Treasurer Jim Chalmers has stepped up his sell on Labour’s renewed tax cuts, publishing new analysis showing households are expected to pocket an average tax cut worth more than $3,000 next financial year.
The intervention comes as opposition leader Peter Dutton stepped up his attacks on Labor on Saturday, accusing the government of “failing economic management”.
His criticism came amid renewed concerns from the Reserve Bank and economists that big spending budgets risked running counter to efforts to rein in persistent price pressures.
Unveiled eight days before the tax cut is due to be implemented, new Treasury analysis reveals the average household with children is expected to pocket a tax cut of $3,268 next financial year, equivalent to $63 a week.
Households without children are expected to receive more modest relief, with the Treasury estimating an average annual tax cut of $1,716, which is equivalent to $33 a week.
Treasurer Jim Chalmers has stepped up his sell on Labour’s renewed tax cuts, publishing new analysis showing households are expected to pocket an average tax cut worth more than $3000 next financial year (image from archive)
Households without children are expected to receive more modest relief, with the Treasury estimating an average annual tax cut of $1,716, equivalent to $33 a week (file image)
Speaking on Sunday, Dr Chalmers said families and Central Australia were set to be the biggest beneficiaries of the stage three package introduced in January.
“Our priority is to fight inflation and reduce the cost of living,” said Dr Chalmers.
“Our economic plan aims to help Australians earn more and keep more of what they earn and that’s why we are focused on strong, sustainable wage growth and cost-of-living tax cuts coming into effect at starting July 1.”
But, addressing the party faithful a day earlier, Dutton criticized the government for having “awakened the ugly politics of envy” through its tax changes.
“The cost of living crisis gripping our nation is Labor’s own fault,” Dutton told the Liberal Party’s annual federal council in Sydney.
“Instead of easing the pressure on inflation by curbing wasteful spending, the (Anthony Albanese) government has increased spending by a staggering $315 billion.”
“Australians are paying 20 per cent more in personal income tax since the last election,” he said, referring to the impact of rising wage levels, as higher wage growth, driven by the current inflationary contraction, reinforces workers’ taxable income.
AMP chief economist Shane Oliver said while cost-of-living relief could prove popular with voters, the government’s decisions were “making the RBA’s job more difficult”, which would ultimately delay mortgage relief.
Speaking on Sunday, Dr Chalmers said families and Central Australia were designed to be the main beneficiaries of the stage three package introduced in January.
“It is once again a reminder of why the responsibility for delivering inflation is in the hands of the RBA and not politicians,” Dr Oliver said.
“Unfortunately, this means we have to continue to rely on the blunt instrument of high interest rates, with their unfair impacts on different parts of the community.”
That view was shared by Westpac economists who sounded the alarm over the increased cost of living support, which will be implemented from July 1, warning that tens of billions of spending in state and federal Labor budgets They threatened to fuel inflation.
“The question is not whether fiscal environments are less restrictive and more accommodative, but whether they are certainly more accommodative,” said Pat Bustamante, senior economist at Westpac.
‘The growing fiscal impulse will be additional support, but increases inflation risks, particularly in areas where capacity constraints exist, such as the construction sector.
“If concerns about persistent price pressures continue, this may increase the risk that interest rate relief will be delayed.”
Dutton criticized the government for having “awakened the ugly politics of envy” through its tax changes.
The new investigation comes after RBA officials on Tuesday indicated growing concern that big spending budgets risked increasing demand and undermining monetary policy.
“Recent budget results may also have an impact on demand, although federal and state energy rebates will temporarily reduce headline inflation,” reads the RBA’s June meeting statement.
In addition to Labour’s tax package, households will also benefit from a $300 energy rebate in the next financial year, cutting $75 off energy bills in the September quarter. The measure will be complemented by additional electricity rebates in certain states, including Queensland and Western Australia.
Following the federal government’s intervention in national wages, 2.6 million minimum and premium wage earners will see their pay packages increase by 3.75 percent from July 1, an increase equivalent to 33.10 dollars per week at least.