Treasurer Jim Chalmers
Moments after delivering his budget, Treasurer Jim Chalmers was defending some of its measures. Image by Mick Tsikas/AAP PHOTOS
  • politics

Treasurer backs rebates for all in cost-of-living fight

Andrew Brown May 14, 2024

Broad cost-of-living relief in the federal budget faces early fire from experts and economists, but Jim Chalmers insists the measures are sorely needed.

The treasurer’s third federal budget included $300 energy rebates for every household and tax cuts of $36 a week on average, along with capping the price of medicines and boosting rent relief.

While some cost-of-living measures in the budget have been targeted, Dr Chalmers backed in the need for measures such as energy rebates for all households, rather than means-testing them to where they were most needed.

“People are under cost-of-living pressure up and down the income scale,” he told the ABC after delivering his budget to federal parliament.

“We’ve found a responsible and affordable, but meaningful, way to help people with the cost of living, not just people on low and fixed incomes, but people in middle Australia too.”

Federal Budget
 Every household will get a 0 energy rebate. Image by Dan Peled/AAP PHOTOS 

Power bill relief will see every household get a $300 energy rebate from July, while eligible small businesses will get a $325 rebate.

As well, Commonwealth Rent Assistance will increase by 10 per cent for more than one million households, with the government spending $1.9 billion over the next five years.

On average, those on rent assistance will receive an extra $19 per fortnight.

The rent assistance rise is the first time there have been consecutive increases in the payment in 30 years.

It’s expected the combined measures of energy relief and rent assistance will shave half a percentage point off inflation, with consumer price growth set to fall into the Reserve Bank’s target band of two to three per cent by the end of December 2024.

Federal Budget
 Tighter and longer-lasting caps will be applied to medication costs for some people. Image by Lukas Coch/AAP PHOTOS 

The cost of medicines will also be frozen, with a cap of $31.60 set for prescriptions included in the Pharmaceutical Benefits Scheme.

Cost caps of $7.70 will also be in place for five years for pensioners and concession holders.

Further cost-of-living measures include the well-foreshadowed stage-three tax cuts, with all taxpayers to keep more of their pay from July.

On average, taxpayers will save $1888 in the upcoming financial year, or $36 a week.

Meanwhile, the Labor government will extend eligibility for the higher rate of JobSeeker payments to those with a partial capacity to work up to 14 hours per week.

Almost one million people on income support will have social security deeming rates frozen for the next financial year.

Dr Chalmers said the cost-of-living measures would be split between broad-based relief and targeted programs.

Federal Budget
 The budget includes .2 billion in new housing measures. Image by Darren England/AAP PHOTOS 

But shadow treasurer Angus Taylor said the budget had failed to address cost-of-living pressures.

“Australians will be disappointed by tonight’s budget, it does nothing to help Australians get ahead and to restore their standard of living,” he said.

“The government has shown it is focused on the wrong priorities at a time when Australians are doing it tough.”

The Business Council of Australia said the budget takes positive steps to boost competitiveness, while the Australian Chamber of Commerce and Industry said the spending plans raised questions on taming inflation in the long term.

The budget includes $6.2 billion in new housing measures, with $1.9 billion to go towards building 40,000 new social and affordable homes.

The government flagged it would work with universities to increase the supply of student housing to meet demand.

University students on placements as part of their degrees in teaching, nursing, midwifery and social work will get an extra $319.50 a week from July 2025, while $3 billion has been wiped from student debt under further tertiary education changes.

Indexation of HECS debt has changed to be based on inflation levels or the wage-price index, whichever is lower.

The government also wants to boost the nation’s manufacturing capabilities under a $22.7 billion Future Made in Australia fund.

The fund will help to boost investment from the private sector to key areas in Australian industry.

More than $800 million will also be spent on mental health support packages, headlined by a free digital support program for 155,000 people per year.

Australians will be able to access services for mental health help without a referral, under the package which will be up and running by January 2026.

Economist and budget expert Chris Richardson said the budget would “poke the inflationary bear” because there was too much front-loaded spending.