No additional cost-of-living relief included in mid-year budget update, Treasurer confirms
Aussies hoping there could be more cost of living relief in the pipeline have been dealt a fresh blow, as the Treasurer holds firm on dishing out a festive cash splash.
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Australians hoping for a Christmas present from the government will be left wanting, despite a bumper tax take cushioning the budget bottom line.
Treasurer Jim Chalmers celebrated the release of the Mid-Year Economic and Fiscal Outlook on Wednesday, announcing the budget deficit has been slashed to a razor thin $1.1bn.
Since May, tax receipts over the forward estimates are $66bn higher than forecast.
Dr Chalmers said the government has banked 92 per cent of the windfall that it’s raked in thanks to soaring commodity prices and uplift in personal income taxes.
But he has resisted the urge to play Santa and dish out a festive-season cash splash.
“This update is effectively a stocktake rather than a long list of brand new measures,” Dr Chalmers told reporters in Canberra.
Instead, the economic blueprint reiterated the government’s intention to prioritise bringing down inflation as the best way to tackle cost of living relief.
“Our budget strategy is putting downward pressure on inflation. It’s inflation, which is hurting people right around Australia,” Dr Chalmers said.
“The sooner we can get on top of it, the better, and this budget position and is responsible economic management as part of that chart.”
Inflation is now at 5.4 per cent after peaking at 7 per cent in the year to March.
MYEFO projects inflation will fall to 3.75 per cent by next June, 0.5 per cent higher than expected in the May budget, before returning to the Reserve Bank’s target in FY 24-25.
Petrol, as the higher global oil prices pass through, contributed 0.25 of a percentage point to inflation in September and remains a concern.
However, the government estimates its “targeted cost of living relief”— such as childcare subsidies, cut price medicines and energy bill rebates — will alleviate pressures in the near term and will reduce inflation by 0.75 of a percentage point in the June quarter 2024.
Almost $10bn in savings will be clawed back but more than half, $5.2bn, will be spent on what the budget has labelled “unavoidable spending measures” such as the end of the Covid-19-era pandemic event visa.
In the lead up to MYEFO, Dr Chalmers and his Finance Minister Katy Gallagher downplayed expectations there would be further cost-of-living relief delivered.
The document referred to “cost-of-living” 20 times, “relief” 26 times and used the government’s favourite buzzword, “targeted”, 28 times.
But with an election looming either late next year or in 2025, Dr Chalmers has already flagged he knows Australians will be expecting more come May.
“We will consider the budget conditions and the economic conditions between now and the May budget to see whether we will provide more cost of living help,” he said.
Originally published as No additional cost-of-living relief included in mid-year budget update, Treasurer confirms
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