In his third annual budget since taking office in 2022, Treasurer Jim Chalmers pledged more money for renewables, critical minerals and defence, alongside a long-planned cut to income taxes by an average A$1,888 a year for each taxpayer.
The government will spend billions to cut energy bills and rent, hoping to lower headline inflation and provide relief for voters grumbling about cost-of-living pressures ahead of an election next year.
“The number one priority of this government and this budget is helping Australians with the cost of living,” Chalmers said in his budget speech to parliament.
“Annual inflation has more than halved from its peak in 2022 … but we know people are still under the pump. That’s why we designed our cost-of-living policies to ease these pressures.”
The government estimates the proposed A$3.5 billion ($2.31 billion) in energy bill relief – equivalent to an annual A$300 rebate for every household – will reduce headline inflation by around half a percentage point for the fiscal year ending June 2025.
Treasury now expects an easing in inflation back to the central bank’s 2-3% target band by the end of this year.
That would be a welcome surprise for the Reserve Bank of Australia, which was forecasting inflation to pick up to 3.8% by the year end from the current 3.6%, raising the risk of another interest rate hike.
The ambitious inflation projections come as Prime Minister Anthony Albanese’s Labor government faces growing criticism over soaring consumer prices ahead of a federal election due by early next year.
Total revenue for 2024/25 is expected to be A$711.5 billion, while total expenses are seen at A$734.5 billion.
Investing in Labor’s “Future Made in Australia” subsidy programme was the other big theme of the budget, with the government pledging to pour in more than A$20 billion over the next 10 years to help domestic industries compete globally.