When questioned about Labor’s budget spending, Prime Minister Anthony Albanese insisted that the billions of dollars in additional spending wouldn’t make Australia’s inflation situation worse.
Overnight, the Albanese government released its second budget, which featured a tiny $4.6 billion surplus, the first since 2007.
The budget’s centerpiece was a $14.6 billion cost-of-living package intended to reduce power costs, offer more affordable daycare, increase assistance, and improve Medicare.
The Coalition is worried that the government’s cash injection would increase inflationary pressure and force the Reserve Bank to raise the cash rate above its present level of 3.85% as Labor injects billions back into the economy.
Speaking to Tom Connell on Wednesday, Mr. Albanese insisted that the government had produced a “responsible” budget that reduced costs of living for Australians who were struggling while keeping inflation in check.
Over the two budgets, passed last night and in October of last year, Mr. Albanese claimed that $40 billion had been saved.
“We’ve applied 87% of the revenue increases directly to that bottom line to reduce debt and to lower interest payments on that debt in order to relieve inflation pressure.”
“So this is a responsible budget that has also found room to offer support through measures like our Energy Price Relief Plan and our price caps on our gas and coal introduced in December last year, are estimated by Treasury to take three quarters of a per cent off inflation,” the budget reads.
Connell then pressed Mr. Albanese on analysts’ worries that Labor’s intention to raise welfare benefits and cut childcare expenses might have an overall negative impact on inflation.
According to Tuesday’s budget statement, the government would cover up to 90% of the cost of childcare for families with a combined income of less than $530,000.
Welfare payments for JobSeeker and Youth Allowance recipients would increase by $40 fortnightly, while those over 55 will enjoy a boost of $92.10 fortnightly.
We’re also targeted in that area, and we make no excuses for making sure that we solve that issue, Mr. Albanese said. “It will make a huge difference, but it won’t add to inflation because it will raise productivity, it will boost labor participation, and we’re also targeted in that area.
“Our fee-free TAFE, another example, is something that will lower the costs for people pursuing TAFE, while also boosting the economy and providing the skills that are needed. This is a responsible measure that will have a positive impact on the economy and address those supply chain pressures that have been identified.”
Peter Dutton, the leader of the opposition, however, thinks Labor’s significant spending will lead to future rate increases by the Reserve Bank, which will eventually worsen conditions for Australian people.
There was nothing for families who are already $25,000 worse off under this government in the budget last night, Mr. Dutton said on Wednesday. “So under this budget at the very least we know interest rates will be higher and for longer,” he said.
We have the highest core inflation of any G7 nation, but it isn’t because of what happened in Ukraine; rather, it’s because of what has been happening in Canberra over the past 12 months.
Jim Chalmers stated earlier on Wednesday that Treasury advice made it “very clear” that the budget was created and “carefully calibrated” to address cost of living issues rather than raise inflation.
“It’s really important to note that the combination of the measures in our energy plan are actually applying downward pressure to the inflation forecast in the budget,” he said.
And because not every component of this cost-of-living package affects the economy at once, subsequent measures are not anticipated to exacerbate these inflationary issues.
