Investment in the “clean energy transformation”, additional measures to tackle housing affordability and a cost of living package targeted at the most vulnerable but “not all limited by age” will feature in Tuesday’s budget, the treasurer has said.
Jim Chalmers revealed key elements of the budget in an advance interview with Guardian Australia confirming it would show a “substantial improvement” in the bottom line built on “better prices for our exports”, lower unemployment and “welcome wages growth, faster than anticipated”.
Chalmers said the budget would be “nowhere near balance” if the government had “spent most of the revenue upgrades like our predecessors did, instead of saving them like we did in October and like we will in May”.
On Friday Chalmers told reporters in Canberra that Labor’s approach of “ambitious government … built on a foundation of responsible economic management” would be “vindicated” in Tuesday’s budget, hinting at a surplus or budget close to balance.
But on the surplus which senior economists including Chris Richardson believe is within reach, the treasurer insisted the “final numbers” would be revealed on budget night.
With inflation having reached its peak, real wage growth is now expected by early 2024 and unemployment to peak at 4.5% in 2024-25.
Chalmers revealed updated forecasts on wages, with real wage growth of 0.75% for the year to June 2024, up half a point since the October budget, and on unemployment, predicted to be 3.5% in the June quarter of 2023 and 4.25% in the June quarter of 2024, both an improvement of a quarter point since October.
After the 11th consecutive interest rate rise on Tuesday, Chalmers said the budget’s impact on the economy was “broadly neutral”, noting the Reserve Bank’s governor, Philip Lowe, had acknowledged the government “is not making his job harder”.
“Our job in this budget is to provide responsible cost of living relief, targeted to the most vulnerable people in ways that don’t add to inflation, at the same time as we show spending restraint in the budget and invest in the drivers of growth including in areas like the clean energy transformation,” Chalmers told the Guardian.
Chalmers said energy bill relief would “take some of the edge off” higher electricity prices and inflation while energy transformation would help make Australia “more resilient to international shocks like the war in Europe”.
“The clean energy transformation is the most important part of our plans to grow the economy in the budget,” he said. “Clean energy will be absolutely front and centre.”
On Friday the government revealed it will create a national net zero authority, delivering on unions’ expectation of an authority to help the energy transition and redeployment of workers.
The government has been pushed by its poverty experts on the economic inclusion advisory committee for a “substantial” increase in “seriously inadequate” jobseeker payments and by the women’s economic equality taskforce to abolish the activity test for childcare subsidies, which is not expected in the budget.
Guardian Australia and other outlets have reported that the increase in the jobseeker base rate is likely to be limited to people aged over 55.
Chalmers said that pre-budget speculation is “very rarely the full story”, hinting at further measures, believed to be one-off payments that apply irrespective of age.
“People will see our cost of living package on Tuesday night. They’ll see that it is broader than any one initiative. They will see that it targets the most vulnerable people and will be delivered in the most responsible way.”
Asked to guarantee that elements of the cost of living relief package will apply across the board, Chalmers promised “broad support for the most vulnerable in the budget, and it won’t all be limited by age”.
On Friday Chalmers said there would be “additional measures” to address the fact “that housing for a lot of people is the pointy end of the spear when it comes to this cost-of-living challenge”.
In the interview, Chalmers said Labor had a “big, broad agenda” on housing that would include “new tax breaks for investment in build-to-rent [housing]” to tackle low vacancy rates and high rents by increasing supply.
This includes changes to the withholding and depreciation rates which the housing minister, Julie Collins, told Guardian Australia would have a “substantial” impact, adding 10,000s of houses to supply by some models.
Chalmers said that place-based responses to poverty were one of his “obsessions”, citing a long interest in “pockets of opportunity and pockets of disadvantage in our country”.
“It has troubled me for my entire adult life that even when unemployment is at 3.5% nationally, there are communities like mine that can’t grab the opportunities that the national economy is creating.
“So there will be in the budget – I think for the first time – a substantial package of place-based initiatives which recognise that disadvantage is entrenched in communities like the one I grew up in and I want to try and do something about that.”
On Friday the government revealed $200m for place-based responses to poverty, which will be invested in “local organisations” and encourage philanthropy to tackle intergenerational disadvantage.
Chalmers said the budget would contain “modest but meaningful” revenue-raising measures, with details of the multinational tax crackdown to be added to the already announced tobacco excise rise and “slightly less generous” superannuation tax concessions for big balances.
The crackdown would be “consistent with the [Organisation for Economic Co-operation and Development] proposals”, which were for a minimum 15% tax rate and a limit on debt-related deductions.
“The budget will account for them, they … will align us with a really important international agenda, so that multinationals pay a fair share of tax in the countries where they make their profits,” Chalmers said.
“We will have more to say about the [petroleum resource rent tax] in due course.”
