Jim Chalmers says it’s good to spend money to avoid a recession

The last recession before that was in 1991.

The additional government spending was due to higher Medicare bulk billing rates, the introduction of the second phase of the Cheaper Drugs policy and a further increase in spending through the NDIS.

Chalmers accused the government’s opponents of wanting to slash government spending and plunge the economy into recession, leaving tens of thousands of people unemployed.

“Our political opponents really want a hard landing in our economy. And they want interest rates to clean up the mess afterwards,” he said.

“And you would understand that in your field – they want to see a crash and then clean up. We want to avoid the crash in the first place. If Australia went into a recession, there would be more job losses and families would be even harder hit than they are now.”

Swan, who was finance minister during the global financial crisis, when the Reserve Bank cut official interest rates from 7.25 percent to a then record low of 3 percent, said he was extremely disappointed with the bank’s current handling of the economy.

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He said that while financial markets were predicting interest rate cuts, the Reserve Bank was emphasising the threat of rate hikes, which would not reduce inflation but would leave many Australian households in financial difficulty.

“I think the Reserve Bank is putting economic dogma over rational economic decision-making, hitting households and mothers hard with higher interest rates, causing a collapse in spending and driving the economy backwards (which) doesn’t necessarily address the key drivers in terms of higher inflation,” he told Nine Network.

“The government is doing a lot to reduce inflation, but the Reserve Bank is just slapping itself in the face. It is counterproductive and it is not good economic policy.”

Shadow Chancellor of the Exchequer Angus Taylor called Swan’s comments “disgraceful” and argued they showed disregard for basic economic principles.

“The reason households are facing higher interest rates for longer is the complete inability of this Labour government to tackle domestic inflation,” he told this press release.

“The responsibility for Australians’ pain lies with Jim Chalmers and (Prime Minister) Anthony Albanese, not the RBA. The only ones putting economic dogma above rational policy are the Labor government.”

Greens economic justice spokesman Nick McKim said that while Chalmers and Swan had “made noise” about high interest rates, they had both given the Reserve Bank the ability to “crash the economy”.