Jim Chalmers has announced a $5.7bn investment in Medicare and an increase in jobseeker and commonwealth rent assistance for all ages as the centrepieces of Labor’s first full-year budget aimed at helping Australians “under the pump”.
In his speech on Tuesday evening promising to “[see] people through the hard times – and [set] our country up for a better future”, the treasurer claimed the cost-of-living relief measures in the 2023-24 budget would shave 0.75% off inflation.
These include help paying energy bills, a $40-a-fortnight raise in jobseeker and 15% boost to the maximum rate of rent assistance.
Business groups, including the Australian Chamber of Commerce and Industry, praised Labor’s “fiscal restraint” but the shadow treasurer, Angus Taylor, argued that with “$2 of extra spending for every $1 extra of revenue” the budget was inflationary.
After 11 interest rate rises Chalmers said the budget aimed to “strike a considered, methodical balance … between spending restraint to keep the pressure off inflation, while doing what we can to help people struggling to make ends meet”.
The budget predicts tough economic conditions in the 2023-24 financial year, with real gross domestic product growth of just 1.5%, and unemployment rising to 4.25% due to higher interest rates and slowing household consumption.
Chalmers said the government couldn’t “throw the kitchen sink” at inequality but it had been “really targeted about it so as not to make cost-of-living pressures worse”.
“We understand Australians are under the pump right now,” he said.
The government will spend $4.9bn over five years on a rise of $40 a fortnight – or $2.86 a day – to help 1.1 million Australians on jobseeker and other working-age payments, including youth allowance and Austudy.
While the base rate will rise for all, eligibility for the existing higher rate of jobseeker for those aged 60 and over who have been on the payment for nine months or more will be lowered to 55.
As a result of the changes from 20 September, a single person with no children on jobseeker under the age of 55 will receive at least $733 a fortnight, with further rises on top from regular indexation. Long-term unemployed people over 55 will get $785, an increase of $92.10 a fortnight for the 55-to-60 cohort.
A further $2.7bn will be spent increasing the maximum rate of commonwealth rent assistance by 15%, benefiting about three-quarters of those eligible for CRA, including 80% of students.
“This will provide up to $31 extra a fortnight for people renting in the private market and community housing – the largest increase in more than 30 years,” Chalmers said.
Labor hopes to lay claim to being superior economic managers compared with the Coalition by delivering a projected $4bn surplus in 2022-23.
Chalmers told reporters in Canberra the $125.9bn improvement in the bottom line over five years since the Coalition’s last budget in March 2022 was the “biggest-ever forecast improvement in a budget in dollar terms … on record”.
As a result, gross debt to GDP will peak “lower and earlier at 36.5% of GDP in 2025-26, $154bn less than was expected”, he said in his budget speech.
But the budget returns to a deficit of $13.9bn in 2023-24, with spending to exceed revenue by $110bn over five years, resulting in gross debt exceeding $1tn in 2025-26.
Chalmers told reporters that while the priority was “helping people who are most vulnerable, who are doing it toughest, that doesn’t mean middle Australia is missing out”.
“On the contrary – this is a government very, very focused on the prospects of middle Australia,” he said, citing measures including health spending and electricity bill relief.
The biggest component of the $5.7bn increase to Medicare is $3.5bn to address declining bulk-billing rates of patients on low incomes and children. That measure will help 11.6 million Australians access a GP without out-of-pocket costs by tripling incentives for consultations with concession card-holders and patients aged under 16.
Labor will also expand on its promise of Medicare urgent care clinics, with eight new clinics to take pressure off hospital emergency departments.
Households will be able to access $1bn in low-cost loans for double glazing, solar panels and other improvements that will make homes easier – and cheaper – to keep cool in summer and warm in winter.
The budget contains the $3bn electricity price relief package, passed in December, with $1.5bn of commonwealth spending matched by the states to be spent over two years. That will deliver savings of up to $500 to 5.5m households, including pensioners, seniors and families receiving tax benefit A or B and 1 million small businesses.
Chalmers said the government’s policies – including the price cap on coal and gas – meant electricity price increases were 25% less than what was projected, and gas 16% less.
He told reporters the $4bn investment in Australia’s potential as a renewable energy superpower would help it “seize the industrial and economic opportunity from being a net zero economy”.
Before budget night, the government revealed it had made $17.8bn of savings and “reprioritisation” of funding. The budget papers show it also expects to shrink the growth in the national disability insurance scheme from a projected $17.2bn over four years to just $1.9bn, a saving of $15.3bn.
While Chalmers has credited improvements in commodity prices, unemployment and real wages growth for the improved bottom line, the budget papers also show the government aims to increase the GST tax take by $3.8bn over five years with a compliance crackdown.
The multinational tax avoidance crackdown, built on the OECD’s 15% minimum tax floor, will net just $370m extra, while costing $111m.
Chalmers revealed that the controversial stage-three tax cuts would cost $69bn over four years but declined to give a 10-year figure for the “old decision” legislated by the Morrison government.
After delivering the budget Chalmers told ABC Labor had “more work to do, but tonight we made substantial progress” on reducing the structural deficit, indicating a need to collect more revenue.
The Greens leader, Adam Bandt, said the budget was a “betrayal of renters and jobseekers”, noting that 5.5m renters do not receive commonwealth rent assistance and the $1 a day increase in that payment was dwarfed by ballooning rents.
“You can’t pay your rent with a surplus,” Bandt said.
In the lead-up to the budget speech Taylor told the Coalition party room that cost-of-living relief was likely to be little more than a “Band-Aid on a bullet wound” and argued that a “drover’s dog” could have delivered a surplus in the current environment.
