The prime minister, Anthony Albanese, has told his MPs to brace for “difficult decisions” in the government’s first budget as he flags cost of living relief in the face of further interest rate hikes.
As the Reserve Bank of Australia lifted the official cash rate to a seven-year high of 2.35% on Tuesday, Albanese said he was aware of the impact it would have on families already feeling the pinch from rising inflation.
Amid the growing cost of living pressures, the government on Wednesday will introduce legislation to fulfil an election pledge to lower the price of medicines, with the maximum co-payment under the pharmaceutical benefit scheme to be cut from $42.50 per prescription to $30.
The move, which is estimated to save $190m in out-of-pocket costs each year, comes as a new report from Suicide Prevention Australia found a surge in the number of people feeling financially stressed, which experts warned was a risk factor for suicide.
Speaking after the launch of the report, Albanese said he acknowledged the pressures facing families, which was why the government would introduce legislation for cheaper medicines and cheaper childcare.
“What we’re talking about today is just an absolute tragedy, the fact that nine people will end their life today is something that is a scourge on our society,” he said.
“We need to do much better and today, this morning is an opportunity to pay tribute to those frontline workers who are doing such extraordinary work under enormous pressure themselves, to help their fellow Australians.
“We understand the pressures that people are under, and we wanted to undertake measures that alleviate cost of living pressures.”
He later told MPs that the 25 October budget would have an eye to further reducing cost of living pressures, but the government would also be forced to make some “difficult decisions”.
“We will soon be preparing our first budget and we need to address the cost of living issues Australians are facing while being mindful of the trillion dollars of debt we have inherited,” he told a meeting of caucus.
“We must be straight with Australians about the challenges before us and the difficult decisions we must take.”
On Tuesday, the opposition also vowed to keep pressure on the government over cost of living, with the leader of the Nationals, David Littleproud, flagging “hand-to-hand combat” over the issue.
In question time, the treasurer, Jim Chalmers, said the cash rate decision would “tighten the screws on family budgets”.
“The markets had anticipated it and home owners were expecting it as well but the fact that we knew it was coming doesn’t make it any easier for people,” he said.
“It is our job to do what we responsibly can to help Australians deal with these pressures in the near term, and to build a much more resilient economy into the future.”
Chalmers is also under growing pressure over the government’s backing of the contentious stage three tax cuts, which will cost the budget $243bn over the decade when they come into effect in 2024.
While both the treasurer and prime minister insist there has been no change to Labor’s position, which was to support the third stage of the cuts, pressure is growing on the government to abandon the policy given the changed economic circumstances.
When asked by the Greens’ MP for the seat of Brisbane, Stephen Bates, how the cuts were “good for the economy”, Chalmers offered a lukewarm response, emphasising there was still two years before the cuts were due to come into effect.
“Our priority is to focus on some of the nearer term issues in our economy, some of the issues which were essential to the jobs and skills summit which was held here in Canberra last week,” Chalmers said.
“The most pressing thing that we can do in the economy is to responsibly deal with people’s costs of living pressures in a way that delivers an economic dividend.”
“I know there is a lot of debate and discussion about those tax cuts. I listen respectfully, obviously, to all points of view that are put to us about the future of those tax cuts, but our focus is on some of the nearer term pressures.”
The opposition leader, Peter Dutton, who told Coalition MPs there would be “tough times ahead”, called on the government to outline how it would deal with cost of living concerns.
“I genuinely feel for families who, at the moment, are trying to work out how they’re going to pay their electricity bill,” Dutton said.
“It’s clear to me that this government has no plan to try and help the Australian families who are under pressure at the moment, and that pressure is mounting.”
