On Monday, Australia’s Labor government announced that it would allocate 14.6 billion Australian dollars ($9.84 billion) over four years in the federal budget to provide relief for families and businesses struggling with the cost of living. The government has assured that this move will not lead to inflation.
According to the federal government, the plan aims to alleviate the pressures of rising prices and inflation, which although eased in the first quarter, still remain close to 30-year highs of 7.0%. Treasurer Jim Chalmers stated in a press release that the focus of the budget will be on providing cost-of-living relief without contributing to inflation. The federal budget is scheduled to be released on Tuesday.
According to Treasurer Jim Chalmers, “People are under the pump.” He also stated that the budget is carefully calibrated to take pressure off the cost of living instead of adding to it. The government aims to provide financial assistance to over 5 million low-income families, small businesses, and pensioners who are struggling with high power bills. This assistance will be announced in the budget.
Chalmers has emphasized that his budget will be fiscally responsible to avoid adding to inflationary pressures. This comes after the Reserve Bank of Australia’s unexpected rate hike last week, which surprised traders who had anticipated a prolonged pause. The government aims to provide some relief while keeping spending in check.
On Friday, the RBA cautioned that inflation risks were increasing due to low productivity growth, surging rent, and rising energy prices. The latest cost-of-living relief measures are in addition to the government’s allocation of AU$11.3 billion for wage increases for aged care workers over four years, as well as a 5% increase in tobacco tax and AU$2.4 billion in extra taxes on oil and gas producers.
The upcoming Australian budget is expected to reveal a significant reduction in the deficit, as the country benefits from tax revenue generated by commodity exports. However, despite this, the government’s outlook is expected to remain cautious as fiscal challenges continue to loom.