Labor sets up energy bill relief in March budget for May election

A surprise revenue gain is giving Labor more options to help households in the federal budget to be delivered on March 25, creating room for a new round of energy bill relief before an election that will be held in May.

Prime Minister Anthony Albanese has confirmed the budget date and election plan after top cabinet ministers signed off on major policies, intensifying a contest on economic policy with Opposition Leader Peter Dutton.

Peter Dutton has argued Anthony Albanese’s government should deliver a March 25 budget. He might just get his wish.Credit: Alex Ellinghausen

Albanese and senior colleagues decided on Friday to confirm the government’s stated plan to release the budget on March 25 and head to the election in the first weeks of May, after Cyclone Alfred ruled out the option of an earlier election.

The prime minister went public with the plan on the 7.30 program on the ABC on Friday night when host Sarah Ferguson asked him if he was “categorically” ruling out calling the election on Sunday or Monday.

“That’s correct,” he said. “I have no intention of doing anything that distracts from what we need to do, and what we need to do is look after each other at this difficult time. This is not a time for looking at politics.”

Federal cabinet’s expenditure review committee has completed most of its work on the budget policies, which have been subjected to full Treasury costings, so Treasurer Jim Chalmers and Finance Minister Katy Gallagher have authority to finalise the measures with Albanese.

Independent economist Chris Richardson has estimated the revenue gains will be worth $24.3 billion over two years, but this is strongly disputed within the government because Treasury has a more cautious outlook and is yet to adjust its forecasts.

The federal energy subsidy – which gave every household $300 for electricity bills over this financial year – is a key issue for the campaign because millions of voters would receive a final $75 payment at the end of June if the government does not extend the $3.5 billion package.

Finance Minister Katy Gallagher and Treasurer Jim Chalmers releasing the mid-year budget update in December. New figures suggest the budget bottom line has improved by billions of dollars since then.Credit: Alex Ellinghausen

The cabinet decisions clear the way for another round of assistance, but the government is yet to decide whether the energy package will be the centrepiece of the budget or held for an announcement during the election campaign.

Chalmers has named the energy bill relief as a major reason for voters to reject the Coalition at the ballot box, given the Liberals and Nationals voted against it when parliament approved the package.

The moves follow a flurry of Labor measures since the start of the year, including an $8.5 billion boost to bulk-billing through Medicare, the funding of 50 urgent-care clinics to ease pressure on hospitals, more than $7 billion for public schools and decisions to fund major roads.

Dutton has cited the spending as a reason for voters to throw Labor out of office, saying the Coalition would cut government waste and improve the budget bottom line.

An election in May could be costly for Labor, as television and radio advertising has been booked and some staff have paid for four weeks of accommodation around the Sydney office where the party’s election headquarters are based.

Media advertising buyers who book slots for Labor are actively talking about changing the dates of Labor’s advertising bookings as a contingency if the election is in May rather than April, according to advertising industry and political sources.

Senior figures believe the government’s position is improving because Albanese and Chalmers can point to good news on four economic factors: the recent cut to official interest rates; lower inflation; good unemployment results; and the economic growth revealed on Wednesday.

A YouGov poll published on Friday showed Labor was in front of the Coalition, mirroring Labor research that showed the party gaining ground following a rate cut and an $8.5 billion Medicare announcement. Coalition sources disputed any significant rise for Labor in recent weeks, while the Resolve Political Monitor in this masthead showed last month that the Coalition was up 52 to 48 per cent in two-party terms.

Dutton has argued that the government should stick to its stated plan for a budget on March 25 because a race to an earlier election would be proof that Labor wants to hide the “true, dire picture” of the nation’s finances.

The prime minister has until the close of business on Monday to call an election for April 12 and ensure a campaign of at least 33 days, as required under the Constitution, but that is now off the table. Albanese will instead call the election for May 3, 10 or 17. Other dates have been ruled out because April 19 is on the Easter weekend and April 26 is the day after Anzac Day.

Richardson, a longstanding budget observer, estimated a combination of a strong jobs market, higher prices for key commodities and ongoing inflation have ensured a revenue windfall when the federal finances are revealed.

In the budget update last December, Chalmers forecast a deficit of $26.9 billion for this financial year, widening to a $46.9 billion shortfall in 2025-26.

Monthly budget data suggests more revenue is hitting government coffers. To the end of January, the budget was $3.6 billion better off than forecast on a pro rata basis.

But Richardson said that given the state of the economy, this year’s deficit was now on track to edge down to $16.1 billion thanks in part to a $12.7 billion jump in revenue. The deficit for 2025-26 is on track to be about $41.2 billion, with total revenue $11.6 billion ahead of expectations.

The additional revenue over this year and next adds up to $24.3 billion in his forecast.

Describing it as a lottery win, Richardson said the budget was being boosted by tax growth that would ultimately come to a halt.

“Many migrants meant more people to tax. Wars pushed up the price of what Australia sells to the world, and we got tax windfalls from that,” he said.

“And inflation took money from families and handed it to the taxman.”

Income tax on individuals is forecast by Richardson to be $5.9 billion better than expected this year and $8.2 billion stronger in 2025-26. Company tax collections are likely to be $12.2 billion better than forecast over the two years.

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