Treasurer Jim Chalmers has flagged that the immigration intake could be increased in the May Budget as "serious" skills shortages cramp growth.
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While spruiking data showing both jobs and pay grew strongly in the government's first six months in office, Dr Chalmers admitted very tight conditions in the labour market were hurting activity and indicated an increased migrant intake was likely to be part of measures undertaken by the government to improve conditions for employers.
"We've got serious skills shortages and labour shortages in our economy, and they are acting as a handbrake," he said.
"I think it is a reasonable assumption that the [net migration] number that's printed in the Budget for that year may be higher than 235,000," he said, adding that increased investment in skills and training would also be required.
"Migration is part of the story, but it's not the whole story. It should never be a substitute for what we need to do to train Australians for local opportunities," Dr Chalmers said.
HIs remarks came as the Australian Bureau of Statistics suspended the release of timely jobs and pay data amid increasingly intense political focus on wages and livings costs.
The ABS has indefinitely deferred release of payroll jobs and wages figures collected from the Australian Taxation Office's Single Touch Payroll system, citing "technical issues".
"The ABS and the Australian Taxation Office have identified additional variability in Single Touch Payroll reporting over the most recent periods," the agency said.
"The ABS will temporarily suspend the release, with no release on January 18, 2023. Changes will be made to processes and the ABS will resume publishing these statistics as soon as possible."
The suspension comes at a crucial time as the federal government and the Reserve Bank of Australia try to gauge the effect of soaring inflation and rapid interest rate hikes on the economy, including wages and employment.
Treasurer Jim Chalmers yesterday hailed data showing both jobs and pay grew strongly last year.
Dr Chalmers said an annual 3.1 per cent lift in the Wage Price Index in the three months to September was its fastest growth in almost a decade and the economy added 234,000 between May and November - the best outcome for any new Australian government in its first six months.
The Treasurer said the "strong start" was important given the scale of economic challenges confronting the country this year.
"We do have plenty going for us but we also have a lot coming at us," he said, warning that the war in Ukraine, China's transition away from zero COVID polices, turbulence in some of the world's major economies, higher interest rates in Australia and abroad and the cost of natural disasters would all have significant consequences for the local economy.
The most recent weekly payroll report, released on December 8, showed payroll jobs grew 0.5 per cent in the week ending November 12, pushing the annual rate to 1.8 per cent and wages grew 0.3 per cent to be up 3.6 per cent from a year earlier.
Dr Chalmers said there were the beginnings of "strong and sustainable" wage growth in the economy.
But Opposition finance spokeswoman Senator Jane Hume said the government had inherited current jobs and pay growth from the Coalition and under Labor "wages have failed to keep pace with the skyrocketing cost of living".
"After almost a year in office...Labor still doesn't have a plan to address the cost of living increases that all Australians are feeling," Senator Hume said.
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The consumer price index rebounded to 7.3 per cent in the 12 months to November with the cost of basics including housing, fuel, food and homewares eating increasingly deeply into household budgets.
And borrowers are unlikely to get any interest rate relief from the Reserve Bank of Australia any time soon.
While some economists such as AMP chief economist Shane Oliver and Market Economics director Stephen Koukoulas think the central bank will hold its cash rate steady at 3.1 per cent at its February 7 Board meeting, others such as ANZ senior economist Adelaide Timbrell expect it will raise the rate to 3.35 per cent and eventually push it up to 3.85 per cent later this year.
The continued rise in living costs comes amid concerns of recession gripping much of the global economy.
The World Bank has downgraded its global growth outlook and now expects growth to reach just 1.7 per cent. It has warned that any further shocks could tip the world economy into recession.
Dr Chalmers said the government's Budget and economic plan was aimed at generating more jobs and wages growth.
"Although Australia won't be immune from a global slowdown, the Albanese government is working to create a stronger, more inclusive and more resilient economy that can better withstand future shocks," he said.
But the government and the central bank face a tricky balancing act in trying to contain inflation while supporting employment and meeting the country's need for workers.
Dr Chalmer's said the pace of jobs growth was likely to ease and the government expects the unemployment rate to reach 4.5 per cent this year.
