Treasurer Jim Chalmers rules out pre-election cash splash, new tax cuts

Treasurer Jim Chalmers has downplayed the prospect of new cost-of-living relief and ruled out a pre-election “spend-a-thon” as the Federal Government tightens its belt to contain inflation.

Dr Chalmers said voters should not expect major big-spending measures in next month’s mid-year economic update or in the Federal Budget, which is due to be handed down in March.

Neither of the major parties are committing to new income tax cuts ahead of the election, with Dr Chalmers ruling it out and Opposition leader Peter Dutton continuing to walk away from promised relief to higher-income earners.

The treasurer’s comments on Monday confirm Labor will resist the temptation to spend its way to a second term in office as it tries to assure voters it isn’t responsible for stubbornly high inflation.

“If there’s a defining feature of our economic management, its responsibility,” Dr Chalmers told reporters in Canberra.

“People shouldn’t anticipate the mid-year update or the budget to be some kind of free-for-all of public spending.”

The Opposition has repeatedly blamed “unnecessary” Federal Government spending for high prices, which it claims has left the Reserve Bank with little choice but to keep interest rates on hold.

Ongoing speculation of a March election has cast doubt over whether the Federal Budget will go ahead as scheduled.

Dr Chalmers confirmed Prime Minister Anthony Albanese had asked him to prepare for a March budget.

Mr Dutton said people were “stressed to the max … because the government has taken decisions which have forced up inflation”, leading to higher grocery prices and other bills.

“I think what we’ve seen here in Australia – and perhaps there’s some parallel in the United States with this – the Prime Minister has made a deliberate decision, a deliberate political decision, to go with the elites, and he’s left behind people who are struggling in the suburbs,” he told Sky News.

“If you look at the Prime Minister’s own lens on the world. He looks at it through the Grayndler lens … He’s obsessed with the Greens, and he’s forgotten about people who are working out in the suburbs.”

Dr Chalmers said the Government was one “that governs for the whole country”.

Meanwhile, an anticipated election fight on income tax might yet fizzle out as both parties steer clear of expensive campaign promises.

After engineering the redesign of the old stage 3 cuts earlier this year, Dr Chalmers said voters should not expect Labor to pitch a “big new income tax cut policy” at the 2025 ballot.

But the treasurer suggested it would be naïve to assume there wouldn’t be changes at some point this decade, as new Parliamentary Budget Office (PBO) analysis reveals Australian workers face a half-a-trillion increase in income tax if the rates and thresholds are not adjusted.

The Coalition was promising a tax package “in keeping” with the old stage 3 tax cuts but that commitment is now in serious doubt after Mr Dutton last week said the state of the budget would determine if it was included in its election platform.

Mr Dutton again refused to commit to the promised tax cuts when pressed on Monday.

“So let’s see how much money is in the bank, and let’s see what room we have to move,” Mr Dutton told Sky News.