A four-year $14.6 billion cost-of-living package will be the centerpiece of Labour’s second budget, which seeks to balance spending restraints with its election commitment not to leave people behind.
The final days of drafting the budget – which was printed over the weekend – saw mounting pressure, including from outspoken Labor Party members, to provide more aid to the underprivileged.
A strong revenue stream, including through wage increases, seems to have enabled the government to spend a little more on social benefits than initially intended.
There was speculation over the weekend, which the government refused to confirm or deny, about a possible modest overall rise in the number of job seekers. It was previously expected that the help of the Job Seeker would be limited to people over 55.
At the same time, the budget is being tipped to see a surplus this fiscal year, though Treasurer Jim Chalmers is constantly stressing the pressure it will face in the years to come.
The government says its cost-of-living plan, which includes already announced relief from utility bills and cheaper medicines, will not be inflationary, but will directly lower price pressures and CPI in 2023-24.
On Sunday, Chalmers, doing a round of media interviews, said five and a half million households would get help with their electricity bills, as well as about a million small businesses.
When asked about the maximum price reduction on utility bills, Chalmers said, “people get hundreds of dollars if they have pensions and payments or own a small business.”
The government has made deals with states and territories and aid will vary in different parts of the country.
Investments will also be made in energy efficiency.
About 40% of the turnover increase comes from strong employment growth and accelerating wage growth. About 20% comes from higher commodity prices and the rest comes from other sources, including higher corporate profits in the non-mining and financial sectors.
Read more: Budget shows real wages expected to start growing early next year and pledges efforts to ‘move the needle’ in underprivileged communities
The treasurer said the budget would be “in the best of Labor tradition – help for the vulnerable with cost-of-living pressures, an eye to the future and responsible economic management”. It would bring significant savings, substantial spending cuts and “modest but meaningful tax changes”.
One of the tax changes is an extension of the rental tax on petroleum resources, which means that the offshore LNG industry is more likely to pay more tax. The deductions are limited by the changes. This will increase revenue by $2.4 billion over future estimates.
The Australian Petroleum & Exploration Association responded kindly.
APPEA chief executive Samantha McCulloch said: “The changes are designed to strike the right balance between the undeniable need for a strong gas sector to support reliable electricity and domestic production for decades to come and the need for a more sustainable budget.” She said the announcement would “provide more certainty” for the industry.
Meanwhile, opposition leader Peter Dutton is under new pressure with another by-election on the horizon, following the weekend announcement by former minister Stuart Robert that he will soon leave parliament.
Robert, who is shadow treasurer, holds Fadden’s Gold Coast seat. He said he wanted to spend more time with his family.
Robert has had some bad publicity in relation to various controversies, and was one of the ministers overseeing Robodebt, which will be the subject of a report from the royal commission mid-year. He admitted to the committee that he had serious doubts about the scheme – which was found illegal – but argued that he had to defend it because of the cabinet’s solidarity.
Read more: Government to spend $11.3 billion in four years to fund 15% wage increase for aged care workers
Although shocked by the loss of Aston’s Victorian seat in the by-election, the Liberals would be sure to keep Fadden, which has a margin of more than 10%. Queensland is a strong coalition state and Dutton’s home state.
Nevertheless, over the weekend, Dutton stressed the importance of getting a local as a Fadden candidate. One – though not the main – factor in Aston’s loss was that the Liberal candidate was from a different part of Melbourne.
“We will pre-select someone who understands that part of the Gold Coast, and frankly we should be in that seat, pre-select someone who can become a future minister or leader of our party. So we will work hard with the LNP in Queensland to make sure we win,” Dutton said.
Former Prime Minister Scott Morrison is also expected to step down from parliament soon.