‘Mini-budget’ will be light on relief

Treasurer Jim Chalmers in question time on Tuesday. Picture: NCA NewsWire / Martin Ollman

Australians reeling from soaring inflation, higher mortgage repayments and fuel prices shouldn’t expect generous handouts in next month’s “mini-budget”.

The October 25 budget looms as a box-ticking exercise focused on funding Labor’s election promises and slashing Coalition spending to save billions of dollars.

Anthony Albanese and Jim Chalmers have talked down expectations of major surprises or sweeteners in the budget, resisting pressure to spend more on cost-of-living support.

While Labor is flying in the polls, households are bracing for more cost-of-living pain in the run-up to Christmas.

As house prices slide, the Reserve Bank on Tuesday lifted the cash rate for the fifth straight month and warned more hikes were coming, albeit with a caveat that the sprint to offset inflation was nearing an end.

The fuel excise discount will be removed on September 29 and inflation is forecast to peak at 7.75 per cent in the final three months of the year.

National accounts figures released on Wednesday are expected to reveal solid economic growth in the June quarter, driven by booming resources exports and retail spending. But the numbers mask recession-level consumer confidence and severe labour shortages.

Facing a mammoth fiscal repair task to lower the nation’s $1 trillion debt bill, Albanese on Tuesday told Labor MPs there would be “difficult decisions” in the October budget.

He urged his team to remain disciplined despite calls for more government spending.

“We must be straight with Australians about the challenges before us and the difficult decisions we must take,” the Prime Minister told his MPs.

While the Treasurer has flagged some cost-of-living relief measures in the October budget, it is more likely the government will use the budget in May next year to provide additional support if inflationary pressures push into 2023.

Outlining the government’s approach in an August 30 interview, Albanese described next month’s budget as a “mini-budget”.

“This is a mini-budget, if you like, in terms of halfway through the year. There was a budget in March, there’ll be another budget next May,” he said.

“What we’re concentrating on in this budget is the funding of all of the election commitments that we made, as well as going through line-by-line, looking for where savings can be made.”

Cabinet ministers have privately talked down surprises in the October budget, declaring it an opportunity to line-up Labor’s priorities and lay down markers ahead of the main budget in May.

Chalmers and Finance Minister Katy Gallagher are understood to have found savings far exceeding Labor’s pre-election fiscal strategy. Sky-high commodity prices and record coal and LNG exports have also helped slash the record deficit bill.

Expect the government to promote its “fiscal discipline” and attack the Coalition for leaving the budget in a “perilous state”.