PETER VAN ONSELEN: Why Treasurer Jim Chalmers is blaming Trump’s tariffs and the cyclone (that wasn’t) for his nasty budget blow-out

By PETER VAN ONSELEN, POLITICAL EDITOR FOR DAILY MAIL AUSTRALIA

Published: 00:26 GMT, 18 March 2025 | Updated: 00:26 GMT, 18 March 2025

Treasurer Jim Chalmers is steadily blame-gaming his way towards next week’s federal budget. 

He will use a speech at the Queensland Media Club on Tuesday to lament the economic impact of US tariffs and recent ex-Cyclone Alfred on his looming budget.

But a Deloitte report on the state of the budget tells a very different story, forecasting structural deficits defined by increasing government spending and lower than expected revenue intakes over the coming four years.

The Deloitte report expects net debt to grow by more than $200billion over the next four years to nearly $750billion. 

Such a deterioration in the budget isn’t predicated on the impacts of tariffs or the ex-cyclone.

With an election just around the corner, the Treasurer is using the international economic uncertainty and the ex-cyclone to try and shift any blame away from government decision making by framing their impact as reasons for lower growth and worsening debt.

He says the effect of US tariffs could be ‘seismic’ and ex-cyclone Alfred will ‘hit’ Australian GDP, with both events expected to fuel inflation. 

‘The imposition of any additional tariffs would be very concerning’, Chalmers says.

Treasurer Jim Chalmers will use a speech at the Queensland Media Club on Tuesday to lament the economic impact of US tariffs and recent ex-Cyclone Alfred on his looming budget

The RBA has previously warned government spending needs to remain in check for interest rates to continue falling on the back of lower inflation.

US steal and aluminium tariffs are the only ones currently in place that affect Australia, and Treasury forecasts they will only have a 0.02 percent impact on GDP by 2030.

Chalmers, however, says he’s more concerned about future tariffs that might be imposed by the US, such as on beef and pharmaceutical exports, arguing the impact will be significant on an export-structured economy such as Australia’s. 

The Treasurer’s concerns are supported by an OECD report released on Monday that projects higher global inflation and slower GDP growth, courtesy of expected US tariffs.

Chalmers is also delicately using ex-cyclone Alfred as cover for worsening budget numbers expected next Tuesday.

He says the storm ‘could wipe a quarter of a percentage point off quarterly growth’. He’s also claiming it will have a ‘hit to GDP of up to $1.2billion’, and ‘could also lead to upward pressure on inflation’.

The Deloitte report points to a $35billion blowout in the budget compared with the numbers Chalmers presented a year ago as part of the 2024 Federal Budget. 

That comes courtesy of $6.3billion in increased spending between December 2024 and March of this year, revenue downgrades due to slowing growth and on the back of MYEFOs prediction at the end of last year that deficits would be $22billion higher than forecast six months earlier. 

The Deloitte report expects net debt to grow by more than $200billion over the next four years to nearly $750billion. Such a deterioration in the federal budget isn’t predicated on the impacts of tariffs or the ex-cyclone, writes Peter van Onselen 

In this context the impact of the ex-cyclone on the federal budget is relatively small. 

Domestic decision making is having a far more profound impact on the budget bottom line than external factors. However that isn’t something the Treasurer is keen to highlight with an election just around the corner. 

Equally, while the Opposition has expressed concerns about increased spending, it isn’t detailing plans to initiate cuts lest doing so leads to a voter backlash. A recent Newspoll found that 80 percent of voters favour increased spending to help address cost-of-living challenges.  

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PETER VAN ONSELEN: Why Treasurer Jim Chalmers is blaming Trump’s tariffs and the cyclone (that wasn’t) for his nasty budget blow-out

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