CANBERRA, AAP – Treasurer Josh Frydenberg says the federal budget will deliver “targeted” cost-of-living relief for Australians while setting a path to balancing the government’s books.
Mr Frydenberg says the budget will reveal a trajectory where debt compared to the size of the economy will peak lower and earlier than initially thought in December 2021.
But the treasurer remained coy about measures in the budget that will help ease the cost of living as petrol prices soar and the price of everyday goods in Australia increase with inflation higher than initially expected.
“I’m not going to get on the sticky paper just a week out from the budget. There’s a lot of swirling speculation about what’s in and what’s out.,” Mr Frydenberg told the Nine Network.
“(But) whether it is TVs or motor vehicles, what we are seeking to do is to alleviate, reduce those costs of living pressures by putting more money into people’s pockets.”
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Mr Frydenberg says the government’s plan to relieve cost-of-living pressures will include “targeted and proportionate” help for families, while pointing to power bills already falling by eight per cent in the past two years, $30 billion in income tax cuts in train and $10 billion a year in childcare support.
But Shadow Treasurer Jim Chalmers says the federal government cannot be trusted on what it says about the economy.
Mr Chalmers says the March 29 economic blueprint on the eve on an election is “showing all the signs of another budget full of secret slush funds before the election and secret cuts after”.
“This Coalition government has barely anything to show for the record debt they had already multiplied even before the pandemic,” he said.
“After a decade of marketing and mismanagement, the dividend for Australians is skyrocketing costs of living, falling real wages, and families falling further behind.”
Mr Frydenberg is expected to tell an Australian Chamber of Commerce and Industry event in Canberra on Friday full employment is in sight, with the latest data showing a four per cent unemployment rate for February.
The budget papers will show gross debt as a proportion of GDP will peak lower and earlier than forecast in the mid-year review published in December, declining over the medium term.
“This is the fiscal dividend of a strong economy,” he says.
Mr Frydenberg says the economic support rolled out during the COVID-19 pandemic cannot go on, with continued funding actually doing more harm than good.
“It would risk putting further pressure on inflation, interest rates and cost of living,” he says.
The budget will continue the government’s conservative set of commodity price assumptions, notwithstanding iron ore prices sitting around $130 a tonne, thermal coal at a record $385 a tonne and metallurgical coal at a record $660 a tonne.
The government will also be sticking with its tax-to-GDP cap of 23.9 per cent.
“This imposes a discipline on the expenditure side of the budget and is consistent with the coalition’s values of cutting taxes, not increasing them, enabling Australians to keep more of what they earn,” Mr Frydenberg says.
Controlling spending growth while delivering essential services such as health and disability support will be a difficult balancing act for the government.
This would involve looking at the “efficiency and quality of government spending”, Mr Frydenberg says.
He pledges the government would not be “baking in” any new structural spending off the back of temporary revenue increases.
Mr Frydenberg is giving little away in terms of where salaries are heading, pointing to the mid-year review showing an upgrade of wages each year over the next four years and the national accounts showing average earnings up 3.4 per cent through the year.