Five million households and one million businesses will receive up to $500 relief on their power bills under a $1.5 billion package in Tuesday's federal budget.
Separately, the treasurer has confirmed next week's budget will contain changes to the gas industry profit tax.
Under the bill relief measure, pensioners, small businesses and people on government payments will have their electricity subsidised.
But the size of the assistance will depend on where you live, as the Albanese government has had to negotiate eight different energy agreements with state and territory governments.
"More than 5.5 million households will get some assistance with their electricity bills, and around a million small businesses will be eligible as well, to take some of the edge off what is the key drivers of these cost of living pressures," Treasurer Jim Chalmers said in an interview with the ABC.
"People will be getting several hundred dollars if they're on pensions and payments, or a small business, but depending on where you live, depending on what the price pressures are, depending on how much the states and territories are prepared to kick in, because this is a co-investment with them."
Shadow Treasurer Angus Taylor said his test for the budget would be whether it put downward pressure on inflation.
"Everyone is being hurt by inflation — the whole lot of us ... and so if you want to help all Australians, all vulnerable Australians, not just the ones you can identify and the ones you are picking out, if you want to help all vulnerable Australians you've got to get the inflation under control," Mr Taylor said.
Treasurer previews changes to profit tax for gas industry
Mr Chalmers used the interview to also confirm a $2.4 billion increase in Petroleum Resource Rent Tax paid by oil and gas companies on their offshore liquefied natural gas projects over the next four years.
The changes to the PRRT follow months of negotiation with the sector and will kick in from July 1.
Rather than allowing companies to fully deduct their project costs against income, as is the case now, deductions will be capped at 90 per cent.
"Australians will get a fairer return on their resources sooner and what this change means is about $2.4 billion in the forward estimates which the gas companies wouldn't be paying, the offshore LNG projects wouldn't be paying, were it not for this change," the Treasurer told the ABC.
"This means more tax sooner from these projects. And it means that it can help fund our cost of living package and other priorities in the budget."
PRRT, which was first introduced in the 1980s, generates on average about $2 billion a year and has been long criticised for providing insufficient return to Australia.
The peak lobby group for the industry, the Australian Petroleum Production & Exploration Association, appears to have endorsed the PRRT changes, saying they aim to get the balance right "between the undeniable need for a strong gas sector to support reliable electricity and domestic manufacturing for decades to come and the need for a more sustainable national budget".
"PRRT revenues are already at their highest level ever, forecast to deliver revenue of more than $11 billion over the forward estimates," APPEA chief executive Samantha McCulloch said.
"This outcome also closes out the long-running Callaghan Review, informed by public consultation, and will ensure the ongoing efficiency and administration of the PRRT regime."
She said a "bipartisan approach" was needed to provide investment certainty and called on the government to work "constructively and cooperatively" with the Opposition.
Mr Chalmers said the whole parliament should support the changes.
"My message to the Greens in the Senate is if they vote against this, they're voting for lower taxes from these projects," he said.
"And my message to the Coalition is that every time they vacate the field on important, modest, responsible but meaningful changes like what I'm proposing today, they deal the Greens in and that's not something the industry wants."
Mr Taylor said he regularly spoke with energy companies but would not confirm whether they had lobbied him to accept the reforms, and said the opposition would wait to see the detail before making a judgement.
Budget improvement not solely from commodities
Tuesday's budget will show a massive improvement in the bottom line.
In October, Treasury was forecasting a $36.9 billion deficit for 2022-23.
While Mr Chalmers would not confirm whether the budget would show a surplus instead, he said there was a big improvement — but not just because of bumper commodity prices.
"That's a common misconception about the improvement in the budget," Mr Chalmers said.
"Commodities are an important part of the story but not the biggest part of the story — only about a fifth of the improvement is from higher commodity prices.
"Improvements in the labour market, lower unemployment and higher wages growth, that makes the biggest contribution — 40 per cent — [while] 20 per cent is commodity prices."
Asked by the ABC if the budget would put downward pressure on inflation, Mr Chalmers said: "We've designed and calibrated this budget so that it takes pressure off the cost of living, rather than add to it."
$4 billion lift for critical services
The budget will also increase indexation for funding for government and community services, including mental health, disability, domestic violence and homelessness services, the Medicare Benefits Schedule and community nursing.
"If you are a health provider, if you're a service provider — you might be doing suicide prevention, you might be providing other key services in our communities — it makes your funding base stronger, more sustainable, and it means you can pay your bills and pay your workers," Mr Chalmers said.
"They are under substantial pressure and what the Finance Minister [Katy Gallagher] is doing with this change, this $4 billion change, is to make it easier for people to pay their bills and pay their workers so they can continue to provide these absolutely essential services in our communities."
