‘A Labor Class of Poor Working People’: Australian Opposition Leader Criticises Labor’s Budget

Australian Opposition Leader Peter Dutton (C) speaks to media during a press conference alongside Indigenous Senators Kerrynne Liddle (L) and Jacinta Price (R) in Adelaide, Australia on April 18, 2023. AAP Image/Michael Errey

Opposition Leader Peter Dutton has criticised the Albanese government’s budget, saying the “extra spending” will be inflationary while creating a “Labor class of poor working people.”

He said the government has failed to extend the low and middle-income tax offset, leaving Australians to face a tax hike from July.

“You’ve got a situation that Labor’s created over the course of the last 12 months where I think we’ve got a middle class of Australians, a working poor that Labor’s created,” Dutton told Seven News.

“[They are] people who are working their guts out, going to work, and just can’t keep their heads above the water.”

The Opposition leader also told 2GB on Thursday that while the Australian taxpayer is happy to support those who are in need, the government must help those that are most deserving.

“It’s not for people in a situation where they can get a job, but they refuse to take a job.”

The budget, announced by Treasurer Jim Chalmers on Tuesday, saw the government funnelling the massive tax revenue towards the healthcare sector, older welfare recipients, single parents, veterans, and renters receiving assistance.

However, middle to upper-class Australians who don’t receive any government assistance would find little joy in the budget.

While the government was optimistic about the A$4.2 billion (US$2.83 billion) surplus, a large part of it was made up of the massive tax revenue from the coal and iron exports, as well as high commodity prices and rising inflation.

Dutton said due to the cost of living pressure, middle-class Australians are getting “less and less” in their grocery baskets. He noted an average family with three kids is “about A$25,000 (US$16,839) worse off under Labor, over the course of the last 12 months.”

“I don’t have anything against Jim Chalmers, but he is developing a Labor class of poor working people,” he said.

“I think that is a devastating legacy.”

Labor Defends The Budget

Dutton backed the Labor’s planned expanded access to GP bulk-billing and energy bill relief. But he was critical of the Labor government’s policy to welcome 1.5 million migrants over five years, saying it would place a burden on city congestion and housing.

Meanwhile, Labor said the budget had been calibrated to help “middle Australia” and those doing it tough.

“Under our government, we are looking after people wherever they live, whatever their income, whoever they are,” Prime Minister Anthony Albanese said.

Meanwhile, Chalmers argued the government is striking a good balance and that the A$14.6 billion (US$9.83 billion) cost-of-living package would not add to inflationary pressures in the economy.

“We are supremely confident that the budget that we handed down last night will take some of these cost-of-living pressures off without adding to inflation,” Chalmers told a National Press Club lunch.

Asked about the impact of migration, Chalmers said the population forecasts were smaller than what they were under the coalition’s budgets.

Economists Weigh In

Rich Insight economist Chris Richardson told the National Press Club that he “had thought the Reserve Bank was done and dusted, but there’s a risk that the extra spending in the budget would add to the pressure on inflation and bring the Reserve Bank off the bench.”

Major ratings agency S&P welcomed the government’s decision to bank its revenue upgrades but warned the budget’s handouts may add to inflationary pressures.

Director Anthony Walker also said inflation would likely remain above the Reserve Bank’s target range until 2026, much later than the bank’s and Treasury forecasts.

Australian Taxpayers’ Alliance President said that despite the Treasurer’s claims that Labor is working to tackle inflation, Chalmers “almost immediately went on to announce over A$185 billion (US$124.61 billion) in additional budget spending.”

“You are paying for this. It will drive inflation even further. Labor’s plan of spending to curb inflation goes to show that over the long term, they have no clue about budget management,” he wrote on May 5.

“There is a dire need for substantive improvements to the budget balance in the coming years. While the 2022/23 improvement is a positive step, it will be inconsequential if the government fails to control the budget in 2023/24 and beyond. Responsible decision-making and necessary spending control measures must be implemented to ensure long-term financial stability.”

Meanwhile, economist John Humphreys from the ATA said that the “tax bonanza” happens every year, is “worth many billions of dollars, and largely goes unnoticed.”

“To give an example, over the two years from 2021/22 to 2023/24 the most recent budget projected the economy would grow by 7.5 percent. If income tax revenue matched that growth, then it would increase from $259 billion up to $278 billion. Instead, the budget predicted that income tax would actually rise to $304 billion, which includes a whopping $26 billion in bracket creep over those two years.”

But several economists, including NAB’s Alan Oster, considered the budget to have a relatively neutral impact on the inflationary environment.

“We see little implication for monetary policy in the near term, with the RBA likely to continue to focus on the ongoing pass-through of rates and the pace of moderation in inflation,” Oster and his colleagues wrote in an analysis.

AAP contributed to this article.