The Labor government’s first budget could push up the cost of living and increase inflation, Treasurer Anthony Albanese has admitted.
Jim Chalmers revealed the Government’s priority would be to provide funding and support to flood victims in NSW, Victoria and Tasmania.
However, he admitted the move would have a “significant impact” on the cost of living.
That could lead to another spike in grocery prices, and it’s unclear how high the cost to Australians will be.
It comes after Anthony Albanese was accused of breaking an election promise by giving Australian families false hope their electricity bills would be cut by hundreds of dollars a year.
Anthony Albanese promised to cut bills for Australian families. His treasurer has now admitted the new budget is likely to increase the cost of living
This could lead to another rise in grocery prices and it is unclear how high the cost to Australians will be
The Prime Minister led Labor to an election victory in May with a promise to cut electricity bills by $275 a year within three years.
But with inflation rising to a 32-year high, wholesale electricity prices tripling in just one year and gasoline prices tipped to rise above $2 a gallon. liters again within a few weeks, it is unlikely that he will be able to keep the promise.
“There will be a significant impact on the cost of living, there will be a significant impact on the budget, and no one is pretending otherwise,” said Dr. Chalmers to the Nine Network on Tuesday.
“We don’t yet know what the full impact will be on the cost of living, we don’t yet know how many billions of dollars this flood and its recovery will cost.”
Dr. Chalmers was speaking ahead of next Tuesday’s federal budget, which will be his first as treasurer.
“What we don’t want to do, and we’ve seen this overseas, is provide the cost of living in a way that just creates more inflation and pushes interest rates higher than they would otherwise be,” he said.
‘It is not an easy balance to find, but we are trying to find it for the right financial reasons.
“The UK government itself recognizes that they may have got this balance wrong and they are trying to recalibrate their settings,” he said.
‘It is an important lesson for all of us. What we have tried to do is to make sure that the cost of living we provide does not make the Reserve Bank’s job more difficult.’
Jim Chalmers revealed the Government’s priority would be to provide funding and support to flood victims in NSW, Victoria and Tasmania
Dr. Chalmers admitted the move would have a “significant impact” on the cost of living
Australians are already nervous about the economy, with NAB’s September Consumer Satisfaction Survey showing consumers need to find an extra $170 a week to spend on groceries, petrol and electricity bills.
With 100 days to Christmas, that’s an extra $2,040 – with economists also tipping at least one more Reserve Bank interest rate hike before the end of the year.
Sydney radio 2GB afternoon host Jim Wilson has previously accused Mr Albanese and his government of making outlandish election promises that were bound to be broken.
“There is no doubt that electricity prices will also rise under a Coalition government,” Wilson told listeners.
‘But Labor went to the election with an iron-clad promise to cut electricity bills by $275 a year by 2025.
‘If you make a promise, you keep it.’
The average electricity bill since April has risen by $300, or 25 per cent for a middle-income home, Australian Competition and Consumer Commission chairwoman Gina Cass-Gottlieb told a parliamentary hearing in Canberra on Wednesday.
Inflation in the year to July rose 7 per cent – the fastest pace since 1990 – and the Reserve Bank of Australia expects it to reach a new 32-year high of 7.75 per cent in 2022.
The big four banks all expect another RBA rate hike by the end of the year with the cash rate already at a nine-year high of 2.6 per cent, after six consecutive monthly rate hikes since May.
Borrowers have not endured so much pain in such a short space of time since 1994, when Australians paying off an average $600,000 mortgage this month were forced to find an extra $89 to service their repayments.
While inflation moderated to 6.8 percent in August, data from the Australian Bureau of Statistics showed an annual increase of 18.6 percent in fruit and vegetable prices following flooding in crop-growing southeast Queensland.
Gasoline prices rose at an annual pace of 15 percent, despite a six-month halving of fuel taxes to 22.1 cents per liter that ended at the end of last month.