The prime minister, Scott Morrison, says the government will deliver a cost of living package that will offer relief “right across the Australian community”, amid growing expectations that the fuel excise will be cut.
As he announced a $365m extension of an apprenticeship wage subsidy scheme in Perth on Sunday, Morrison said the budget would seek to provide financial assistance to households without driving up inflation.
“This budget once again is about Australians – the pressures they face, the cost of living pressures that they’re having to deal with. To guarantee the essential services that they rely on, to ensure that we can keep them safe (and) that we can support the defence forces that secure our position in a very volatile Indo-Pacific region,” Morrison said.
“It’s about the economic plan which is going to guarantee their economic success, not just over the next couple of years, but for the decade ahead.”
He said the government’s record in managing the pandemic demonstrated that it had the financial credentials to “keep the pressure on inflation down”, saying Labor would have paid people to get vaccinated and unnecessarily extended jobkeeper.
“The problem with Labor is when they start spending they can never stop – they don’t have the discipline. We have the discipline to know when you need to spend and when you need to stop.”
The government has already announced a number of measures ahead of Tuesday’s budget, including business cashflow assistance, new health funding, infrastructure commitments and more money for veterans and defence.
But the shape of the government’s cost of living package – expected to be the centrepiece of treasurer Josh Frydenberg’s fourth budget – remains unclear.
The government is pegging its pre-election political recovery on the budget, with current polling figures suggesting an uphill battle for the Coalition to win the May election.
There has been robust internal debate over whether to extend or increase the tax offset for low and middle income earners, but Frydenberg has insisted this was always intended as a temporary measure that had worked as an economic stimulus.
Low and middle income earners on up to $126,000 a year are already in line to receive the payment of up to $1,080 when they lodge their tax return for the current financial year.
With the economy recovering strongly and expectations that inflation could hit 5% this year with wages lagging behind, Frydenberg has indicated an additional but more modest cash payment for wage earners and some welfare recipients will be forthcoming.
Pensioners are expected to receive a $250 payment as part of the pre-election cash splash.
Frydenberg also suggested the government would cut the 44c per litre fuel excise to help motorists with the price of petrol, which is now more than $2.20 a litre.
“Fuel prices have skyrocketed and for many families this is not a choice” Frydenberg told the ABC on Sunday.
“These are costs that families are incurring and, of course, are putting real pressure on household’s budget.”
Frydenberg is also flagging a “significant” improvement to the budget bottom line, which is benefiting from soaring commodity prices, higher than expected tax receipts and lower payments.
“That’s the fiscal dividend we are getting to the bottom line from having a strong economy,” Frydenberg said in a separate interview on Channel Nine.
The shadow treasurer, Jim Chalmers, said Labor was “broadly supportive” of a cut to fuel excise that would help address cost of living pressures, but said there also needed to be consideration of reforms that had “enduring economic benefit”.
“Certainly Australians need some kind of relief from these costs of living pressures. Petrol is a big part of the story, as everybody knows, but it’s not the only part of the story,” Chalmers told the ABC’s Insiders program.
“We think that there is a place for cost of living relief in the childcare system, we think there’s a place for cost of living relief when it comes to power bills, and our policies go to those solutions.”
