Ahead of next month’s Mid-Year Economic and Fiscal Outlook (MYEFO), Treasurer Jim Chalmers stressed that Australia’s economy had outperformed many other nations in the face of increased volatility over the past few years, marked by lower inflation, lower interest rates and low unemployment.

The treasurer also praised the government’s cost of living efforts, stressing that his administration has delivered significant and responsible relief while fixing the budget, not at the expense of it.

“Inflation has decreased by more than half. Core inflation is also falling. Real wages are rising again. The economy is still expanding. One million new jobs were created, most of them full-time,” he said.

“Participation is near record levels; the gender pay gap is at a record low. We turned two huge deficits into two substantial surpluses – the first in nearly two decades.

"We've found almost $80 billion in savings, banked most of the revenue improvements, and saved tens of billions of dollars in debt interest as a result."

Chalmers added that while the government was pleased with the "very significant progress in the overall numbers", he understood that this did not necessarily reflect how people were doing on a day-to-day basis.

"We're not pretending that the mission is accomplished - it's not." We are realistic about it, but also optimistic,” he said.

Pointing to the global challenge of inflation, the treasurer said Australia had outperformed many comparable economies.

“Our inflation peaked lower and later than most advanced economies. This means prices have risen less here than in countries such as the US, UK and New Zealand. And our services inflation is also lower than the UK and the US,” Chalmers said.

“Interest rates have also risen higher than ours in almost every comparable country, causing worse unemployment, slower job creation, lower growth or a combination of the three.

"And while the rates are slightly down in places like the US, the UK and New Zealand, they're still higher than ours."

He also revealed that the Treasury's MYEFO growth forecasts will show the slow growth of the Australian economy will continue in the short term, but "any growth in these circumstances is welcome given that many other countries are turned back'.

"The Treasury expects a gradual recovery in the economy, led by rising real incomes thanks to our easing of the cost of living, job growth and progress reducing inflation," Chalmers said.

"We have already seen a modest recovery in consumer confidence, with the ANZ Roy Morgan gauge near two-year highs and showing households are now feeling more confident about the next 12 months."

According to the treasurer, the government is "confident, not complacent" that the economy has overcome the worst of the inflation challenge, adding that there is "still more to do and a lot to lose if we don't do more".

"Albania's Labor government is proud of the record I set today, but more proud of the Australian people, to whom the credit really belongs," he said.

Taylor is not so upbeat

While the treasurer presented an upbeat assessment of the Australian economy, his opposition counterpart said Labor had made a bad situation worse.

In his response, shadow treasurer Angus Taylor said the government's three "expansionary budgets" had caused inflation to stay higher for longer

"The reality is that prices are still going up and Australians have now had almost three years of inflation above the range," Taylor said.

"The price level is what Australians feel and so inflation had to be attacked aggressively and early." Australians pay the price at the till.

“Cost pressures are eating away at Australian small business margins. There is nothing soft about the pain experienced by Australians. If this is the plan, Australians should be deeply concerned.

In fact, Taylor argues that Australians have been left poorer by the most incompetent government since Whitlam, noting that Australia has seen the biggest drop in real disposable income in the advanced world at 8.7 per cent under Labour.

“Labour has had three budgets and almost three years to get this right. They have stumbled at every obstacle. Making the wrong weather calls. Like adding $315 billion in spending, adding to inflation. That's $30,000 in additional costs per household,” he said.

"Government spending is now at its highest level in history, outside of the pandemic, according to last year's final budget result, and the structural deficit is only moving in one direction. The OECD and IMF have been consistent in their calls for stronger fiscal safeguards. The RBA said the extra government spending was making their job more difficult.

MYEFO, the shadow treasurer said, was a chance for Chalmers to "finally get it right", calling for a budget update that helped improve living standards and tame inflation while restoring budgetary discipline.

"Right now we have an opportunity. It is about choosing a different future – a future where fairness, opportunity, enterprise and prosperity are available to all Australians. A future where we get Australia back on track,” Taylor said.

"To do that, we need a program focused on getting the fundamentals right. That is why a Dutton-led coalition will get Australia back on track by returning to the mainstream economic agenda. This is how we will restore our standard of living and ensure future prosperity.”