Federal Budget 2024: Treasurer Jim Chalmers details lower gross debt, ‘affordable’ cost-of-living relief

Treasurer Jim Chalmers says the Federal Government will do what it “can afford to do” in delivering cost-of-living relief in next week’s Budget but suggested the bulk of that relief will be through already announced tax cuts.

Just hours ahead of the Reserve Bank of Australia’s May decision on interest rates, the Treasurer also announced the expected levels of gross debt in the Budget would be $152 billion lower than had been expected by the Coalition for the 2023-24 financial year.

“To put that in context, that is roughly what we expect to spend on a combination of health and defence this year,” Dr Chalmers said at a press conference in Canberra on Tuesday.

He said pushing gross debt lower by that magnitude would save taxpayers about $80b in debt over the next decade.

Dr Chalmers was asked again about possible cost-of-living relief in the Budget amid speculation of interest rate cuts now not being likely until November, continuing the pressure on household budgets and exacerbated by a higher-than-expected inflation figure in the first three months of the year.

Inflation in the year to March 31 was 3.6 per cent, well down on a peak of nearly 8 per cent at the end of 2022 but still above the RBA’s target of between 2 and 3 per cent. Its rate rise regime has been targeted at pushing the rate lower but concerns remain about services given severe price hikes, particularly in sectors like insurance.

“I think everybody would acknowledge that the rate rises in the system are putting a lot of people under pressure,” Dr Chalmers said.

“They are one of the reasons, but not the only reason, why our economy and particularly consumption in our economy has slowed considerably.”

Dr Chalmers reiterated cost-of-living relief in the Budget would be responsible. Last year’s measures included an increase to Commonwealth rent assistance, utilities bill relief and childcare measures — but not to Youth Allowance or JobSeeker, which has been criticised by advocates.

The Treasurer said in economy’s “defining challenge, certainly in the near-term” was still inflation.

“People are under a lower cost of living pressure,” he said. “That’s why the Budget will try and ease what we can have that pressure primarily through a tax cut for every taxpayer, but with additional cost of living relief, as well.

“We’ll do what we can afford to do but we know people are under the pump.

“A key priority but not the key priority in the budget will be helping to ease the pressures that we understand people are under.”