Albanese calls urgent caucus meeting on cost-of-living fixes

Labor caucus members have been called to Canberra on Wednesday for an urgent meeting with Prime Minister Anthony Albanese to canvass new measures to cut the cost of living, as the government works on energy subsidies and other proposals to deliver help to households.

The meeting will clear the way for an economic agenda that includes practical measures that ease the pressure on households without fuelling inflation, amid strong support within the government for another $3 billion energy package to cut bills for people in need.

Prime Minister Anthony Albanese and Treasurer Jim Chalmers are under pressure to provide cost-of-living relief as inflation remains high. Credit: Marija Ercegovac

In an unusual move that has heightened talk of new policies, Albanese has asked federal Labor MPs to assemble in Canberra almost two weeks before parliament resumes so they can discuss the cost of living and other issues.

The controversial stage three tax cuts are also being debated inside and outside the government after Albanese declared this week that the cuts to personal income tax rates would go ahead as planned in July, although he hedged on whether the plans might be amended.

The government believes it has time to adjust its plans before the May budget if concerns about inflation force a rethink of the tax cuts, which would inject $20.4 billion into the economy in their first year and $23.5 billion in their second year.

Opposition Leader Peter Dutton has called on Albanese to deliver the package in full, as Labor promised at the last election, but the Greens want the tax cuts scrapped and progressive think tanks such as the Australia Institute say the benefits are too generous to workers on higher incomes.

Labor backbenchers doubt there is time to adjust the stage three plan before the cuts flow to workers from July 1 under existing law, and they are worried about a backlash from voters if the government reneges on its election pledge to leave that law unchanged.

But the sudden notice about the meeting on Wednesday, which took MPs by surprise, is being seen by several caucus members as a positive sign that new policies on other fronts would be unveiled on the cost of living.

The meeting at 4pm on Wednesday will be followed by drinks with the prime minister at the Lodge, to be funded by Labor to ensure taxpayers do not carry the cost of the private function.

The caucus discussion will confirm the government economic plan before Albanese delivers an address to the National Press Club the following day, January 25, ahead of the Australia Day long weekend.

Some backbenchers, speaking on condition they were not named because any public remarks could be used against them within the party, expressed frustration at being called to Canberra for one or two days when parliament is not sitting. Parliament is due to resume on Tuesday, February 6.

Others interpreted the timing as a move to make a strong statement on Labor’s domestic agenda early in the year after the government lost support in the opinion polls last year.

A key factor for Albanese and the government is the campaign for the byelection in the Melbourne electorate of Dunkley, set for March 2.

Any change to the stage three tax plan, which costs $313 billion over a decade, would set off a political firestorm over a broken promise during the byelection when Labor is hoping to hold the seat and stare down Dutton’s call for a protest vote against Albanese on the cost of living.

A leading policy option among cabinet ministers is to fund a second round of the $3 billion Energy Bill Relief Fund to cut electricity bills for more than five million households in a joint project with the states and territories.

The first phase of the policy ends on June 30 and key figures in the government favour another round of subsidies after Treasury, the Reserve Bank and the Australian Bureau of Statistics said the assistance helped to lower prices.

Rather than being paid directly to consumers, the energy funding is channelled through state schemes to reduce bills before they reach pensioners and others on income support. The federal government paid $1.5 billion this financial year, with matching funds from the states and territories.

Albanese spoke about further cost-of-living measures last year but made it clear this week that the benefits would be unveiled before the May budget.

The government believes it has time to adjust its plans before the May budget if concerns about inflation force a rethink of the stage three tax cuts.Credit: Luis Ascui

“Cheaper medicines, cheaper child care made a big difference last year,” he said on Wednesday. “But we’re looking at other measures as well. We’ll be making announcements in the lead-up to the budget.

“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.”

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