Why you can’t argue the $300 energy rebate will lower inflation
Energy bill relief increases people’s real disposable income and boosts aggregate demand. We can debate how far they push inflation but not that the direction is up.
For more than a year, the government has claimed subsidising energy bills reduces inflation.
In his budget speech, Treasurer Jim Chalmers said: “The ABS has shown how cutting energy bills directly cuts inflation too. Keeping the lights on for families and businesses – and keeping downward pressure on inflation.”
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Steven Hamilton is assistant professor of economics at George Washington University and visiting fellow at the Tax and Transfer Policy Institute at the ANU.
