Treasurer Jim Chalmers
Jim Chalmers is spruiking the cost-of-living relief in his budget, saying it will be substantial. Image by Mick Tsikas/AAP PHOTOS
  • politics

Treasurer promises more relief alongside tax cuts

Andrew Brown May 12, 2024

Tax cuts will be a “foundation stone” of cost-of-living relief in the budget but the treasurer is promising further support measures are on the way.

Jim Chalmers says while there will be significant measures to address rising prices when he hands down his third budget on Tuesday, it won’t add to inflation pressures.

While the relief of $107 billion in changes to stage three tax cuts will be front and centre in the budget, Dr Chalmers said other measures would complement it.

“There will be additional cost-of-living relief in addition to a tax cut for every taxpayer. Those tax cuts are the foundation stone of the cost-of-living help in the budget, but there’ll be some more help for people as well,” he told Sky News on Sunday.

“The cost-of-living relief in this budget won’t be identical to what we’ve seen in the past, but it will be substantial.”

Treasurer Jim Chalmers
 Jim Chalmers expects the budget to put downward pressure on inflation. Image by Mick Tsikas/AAP PHOTOS 

The changes to stage three tax cuts will kick in from July, which will see low and middle-income earners retain more of their pay cheque than the original proposal.

While inflation has eased since the previous budget, the Reserve Bank expects it won’t fall back into the target band of between two and three per cent until mid-2026, based off its latest forecast.

Inflation in the year to the end of March stood at 3.6 per cent.

“We do expect the budget to put downward pressure on inflation rather than upward pressure, in every budget we update all the forecasts,” Dr Chalmers told ABC TV.

“These are uncertain times to make forecasts about the economy but people should expected to see one of the consequences of our budget is low inflation rather than higher.”

Treasurer Jim Chalmers and daughter Annabel
 Jim Chalmers and daughter Annabel bought Mother’s Day flowers from a local florist. Image by Russell Freeman/AAP PHOTOS 

Shadow treasurer Angus Taylor said dealing with domestic inflation needed to be the starting point of the budget.

“If we have another flop in this budget, Australians are going to pay a very, very high price,” he told ABC’s Insiders program.

“(The government) should be restrained in spending, they should make sure that the economy grows faster than spending, and that’s the exact opposite of what we’ve seen in the last two years.

“They think the best way to get the economy going over the medium term is to get the government to invest, we think it’s to get the private sector to invest.”

The treasurer said cuts to the petrol excise were not being considered despite rising fuel prices.

“We found a better way to provide that cost-of-living relief rather than chase the petrol price, which has been very volatile and which might become more volatile, given events and tensions in the Middle East,” he said.

Meanwhile, the Australian Council of Trade Unions has backed calls for continued wage growth in the budget along with further cost-of-living relief.

Union president Michele O’Neil is hoping the budget will continue the trend of boosting pay packets.

“Unions will also be looking for real cost-of-living measures in this budget, as well as commitments to decent well-paid secure jobs as part of the Future Made in Australia package,” she said.

“The resurgence in wage growth over the last couple of years has made a real difference to the lives of working Australians.”

Shadow treasurer Angus Taylor
 Shadow treasurer Angus Taylor is calling for spending restraint from the government. Image by Lukas Coch/AAP PHOTOS 

It comes as state education ministers urged the federal government to provide fair public school funding in the budget.

In a joint statement, the ministers from NSW, Victoria, Queensland, Tasmania and South Australia called for the schooling resource standard to be brought up to 100 per cent.

“Tuesday’s budget is the opportunity for the federal government to deliver its election commitment to get every school to 100 per cent of its fair funding level,” the statement said.

“Anything less than full funding would be unacceptable to the millions of families who attend public schools.”