Treasurer Jim Chalmers hasn't ruled out a recession hitting the Australian economy, with a range of scenarios modelled in response to the economic challenges posed by the war in the Middle East.
As he stood up on Wednesday to announce a suite of measures aimed at helping small businesses, Chalmers acknowledged the "significant economic shock" caused by the blockage of the Strait of Hormuz.
He said the government is continuing to work through several scenarios, and said the quicker the war is resolved, the sooner the global economy can "get the show back on the road".
"Obviously, those are the key considerations in that modelling, and the longer the shock drags out, obviously, the harsher the consequences for our economy, whether that’s measured by inflation or by growth or by impacts on the labour market," he told reporters in Canberra.
"Australians didn’t choose this war. They’re paying the price for this war at the petrol bowser and more broadly as well. From an economic point of view, this war can’t end soon enough, but the consequences will linger for longer."
Chalmers reiterated that the previous forecast inflation figure of "high fours or low fives" was now "conservative", but stopped short of suggesting a new figure.
The ANZ-Roy Morgan consumer confidence index found inflation expectations have reached their worst on record, rising from 6.9 per cent to 7.3 per cent.
Economists at all of Australia's 'big four' banks expect the Reserve Bank to lift rates again in May.
Asked whether fuel mandates could be imminent, Chalmers said the government continues its work to avoid "heavier-handed interventions".
"We go to great lengths to make sure that people understand that we are doing our best to avoid COVID-style interventions," he said.
New moves to 'shield' small businesses from war pressure
Small businesses are being offered temporary help on their tax obligations from the Australian Tax Office (ATO), as part of a suite of measures to "shield small businesses".
"The ATO has agreed to provide temporary relief for businesses unable to meet their tax obligations due to fuel supply issues, where that's appropriate," he told reporters in Canberra.
"This could include more generous payment plans, remission of interest and penalties, and also support in various PAYG instalments, where there's been a downturn in tax income."
It includes the establishment of a dedicated channel for small businesses to help them access relief provisions.
The government will also extend the small business responsible lending obligations exemption for a further 10 years.
The measure, initially introduced in 2020, allows banks and lenders to provide fast loans and credit, bypassing some regulatory burdens.
It includes commitments from Australian banks for temporary payment deferrals, loan restructuring or emergency credit limit increases.
Small business minister Anne Aly said the government had been consulting with small businesses and peak bodies on the measures.
"We can’t control the war in the Middle East. We can’t stop the war in the Middle East, but what a responsible government can do is to do everything that it can to shield its citizens and to shield small businesses," she said.
"They employ people, and because they give back to Australia, we're keen to look after them as well, and that's exactly what we're doing."
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