PM calls MPs back to Canberra for cost-of-living war council

With a cost of living crisis spiralling out of control, the Prime Minister has taken emergency action.

Politicians have had their holidays cut short as the Prime Minister has reportedly called an unusual meeting to address the cost of living crisis smashing Aussie families.

Labor MPs will be back in Canberra almost two weeks earlier than expected as concerns in the government grow over the crisis.

The Sydney Morning Herald reports Anthony Albanese has called an urgent Labor caucus meeting for Wednesday to discuss energy subsidies and other proposals that will need to be carefully balanced to avoid sparking inflation but deliver financial relief to struggling households.

The meeting is scheduled for 4pm on Wednesday ahead of the PM’s National Press Club address the following day and is expected to confirm the government’s economic plan to be announced during the speech.

Parliament is not due to resume until Tuesday February 6.

Prime Minister Anthony Albanese is concerned the cost-of-living crisis is costing his government votes. Picture: Chris Kidd.

The Sydney Morning Herald reports that some backbenchers, speaking on the condition of anonymity, were frustrated at being called back to Canberra for the meeting.

However, others believe the government wants to make a strong statement addressing cost-of-living issues early in the year to re-establish its credentials on an issue that cost it support in 2023.

A by-election looming in the Melbourne electorate of Dunkley on March 2 may also be behind the timing.

According to reports there is strong support within the government for another package to reduce energy bills.

The $3 billion Energy Bill Relief Fund – jointly funded by the states and territories – was announced in the last federal budget and will reduce electricity bills for more than five million households between July 1, 2023 and June 30, 2024.

Rather than being paid directly to consumers, the bill relief is being delivered through state schemes for people on income support payments.

The cost of living crisis is smashing Aussies. Picture: NCA NewsWire / David Crosling

Earlier this week, the PM spoke of delivering cheaper medicines and child care in 2023 and said “we’re looking at other measures as well”.

He added that the government would be making announcements in the lead-up to the federal budget in May.

“I’ve asked Treasury and Finance to continue to come up with ideas in ways in which we can assist with cost of living, but without putting pressure on inflation.”

The stage three tax cuts are the big-ticket government policy aimed at reducing cost-of-living and the government confirmed this week they will begin from July 1.

The tax cuts will mean that those earning over $200,000 score a tax cut of $9,075 a year tax cut while workers on $100,000 will get a cut of $1,375 and those earning $50,000 will pocket an extra $125 a year.

The tax cuts were a Labor election promise and opposition leader Peter Dutton has called on the government to deliver the package in full, while the Greens want the cuts scrapped and others believe they are too generous to workers on higher incomes.

RBA governor Michele Bullock is expected to deliver cost-of-living relief in the form of lower interest rates at some point in 2024. Picture: Aaron Francis / The Australian

The Reserve Bank of Australia (RBA) may also be soon to deliver good news to millions of Aussie homeowners, with financial markets virtually ruling out the possibility of another interest rate rise when the board meets on February 6.

The widely held expectation is that interest rates will be kept on hold at 4.35 per cent at that meeting, after the most recent inflation data, for the month of November, was weaker than expected.

However, inflation data for the December quarter, to be released on January 31, is seen as the final hurdle to ensure interest rates don’t rise any further.

As for when rates may begin to go down, economists and financial markets are betting on 2024 to bring long-awaited financial relief.

Some economists are forecasting interest rate cuts to come as soon as March, while forecasts of a cut by June are much more widespread.