But Dr Chalmers also echoed Reserve Bank governor Philip Lowe in saying inflation would peak “significantly higher” than the current 5.1 per cent.
Agriculture Minister Murray Watt on Wednesday said that addressing labour and skills shortages were a key short-term priority for his portfolio, adding that he was “up for any ideas”.
Job vacancies increased by 4.6 per cent between the start of January and the end of March, according to the ABS, outstripping the growth rate for total jobs (up 0.6 per cent) and filled jobs (up 0.4 per cent).
The most acute shortages were in mining, financial and insurance services, administrative support, other services and wholesale trade.
The OECD said the Australian economy was “set to continue” solid growth out of the pandemic, and noted the recent resilience through the COVID-19 omicron variant and recent widespread flooding across the east coast.
But Australia’s high level of household debt – the highest in the club of wealthy nations as a portion of the economy – could pose a risk as the Reserve Bank embarked on an interest rate rising cycle.
The RBA on Tuesday surprised economists and investors by increasing the cash rate to 0.85 per cent, with the largest interest rate rise in 22 years.
“With monetary policy now beginning to normalise, mortgage rates are increasing in many OECD countries, raising solvency concerns,” the report said, though it cited the concurrent build-up in household savings – about $270 billion since January 2020 – as a cushion for households.
RBA governor Philip Lowe said the rate rise, which was double what he described last month as “business as usual”, was due to the “resilience” of the local economy and growing inflation from spiking energy prices.
Dr Lowe said the bank expected to take “further steps” to normalise monetary policy in coming months, and was “committed to doing what is necessary to ensure that inflation in Australia returns to target over time”.
The OECD said while there were negative supply-side shocks flowing through to the local economy due to the Ukrainian conflict and China’s COVID-zero policy, Australia would also benefit from higher energy prices.
Looking at the medium term, the OECD urged Australia to undertake tax reform to limit reliance on personal income taxes as a necessary step to address an ageing population.
It also said the energy crisis caused by Russia’s invasion of Ukraine pushing oil, gas and coal prices to record highs reinforced the need for countries to “continue the transition towards greater renewable energy”.