impact of interest rate rises on growth, when it comes to what this spike in inflation means for real wages.”
Dr Chalmers said it was important to find savings in the budget, with the nation’s debt being burdened by rising interest rates.
“If you think about the consequences of those rising interest rates on the budget, more than a billion dollars this year, more than $5 billion in the last year … these are not small amounts of money,” he said.
“The key task of every budget is to make sure that we are getting maximum bang for buck from taxpayers’ dollars, which are costing more and more to service because every additional dollar in the budget is a borrowed dollar.”
He said following consultations with fellow G20 economic ministers, it was clear there was “a lot of concern” about the global economy.
Dr Chalmers said inflation, interest rates, slowing growth, food and energy insecurity, and government debt were all hobbling economies around the world.
Asked if the fuel excise cut would be extended beyond its end date in September, Dr Chalmers said the cost-of-living measure was too costly to continue.
“We’ll always try to do the right thing by people, [and] will take the economic conditions into account when the time comes,” he said.
“But my expectation, and the expectation I’d encourage people to have is that we can’t afford to continue that petrol price relief forever.”
Dr Chalmers said the Albanese government had chosen to prioritise childcare and medicines when it handed down its first budget in October.
He also said he would announce the terms of reference and panel for the review of the Reserve Bank before parliament returns next week.