Treasurer Jim Chalmers has hailed the new stage three tax cuts before the new cost of living measures come into effect on Monday, maintaining the billions of dollars of subsidies would not be inflationary.
Treasurer Jim Chalmers says the Albanese government is “confident” about the “future trajectory” of inflation.
However, Mr Chalmers said they are “not complacent” about it.
“When you compare us to the rest of the world … our inflation peaked later and lower than most of those other countries, but our experience has been very similar otherwise,” he told Sky News Australia.
Speaking to Sky News Political Editor Andrew Clennell on Sunday Agenda, Mr Chalmers said he was focussed on “getting on top” of the inflation challenge in the Australian economy.
Mr Chalmers said inflation did not always moderate in a “straight line” and “zigs and zags on the way down”, before drawing comparisons to other economies, including the US where inflation ticked up before decreasing again.
All 13.6 million Australian taxpayers will receive a tax cut under the new measures, along with a $300 energy bill rebate and a swath of other relief measures.
Mr Chalmers discussed the new changes set to take effect from Monday on Sunday Agenda. Picture: Sky News Australia
“We’ve also designed that cost of living relief to put downward pressure on inflation, rather than being part of the problem,” he said.
Mr Chalmers was asked whether the Treasury’s inflation prediction of 2.57 per cent by the end of the year was too optimistic, to which the treasurer said he was confident about the future trajectory of inflation but maintained the Labor government was not being “complacent”.
“Our job here is to get on top of the inflation challenge without smashing the economy,” Mr Chalmers said.
He said the four per cent unemployment rate along with the “incredibly resilient” labour market was a “remarkable achievement”.
Mr Chalmers also argued the stage three tax cuts, about to flow to all taxpayers on Monday, would not be inflationary and millions of people and households were set to benefit from the “best combination of substantial, meaningful and responsible” cost of living relief.
Nationals Senate Leader Bridget McKenzie says inflation is “homegrown” and lies “very much at the feet” of Treasurer Jim Chalmers.
Unemployment fell from 0.1 per cent to four per cent in May.
“We’re grappling with it at a higher rate, for longer, than other countries internationally,” Ms McKenzie told Sky News Australia.
“That was made clear in the Reserve Bank Governor’s commentary earlier this year about this absolutely being a homegrown issue.
“When inflation stays higher for longer than it needs to be, that lies very much at the feet of Jim Chalmers and the decisions that his government has made in terms of not getting spending under control.”
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“When we changed those tax cuts at the start of the year, the Treasury made it clear that they didn’t expect it to put additional pressure on inflation beyond what was already factored into their forecasts,” he said.
“That’s because we used the same envelope as before, but made them fairer, made sure everyone got a tax cut, not just some people.
“Beyond that, we’ve designed the energy bill relief and the rent assistance, which comes in in September, to take some of the edge off inflation rather than add to it, so I am confident that the budget settings are right.”
Mr Chalmers said the Labor government recognised people who were “doing it tough” and welcomed the assistance from state governments.
The Treasurer was asked about Queensland’s $11 billion relief package and whether state governments’ cost of living measures could hurt the economy and boost inflation.
The new stage three tax cuts and cost of living relief will come into effect on Monday.
Workers earning $30,000 per year will receive an extra $354 back.
Every household will receive a $300 energy rebate which automatically comes off energy bills.
“I welcome the assistance from the state governments, including here in the great state of Queensland, because they recognise, as we do, that people are doing it tough,” he said.
“We have a responsibility to help where we responsibly can, and I’m confident that they’re doing that the right way.
“I engaged with Treasurer Cameron Dick here in Queensland, and with other treasurers, to make sure that we’re providing that relief, doing it in the most responsible way that we can, conscious of all the other pressures in the economy.”