Australian govt pledges $10bn to ease cost of living pressures

Treasurer Jim Chalmers insists measures will not add to the country’s already high inflation.

A nightfall skyline view of Sydney Harbour with the Sydney Opera House and the central business district om the background. Two people are silhouetted sitting on an outcrop in the foreground.
Australia's inflation rate is hovering at 30-year highs [File: Loren Elliott/Reuters]

Australia’s centre-left Labor government has pledged to include 14.6 billion Australian dollars ($9.88bn) in the federal budget for cost-of-living relief for families and businesses, promising it will not stoke inflation.

The plan announced on Monday is designed to directly ease price pressures and inflation, the federal government said, which retreated slightly in the first quarter but still sits near 30-year highs of 7 percent.

“The centrepiece of the budget … will be cost-of-living relief that doesn’t add to inflation,” Treasurer Jim Chalmers said in a statement, ahead of Tuesday’s federal budget.

“People are under the pump. We’ve carefully calibrated and designed this Budget so that it takes pressure off the cost-of-living rather than add to it.”

The financial assistance will be spread over four years and be targeted at more than 5 million low-income families, small businesses and pensioners struggling with high power bills.

Chalmers has repeatedly stated his budget would be restrained on spending so as not to add to inflationary pressure while also giving some relief, after the Reserve Bank of Australia (RBA) last week stunned markets with a rate rise, defying trader expectations for an extended pause.

The RBA on Friday warned that risks to inflation were on the upside given low productivity growth, rising energy prices and a surge in rents.

The latest relief measures come after the government set aside 11.3 billion Australian dollars ($7.64bn) for wage rises for aged care workers over four years, while announcing an additional 5 percent tobacco tax and 2.4 billion Australian dollars ($1.62bn) in more tax on oil and gas producers.

Australia’s deficit is expected to shrink sharply, the budget is expected to show, as its coffers bulge with tax windfalls from commodity exports, yet the outlook will be a sober one as fiscal challenges loom.

Source: Reuters