No More Cost of Living Relief As Australian Government Focuses on Budget Repair

People shop for fresh produce at the Queen Victoria Market in Melbourne, Australia, on July 4, 2023.William West/AFP via Getty Images

Australian Treasurer Jim Chalmers has stated that the government is currently not considering more living cost relief but instead will focus on repairing the budget to alleviate the pressure facing households.

This comes as the federal Labor government is expected to deliver a budget surplus of around $20 billion (US$13.46 billion) for the 2022-2023 financial year, an improvement of $52 billion compared to the deficit of $32 billion in the previous year.

Mr. Chalmers has rejected calls for more government handouts to households struggling with the high cost of living. He also noted that the huge surplus had not come at the expense of helping people.

In an interview with the Australian Broadcasting Corporation, the treasurer said the recently introduced cost-of-living measures were playing their roles and that it was more important to have a healthier budget.

“We’ve got a cost‑of‑living package which we’re rolling out right now, which is really important. It will help people with out‑of‑pocket health costs and rent and medicine costs and across the board, and that’s really important,” Mr. Chalmers said.

“But having a Budget which is in much better nick means that if–at some future point–and we’re not contemplating additional measures right now–but at some future point if we need to, we do that from a much more solid foundation and that’s because we’re managing the budget so responsibly.”

Treasurer Jim Chalmers during the budget lockup at Parliament House in Canberra, Australia, on May 9, 2023. Martin Ollman/Getty Images

In the May budget, the federal government unveiled a $14.6 billion living cost package, sparking concerns about worsening inflation.

The treasurer also argued that there was no need for the government to choose between responsibly managing the economy and providing cost‑of‑living help at the expense of each other.

“I think for too long, the economic debate has been dominated in this country by this false choice between responsibility and compassion,” he said.

“The textbook response in the kinds of economic conditions we confront together is, you get the budget in much better nick–not at the expense of people doing it tough–but so you can provide a much more solid foundation to help them.”

Opposition’s Response

After Mr. Chalmers revealed the government’s plan for the federal budget, Shadow Finance Minister Jane Hume said the treasurer was “moving in the right direction” by controlling government spending despite pressures from other ministers whom she said had a wish list of things they wanted to spend.

“He’s moving in the right direction. I think he’s actually listening to the messages from the Coalition that the most important thing he can do to bring down inflation is to rein in those spending ambitions,” she told Sky News.

“It takes an awful lot of discipline from a treasurer and indeed from a finance minister to say no to those spending ambitions.”

Ms. Hume also said the only way to bring down the cost of living was to curb aggregate demand that included government expenditures.

Shadow Finance Minister Jane Hume during a doorstop in the media gallery at Parliament House in Canberra, Australia, on March 18, 2021. Sam Mooy/Getty Images

Prior to this, Shadow Treasurer Angus Taylor criticised the Labor government for the $185 billion extra spending in the 2023-2024 budget, saying it needed a proper fiscal policy.

“That’s an enormous fuel they are throwing on the fire,” he said.

“They need to have a fiscal policy to take the pressure off, not adding to the pressure.”

Reserve Bank Governor’s Position Yet to Be Revealed

Meanwhile, the treasurer still declines to reveal the government’s pick for the Reserve Bank governor’s position despite the supposed deadline coming close.

The incumbent governor Philip Lowe’s seven-year term will expire on Sept. 17.

Despite helping the Australian economy navigate the COVID-19 pandemic, Lowe has been subject to heavy criticism for giving unclear messages indicating that interest rates would remain low until 2024, which turned out to be untrue.

While Mr. Lowe has expressed his willingness to assume another term, there have been speculations that the government will choose a new face from a “secret shortlist” of candidates.

“I'll be taking my recommendation to the Cabinet colleagues about the position of the Reserve Bank Governor up soon,” Mr. Chalmers said.

“I don’t want to pre‑empt the timing or the nature of that discussion because I genuinely want this to be–think of it this way, this is one of the most important appointments that the government will make and it’s a big job as we talked about last time, it’s a big call.”

The treasurer also noted that he had consulted with the opposition on the issue despite not being obligated to.

Mr. Chalmers and Mr. Lowe are set to fly to India to attend the G20 Finance Ministers and Central Bank Governors meeting in the week commencing July 17.