Treasurer Jim Chalmers says budget won’t spark inflation

The Treasurer says he is not “spraying cash around” but guiding spending in a way to reduce inflation and keep Aussies free from another interest rate rise.

Treasurer Jim Chalmers has defended his budget as a “conservative” and “cautious” spend that would not spark inflation by “spraying cash around”.

Appearing on the ABC following his budget speech on Tuesday night, Mr Chalmers rejected the argument his relief measures, such as $300 energy rebate for every household and rental bill relief, would heat up the economy and pressure the Reserve Bank of Australia to lift interest rates to keep inflation tracking on a downward trend.

“I’m very confident in this budget that we are putting downward pressure on inflation, that we are being part of the solution to inflation, rather than a problem,” he said.

“That’s because of spending restraint, the responsible economic management and the way we’ve designed our cost of living help.”

7.30 host Sarah Ferguson pressed the treasurer on how he could deliver more money into the pockets of Australians without triggering inflationary pressures, and Mr Chalmers responded that delivering energy bill relief was not the same thing as “spraying cash around”.

Federal Treasurer Jim Chalmers interview on ABC following the Budget release. Picture: ABC,

“First of all, people don’t have a lot of spare cash lying around,” he said.

“People are under extreme cost of living pressure.

“Secondly, there is a behavioural difference to sending someone a check and encouraging them to spend it, or taking a bit of the edge of some of their bills.”

The treasurer said he had proceeded on advice from the Treasury Department that his cost-of-living package would not put upward pressure on inflation.

Mr Chalmers announced in his speech that every household would receive $300 in energy bill relief as part of the support package.

But he said spending in the budget was not profligate but was “made up entirely of unavoidable spending pressures and the cost of living pressures”.

Shadow Treasurer Angus Taylor said the budget’s cost-of-living measures were like putting a Band-Aid on a wound. Picture: NCA NewsWire / Martin Ollman

“I think we’ve taken a pretty cautious, pretty conservative, responsible and restrained approach,” he said.

Opposition Shadow Treasurer Angus Taylor slammed the budget as a “political” move, with the next election now 12 months away.

“It is designed for election and not a cost of living crisis,” he said.

“When all you have is a Band-Aid to put on the bullet wound that is all you do. That is all Labor is offering here.”

He also slammed the budget’s $13.7bn spend on production tax credits for miners in critical minerals.

“We strongly support having those sectors being strong, want them to be strong and they have been for a long while, but the way to get there is to focus on the fundamentals, not to throw money at them with subsidies,” he said.

“We don’t support the $13.7bn of production tax credits.”

Originally published as Treasurer Jim Chalmers says budget won’t spark inflation