The shadow treasurer, Jim Chalmers, says a Labor government will consider further support to ease cost of living pressures if necessary once the temporary cut to fuel excise ends in September.
In his budget reply speech in Canberra on Tuesday, Chalmers also committed to improving the quality of government spending, saying the Coalition’s budget handed down last week was “chock-full” of waste that could be trimmed.
The pledge to assess cost of living pressures comes as the reserve bank warned on Tuesday that inflationary pressures would continue to mount “over coming quarters”, arising from higher petrol and commodity prices.
Underlying annual inflation is at 2.6%, while in headline terms it is 3.5%.
Chalmers said that if Labor formed government it would have the opportunity to “reorient” the budget before the end of the year, and said it would consider the economic circumstances at the time as it assessed extending support for cost of living pressures.
“We’ve said it’s hard to imagine a world where the cash handouts in the current budget will continue indefinitely, and that’s just been upfront about the pressures in the budget,” he said.
“Having said that, clearly if we are putting a budget together whenever it might be on the advice of the Treasury, clearly we will play the cards that we are dealt and if there is a need for more support, then clearly we will look at that.
“But our starting point is that the support that passed through this parliament in the middle of last week is temporary.”
On the task of fiscal repair, Chalmers criticised the government for the short-term nature of its budget and paraphrased Kevin Rudd’s criticism of the Coalition’s profligacy.
“To paraphrase another Queenslander – I say this to Scott Morrison and Josh Frydenberg: this reckless rorting and wasteful spending must stop,” Chalmers said.
“If it’s not the time to flick a switch to austerity, it is the time to flick a switch to quality.”
When asked about what savings Labor would make, Chalmers said he believed there was an opportunity to improve the budget by looking at quality investments and also targeting multinationals to ensure they paid their “fair share” of tax.
“There is a gap, I think, when it comes to budget repair in the future,” he said.
“There is a task to deal with the stupendous waste and rorts that we’ve seen in the budget. Discretionary fund after discretionary fund, allocated by colour-coded spreadsheet, that is a problem in the budget.
“Because every dollar wasted in that fashion is a dollar you can’t invest in the economy or you can’t provide support for people doing it tough.
“There is an opportunity to reorient the budget, which we would like to get the opportunity to do before the end of the year, into more quality investments.”
Chalmers nominated spending on government contractors as one measure Labor may change, saying it could save in the “low billions”.
He said a Labor government would also look to “trim” discretionary funding programs, but said it was difficult in opposition to know what funding had been committed and where it was being spent.
Chalmers also reaffirmed Labor’s commitment to the controversial stage three tax cuts due to come into effect in 2024, and criticised the Coalition’s 23.9% tax to GDP cap as “arbitrary”, saying it had been imposed for political reasons.
He was pessimistic about the near-term prospect of being able to deliver a surplus, saying both the budget and the most recent intergenerational report indicated it would be “some time” before the budget was back in the black.
Chalmers’s budget in reply speech came as the prime minister, Scott Morrison, sought to take credit for falling fuel prices, holding a press conference at a petrol station in Sydney to spruik the cut to excise announced in last week’s budget.
“I’m very pleased to see already what we thought might even take a bit longer than this, that we’re seeing that cost of living relief flow through to Australian families, for individuals as they’re going off to work, getting around the city and ensuring that they can get that cost of living relief now,” Morrison said.
“Cost of living relief that’s been provided by good economic management, strong budget management.”
Petrol prices have dropped markedly since the budget, but this has been credited mostly to changes in the global oil market price rather than the 22-cent a litre cut to excise.
When Morrison was asked if he would also take responsibility for petrol prices going up before the election, he said: “Prices will still move around, but what I do know is they’ll be 22 cents a litre less than what they would otherwise be.”
