People in Melbourne's city centre
The latest job figures from the ABS show signs of a slowing down in the labour market. Image by Diego Fedele/AAP PHOTOS
  • economy (general)

Cost of living relief on table but cash handouts vetoed

January 3, 2024

Financially stressed Australian households could be in line for more cost of living relief as the federal government weighs up its options for extra help.

That assistance is unlikely to come in the form of cash handouts as Prime Minister Anthony Albanese warns giving money out directly could potentially make inflation worse. 

Mr Albanese confirmed on Wednesday Treasury and the Department of Finance had been tasked with coming up with a fresh set of policy ideas for consideration ahead of the May budget.

“Our priority will be to provide cost of living relief whilst taking pressure off inflation,” he told reporters in Sydney.

Fee-free TAFE, which began last year with more places opening in 2024, was highlighted as an example of cost of living relief that ticks all the boxes. 

The policy would create downward pressure on inflation, the prime minister said, by addressing longer term issues of labour market shortages and supply chain limitations. 

Other help already in the system includes boosted Commonwealth rent assistance and energy bill relief.

The opposition has called on the government to tackle inflation at the source by reining in spending rather than addressing the symptoms via cost of living support.

Nationals leader David Littleproud has warned of higher food prices under changes to the Pacific Australia Labour Mobility scheme.

The scheme is used by agriculture and food processing industries, among others, to hire workers from Pacific islands and Timor-Leste when not enough local workers can be found.

Mr Littleproud said new rules stipulating a minimum 30-work week over a month, rather than the entire placement, would drive up costs for farmers.

“Unfortunately, everyone’s going to pay for this because farmers simply can’t afford not to pass this onto you at the checkout,” he told Sky News on Wednesday.

Mr Albanese said the changes ensured workers were not brought into the country and not paid. 

Australian households and businesses have been under pressure from rising consumer prices and the series of interest rate hikes aimed at tackling inflation.

Prime Minister Anthony Albanese
 Anthony Albanese has flagged the possibility of new measures to help with cost of living pressures. Image by Flavio Brancaleone/AAP PHOTOS 

Yet collectively, households are still squirrelling money away, with deposits totalling more than $1.4 trillion in November, data from the banking regulator shows.

That represents a gain of 0.7 per cent or $10.5 billion since October and a jump of 7.5 per cent from a year ago.

The deposits from households captured by the APRA data include term deposits, transaction accounts, mortgage offset accounts and savings accounts.

The numbers published by APRA reflect the “substantial savings buffers” highlighted by the central bank in its last statement on monetary policy in early November.

The trend began during the pandemic when locked-down households began tipping money into their mortgages, offset and savings accounts, as opportunities to go out and spend or travel were curtailed.

RateCity research director Sally Tindall said the monthly increase in household deposits led to another overall record high.

“This data illustrates just how determined people are to keep a hold of their cash, ready for a rainy day,” she said.

But not everyone is in the same position, as the Australian Council of Social Services has noted.

“There are more than three million people living in poverty in Australia,” CEO Cassandra Goldie said recently.