Federal budget 2023: Six-point plan to ease the cost-of-living burden

A $14.6bn ‘responsible, targeted’ cost-of-living package spanning energy and welfare relief, rental support and healthcare was at the heart of Jim Chalmers’s second budget.

The Labor government has addressed cost-of-living pressures in this year's federal budget.

A $14.6bn “responsible, targeted” cost-of-living package spanning energy and welfare relief, rental support and healthcare was at the heart of Jim Chalmers’s second budget on Tuesday night.

The centrepiece plan revealed by the Treasurer includes six big-ticket items the government will fund over five years. They are:

● $1.5bn in household energy bill relief;

● $300m to make more than 170,000 homes more energy ­efficient;

● $3.5bn to strengthen Medicare by tripling the bulk-billing incentive for GP consultations for under-16s, pensioners and other commonwealth concession card holders and building new urgent care clinics;

● $1.9bn to expand the single parenting payment;

● $4.7bn to increase JobSeeker and other welfare benefits, and;

● $2.7bn to increase commonwealth rent assistance.

Jim Chalmers said the tripling of bulk-billing incentives was the “main big new thing” the government decided to hold back for budget night, which will support GPs to provide care for about 11.6 million eligible Australians at no expense to the patient.

About 1.1 million households receiving commonwealth rent ­assistance will be better off, as the government increases the maximum rate by 15 per cent at a cost of $2.7bn.

A couple with three children on Family Tax Benefit Part A who rent their home will receive about $800 a year in extra government support to help them with rent and cost-of-living pressures.

About 1.1 million Australians on income support payments such as JobSeeker, Austudy and Youth Allowance will have their base rate increased from $49.50 per day to $52.35 per day, despite the Economic Inclusion Advisory Committee recommending a rate of $68 per day.

Older Australians will receive more, with around 52,000 people aged between 55 and 60 who have received JobSeeker for nine months or more having their payment bumped to $56 per day, ­receiving an extra $92.10 per fortnight. This more generous rate ­already applies to Australians aged 60 and older.

The government will invest $1.5bn into energy bill relief for low-income Australians and small businesses, which will be matched by the states, delivering up to $500 for cheaper electricity bills for around five million households and up to $650 for eligible small businesses.

The government-funded discounts will automatically apply to energy bills from July 1 over the course of a year, or two years for Tasmanian residents.

The Treasurer said it was the government’s “really strong view” the temporary price caps on wholesale gas contracts combined with energy bill relief would put downward pressure on inflation next year.

The budget papers estimate the package will reduce inflation by three-quarters of a percentage point in 2023-24.

“In March of 22 our predecessors pumped $8bn of cost-of-living relief over six months, we’re putting $14.6bn over four years,” Dr Chalmers said.

“So it’s over a period of time, it is targeted, it is responsible and really at every stage – whether it’s our plans for the supply side in growth, whether it’s plans for the cost-of-living package or the way we’ve banked so much of the upward surge in revenue – all three of those things are because we still see inflation as the defining challenge in our economy and the budget has been carefully designed and calibrated to take the pressure off inflation rather than add to it.”

A budget cost-of-living fact sheet outlined a further eight measures on top of the $14.6bn package that will save Australians billions of dollars more, including $1.6bn so some patients can buy two months’ worth of medicine for stable, chronic conditions and a further $2.2bn for new and amended listings on the Pharmaceutical Benefits Scheme for affordable access to new ­medicines.

The government will also ­increase the National Housing Finance and Investment Corporation’s liability cap by $2bn to a total of $7.5bn, supporting more lending to community housing providers for social and affordable housing projects.