Budget 2023: Albanese government to spend $14.6bn on cost of living relief

Australians struggling with cost of living will benefit from a $14.6bn package to be announced in Tuesday’s budget.

Jim Chalmers’ second budget will commit $14.6 billion over four years to help Australians “of all age groups” struggling with mounting cost-of-living pressures without adding to inflation.

The Treasurer says the package – which will target single mothers, welfare recipients, and pensioners – was “perfectly calibrated” and wouldn’t be in the form of cash handouts.

Dr Chalmers says the $14.6bn “centrepiece” suite of upgraded support payments and subsidies will directly lower inflation in the 2023-24 financial year.

The package includes $1.5bn in energy relief, which will give 5.5 million households and about a million businesses up to $500 off their power bills. But how much a household or business is entitled to will depend on where they live, as the government has had to do individual deals with each state and territory.

He said that will not be inflationary because the government had “found ways to take hte pressure off bills”.

Treasurer Jim Chalmers, pictured with his children Annabel, 5, and Jack, 4, will hand down his second budget on Tuesday – which will include a $14.6bn cost of living package. Picture: Dan Peled / NCA NewsWire

The government is remaining tight lipped on what else will be funded as part of the package, but Labor says it can afford the package in part because a major audit from Finance Minister Katy Gallagher “reprioritised” more than $17bn in budget savings.

Dr Chalmers said the budget would be in “the best Labor tradition”, offering “help for the vulnerable, an eye on the future, and responsible economic management”.

“People are under the pump. We’ve carefully calibrated and designed this Budget so that it takes pressure off the cost-of-living rather than add to it,” he said.

“(This budget) will see people through difficult times and set our country up for the future.

“This budget will help Australians doing it tough and will make inroads in cleaning up the mess we inherited from the Coalition.”

Dr Chalmers said the government needed to be “responsible” about what it spends.

The package is separate to Labor’s $11.3bn commitment to aged-care pay rises, $9 billion boost to make childcare cheaper through subsidies, and paid parental leave changes.

It’s widely anticipated that payments for single parents – that currently end when their youngest child turns eight-years-old – will be extended by up to four years.

JobSeeker payments are expected to be boosted “modestly” for all ages, not just those over 55 as has been reported since last week.

“I’ve been saying for some days, since the story about people over 55 first appeared, that the cost of living support will be broader than that, and it won’t be limited by age,” Dr Chalmers told ABC Radio.

“And I think when people see the package in its entirety, they will see what we’ve tried to do here is recognise the genuine pressures that people are under and to do what we can, beginning with the most vulnerable people.”

However, the boost is set to fall short of the “substantial” amount recommended by the government's own review panel.

The government has also announced changes to prescriptions, which could save Australians up to $180 a year per medication.

It’s expected the government will make changes to the Commonwealth Rent Assistance.

Senator Gallagher said the package would be “significant” not just in scale “but in the reach we’re trying to have with it”.

“I think what it shows is that what really has been front and centre of our thinking as we finalise the budget is how to provide that sensible and affordable cost of living relief against an environment of high inflation. That’s been a challenge as we’ve been making our decisions,” she told ABC News.

But the opposition’s finance spokeswoman, Jane Hume, said the best cost of living relief the government could offer Australians was a straightforward plan to tame inflation once and for all.

“Otherwise that extra $100 a week or however much it will be will simply be eroded away by high inflation,” she told ABC Radio.

Originally published as Budget 2023: Albanese government to spend $14.6bn on cost of living relief