Government looks at more cost of living relief for Australians ahead of May budget

Anthony Albanese has indicated Labor will seek to roll out more cost of living support in the May budget as Australians continue to grapple with soaring interest rates and inflation.

Anthony Albanese in Sydney on Wednesday. Picture: NCA Newswire / Gaye Gerard

Anthony Albanese has asked Treasury for advice on how the government can roll out more cost-of-living relief in the May budget without adding to inflation, prompting Labor MPs and unions to call for highly targeted programs to be expanded to provide support for middle income earners.

In his first press conference of the year, the Prime Minister – who signalled there would not be an election until next year – declared cost-of-living was central to his agenda after he was criticised for allowing 2023 to be dominated by the voice to parliament referendum and his overseas trips.

Foreshadowing support for struggling households as part of a government reset, Mr Albanese said he wanted to help people who were “feeling pressure as a result of global inflation”.

“I have asked (the departments of) Treasury and Finance to come up with further propositions that we’ll consider in the lead-up to the May budget this year,” Mr Albanese said.

However, the Prime Minister stressed that his government would be cautious about “distributing additional cash” directly to Australians out of fear this could exacerbate inflation, and instead would look at measures such as further subsidies to energy bills.

“If you … distribute additional cash to people you, potentially make inflation worse and therefore don’t help to solve the problem,” he said.

“And that’s why the energy price relief plan, instead of giving cheques to people, reduced their bills substantially.”

Leading economists Chris Richardson and Saul Eslake said it would be difficult to deliver cost-of-living relief that was not inflationary, warning the government against changing the disciplined budget strategy by which it has used revenue to pay off debt.

But Labor MPs welcomed Mr Albanese’s cost-of-living focus and called for the expansion of the electricity bill rebate in the last budget, which provided up to $500 relief for concession card holders and people on social ­security payments.

The MPs also urged the government to use the Senate inquiry into the price setting of super­markets to take action on the profits enjoyed by Coles and Woolworths.

Tasmanian MP Brian Mitchell said the government needed to expand the eligibility of its programs, which had been targeted at low-income households.

“Certainly, my intention over the next few months will be to press that a bit more, what can we do for Middle Australia, those who haven’t qualified for the concessions so far,” he said.

Mr Mitchell said businesses posting big profits needed to do their “fair share” to fight the cost-of-living crunch.

“Those who are doing really well, is there capacity to look at how they can play their part fairly? For example, we look at big grocers, they are making record profits,” he said.

“Profits are a good thing, but for those making a record profit in a high inflation environment, you’re contributing to inflation, not helping tackle it.”

Bennelong MP Jerome Laxale also called for the eligibility for cost-of-living programs to be ­expanded.

“I think our cost-of-living relief has been effective and targeted … I believe it should be extended,” Mr Laxale said.

Macarthur MP Mike Freelander said power and food prices were the main things “knocking people around”.

“The Senate inquiry into supermarket overcharging, people are keen to look at that. I’m positive we’ll get positive changes this year,” Dr Freelander said.

None of the MPs called for the stage three tax cuts to be axed, with Mr Freelander saying the government had “reiterated” its commitment to the policy on a number of occasions. 

Mr Richardson said it was important that any new money going into the budget was offset with funding cuts to other areas.

“They can’t do much about the cost-of-living challenge,” he said.

“If there was a magic wand to wave then this government would have done it, the last government would have done it.

“If you give people money in a cost-of-living crisis caused by inflation then they spend the extra money and that adds to the inflation challenge,” he said.

Mr Eslake said one thing the government could do was to provide a bigger tax cut to low-income earners when the stage three cuts begins in July. But he said it would be better if the Prime Minister campaigned more forcefully in ­defence of his government being fiscally prudent last year.

“The government is obviously frustrated it is not getting the credit it thinks it deserves for having saved most of the windfall gains,” he said.

“I think they ought to be making that case more often and more forcefully. (Jim) Chalmers is doing it on his own.

“Albanese hasn’t really tried to prosecute Chalmers’ argument that the best thing the government can do is avoid the temptation to splurge cash.”

Unions are going further than Labor MPs in pushing for cost-of-living relief.

CFMEU national secretary Zach Smith said “the stage is set” for the government to introduce ambitious reforms to address the cost-of-living challenge, urging Labor to introduce a mega profits tax on companies to fund affordable housing, among other measures.

Electrical Trades Union national secretary Michael Wright said the government should look to expand its $1.6bn electrification package announced at the last budget that is aimed at helping Australians electrify their homes and eventually save on power.

“The most pressing issue which sounds out in the cost of living is on the energy transition,” he said.

“Providing stability to grid … ­increasing investment, providing pathways to households to electrify … that is the single biggest cost-of-living increase the government can deliver.”

ACTU acting secretary Joseph Mitchell said working families wanted to see politicians “standing up to big business” while also delivering higher wages.

“Parliament can give working people a pay rise by passing the second tranche of the government’s workplace laws, which closes loopholes that big corporates exploit to undercut wages and conditions,” he said.