<div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Treasurer </span><a href="https://www.9news.com.au/jim-chalmers" rel="" target="_blank" title="Jim Chalmers"><span>Jim Chalmers</span></a><span> warned the Iran war is threatening to drive </span><a href="https://www.9news.com.au/inflation" rel="" target="_blank" title="inflation "><span>inflation</span></a><span> towards 5 per cent and wipe billions of dollars from Australia, but said it was why he would deliver bold budget reforms.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>In a pre-budget speech this afternoon, Chalmers said new Treasury scenarios forecast inflation to reach from high 4 per cent if oil prices stay at $US100 a barrel to 5.5 per cent if prices continue to rise to $US120.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"It means the prospect of inflation peaking in the high fours or even higher this year is very real," he said. </span></div></div><div><div id="adspot-mobile-medium"></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>READ MORE: </span></strong><a href="https://www.9news.com.au/national/how-close-is-australia-to-recession-warning-signs-explained/f6c2e2a9-dc84-4f1c-8de3-d01c8e782eaa" rel="" target="_blank" title=""><strong><span>Is Australia headed for a recession? The job data paints a grim picture</span></strong></a></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Australia's economic output, known as GDP, could be 0.2 per cent lower mid-year but recover quickly or could fall 0.6 per cent lower in 2027.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"Before this war, inflation was already too high. Productivity growth had been too weak for two decades, and while the global economy was muddling through, and Australia had held up remarkably well, the global environment was already volatile," Chalmers said.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"Developments in the Middle East make addressing these three challenges more urgent, not less."</span></div></div><div><div class="OUTBRAIN" data-reactroot="" data-src="//www.9news.com.au/national/treasurer-jim-chalmers-delivers-grim-forecast-in-pre-budget-speech-as-he-touts-ambitious-reform/fda1a3f1-a9b1-4382-a7f1-e441a4bf0abf" data-widget-id="AR_5"></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>With that in mind, Chalmers concluded that rising global uncertainty demanded "more reform, not less". </span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"It's a reason to go further, not slower," he said</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>He touted his fifth budget, which will be handed down in May, as an "ambitious" one.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>It will deliver three key packages on tax, savings and productivity and investment. </span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>All eyes are on the tax package as speculation grows that the federal government is considering reforming the </span><a href="https://www.9news.com.au/national/capital-gains-tax-discount-parliamentary-budget-office-analysis/4fc12d1b-e962-401e-b1ba-0b15d68ba03b" rel="" target="_blank" title="capital gains tax discount"><span>capital gains tax discount</span></a><span> — a 50 per cent tax break for property investors that critics say has worsened housing affordability.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>READ MORE:</span></strong><span> </span><a href="https://www.9news.com.au/national/petrol-news-australian-competition-and-consumer-commission-to-investigation-allegations-of-anticompetitive-conduct-by-regional-fuel-retailers/4eb3ac2d-fa27-40bd-9cce-705ccb4a0f44" rel="" target="_blank" title="ACCC to investigate allegations of anti-competitive conduct by regional fuel retailers"><strong><span>ACCC to investigate allegations of anti-competitive conduct by regional fuel retailers</span></strong></a></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>The </span><a href="https://www.9news.com.au/national/federal-budget-2026-government-hint-changes-capital-gains-tax/938c783c-4361-4c06-bde7-bc3168cd2016" rel="" target="_blank" title="government dropped its two clearest hints that it would wind back the Howard-era policy yesterday"><span>government dropped its two clearest hints that it would wind back the Howard-era policy yesterday</span></a><span> after two Labor senators endorsed a parliamentary inquiry's report that found it was flawed and Chalmers failed to quash the rumour.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>In his speech today, the treasurer confirmed the budget will include major tax reform that will be guided by how the "outdated" system weighs on younger and future generations.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"Any changes would have a substantial focus on our intergenerational responsibilities," he said.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Chalmers said the reform would also make the tax system simpler and more sustainable and drive business investment but only "if we can afford to". </span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"We're working on more tax reform in the budget," he said.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>READ MORE: </span></strong><a href="https://www.9news.com.au/world/joe-kent-tucker-carlson-interview-tulsi-gabbard-middle-east-iran-war-donald-trump-us-politics-news/b00c6b2b-d83f-46c9-b1ed-2dbb296dcc3a" rel="" target="_blank" title=""><strong><span>Whistleblower Trump advisor contradicts central claim behind Iran war</span></strong></a></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"How much of that we can do in May depends a bit on fiscal considerations, international developments, and also, of course, cabinet deliberations."</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>The budget will also rein in government spending and work with the states, territories and the private sector to build productivity and increase investment.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Chalmers said all three packages have been calibrated for the volatile global economy and will help the nation succeed through it.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"It will be an ambitious budget because ours is an ambitious government, and this is an ambitious country," he said.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><em><strong><span>NEVER MISS A STORY:</span></strong></em><span> </span><em><span>Get your breaking news and exclusive stories first by following us across all platforms.</span></em></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><ul><li><em><strong><span>Download the 9NEWS App here via</span></strong></em><span> </span><a 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