State governments are no longer contributing to inflation. They are withdrawing from GDP, according to ANZ:
Tasmania’s 2024-25 budget was the final state budget to be released. It showed cumulative budget deficits between 2023-24 and 2026-27 tripled to over $3.1bn compared with the 2023-24 Revised Estimates Report from February.
Our chart of the week shows the combined budget deficit for all states and territories is equivalent to 0.3% of GDP in 2024-25.
But what it also shows is that deficits are shrinking now. It is the rate of change of spending that impacts GDP, not the level.
That is, state governments are engaged in austerity.
The problem for inflation is at the federal level. Treasurer Jim “chicken” Chalmers knows only one way to manage anything: spend your money.
He is adding to GDP (and inflation) over 2024/25 to the tune of $37.6 (or 1.7% of growth):
And the federal government does none of the heavy lifting on infrastructure. This is mostly OPEX for bureaucrats.
Indeed, when we add Chalmer’s refusal to contain Ukraine energy profiteering, and his policy of overmigration, Treasurer Jim “chicken” Chalmers becomes singularly responsible for stagflation:
He is the worst treasurer ever.
