Federal Treasurer Jim Chalmers says a backbench push for more cost-of-living relief is “not unusual”, as the government faces pressure to do more in its mid-year budget update.
Mr Chalmers will today meet with Labor MPs calling for additional relief, but said next month’s Mid-Year Economic Financial Outlook should be considered an update, not a “mini-budget” with additional relief measures.
“The colleagues know we are delivering relief already … it’s not unusual for me to confer with my parliamentary colleagues about our economic policies, I do that in all kinds of different ways.
“It would be stranger if I didn’t do that.
“They are reflecting, as good members and good senators should, the very real pressure people are under in our communities, the communities we represent.”
He said the government had already implemented electricity bill relief, measures to damped cost increases to early childhood education, cheaper medicines and boosts to income support payments.
And while saying he would not get “too carried away” by the monthly figure, Mr Chalmers welcomed yesterday’s news that inflation had moderated beyond expectations to 4.9 per cent over the past 12 months.
Shadow Treasurer Angus Taylor said the government should not congratulate itself on the recent result.
“Australia has the stickiest, most persistent inflation of any advanced country,” he said.
“We have amongst the highest levels of inflation of any advanced country. And indeed, we’ve seen the sharpest drop in household disposable income.”
OECD forecasts rate cuts from mid-2024
Overnight, the OECD published its latest forecast for the Australian economy, saying inflation had peaked and would finally moderate towards the Reserve Bank’s target rate of 2 to 3 per cent
It forecast that the official cash rate would be held at 4.35 per cent and be followed by 75 basis points, or 0.75 percentage points, of cuts from mid-next year to the end of 2025.
Ahead of today’s meeting with Labor MPs, the prospect of changing course on legislated tax cuts due to come into effect next year was raised again, with warnings by economists that the cuts would ultimately fuel inflation.
The government has repeatedly avoided any discussion of paring back the tax cuts, which were passed with the reluctant support of Labor in 2019.
Mr Chalmers repeated the government had not changed its position, saying their inflationary impact would already have been factored into Reserve Bank and Treasury forecasts.
“Because they were legislated so long ago, they have been factored into the baseline of the Reserve Bank’s forecast, and indeed the Treasury’s forecast,” he said.
“We haven’t changed our position on stage 3, we do understand that people would like us to do that, one of the reasons they would like us to do that is they want to make sure we are helping people on low and middle incomes as well, and we are.”
Mr Chalmers also noted the government would not be forecasting a second surplus in its budget update, though there would be a “substantial improvement” to the government’s bottom line.
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