‘Hitting the nail on the head’: Prime Minister’s economic promise

Albania’s government is defending its cost-of-living benefits, including tax cuts for all taxpayers that come into effect on Monday, against fears they will fuel inflation and lead to higher interest rates.

Premier Anthony Albanese and Treasurer Jim Chalmers on Sunday advanced stage three tax cuts and other measures including a $300 energy rebate and a wage hike for low-income workers, denying they would overstimulate the economy.

Albanese, during a visit to an Indian sweets factory in Melbourne, said the government was doing what it could to bring down inflation while helping Australians.

“Our goal is to make sure we address the short-term issues that are causing cost-of-living pressures on families,” he said.

“But we also want to make sure we have the right economic conditions, which is why we have achieved budget surpluses that put downward pressure on inflation.”

He said the Sweet Magic plant was the right place to talk about the government’s economic plans “because our goal is to hit the nail on the head.”

“This is the perfect solution to put downward pressure on inflation while also lowering the cost of living,” he said.

“Tomorrow will be a big day – 2.6 million bonus earners will receive a pay rise and 13.6 million Australian taxpayers will receive a tax cut.”

Fears the RBA will raise rates from 4.35 per cent, its highest level since late 2020, rose after the CPI rose to 4 per cent in May.

Chalmers said he hoped inflation would be subdued despite May and March figures of 3.6 per cent, above the RBA’s target of 2-3 per cent.

The Australian Bureau of Statistics will release a major report for the June quarter on 31 July, just days before the next RBA board meeting on 6 August.

Michele Bullock, the RBA Governor, has always said that if necessary, the RBA will raise interest rates again to bring inflation under control.

History continues

On Sunday, the opposition went on the attack, with senior MP Michaelia Cash saying the government’s package would do nothing to help Australians.

“Coming back to the real world, when Australians wake up today, they will find it difficult because of the policies of this government,” she said in an interview with Sky News.

“It’s not inflation; This is jimflation.”

Shadow Treasurer Angus Taylor blamed inflation on the government.

“The Albanian Labor government has utterly failed to address the root of Australia’s cost of living crisis – inflation,” Mr Taylor said in a statement.

“We are in a deep cost of living crisis and Labor sees no light at the end of the tunnel.

“The Albanian Labor Party government has no vision for a low-inflation, high-growth economy. They have no plan for economic prosperity.”

Mr Chalmers acknowledged that many households were “in a difficult position” due to higher costs of living and higher interest rates, but said he expected government policy to be “helpful in the fight against inflation”.

“We are confident, but not satisfied, that we will overcome this inflation problem,” Mr Chalmers said.

“We can provide cost of living relief and we can improve the fiscal situation without destroying the economy.”

Speculation about another interest rate hike gained momentum on Wednesday after hotter-than-expected inflation data encouraged investors to increase bets on another rate hike ahead of the next RBA meeting.

“I think it’s abundantly clear that the interest rate increases that are already in place in the system are putting a lot of pressure on people,” Mr. Chalmers said.

“We have seen this in many economic indicators. I understand that, and that’s another reason why this help tomorrow is so important.”

But he warned that Australians should not expect easing inflation to be easy.

“This inflation in our economy will continue to fall. It doesn’t always fall perfectly straight”

“We have also seen this around the world. And we see it here in Australia too.

“But our role is to make people’s lives easier.

“That’s why tax cuts, energy bill reductions, wage increases, cheaper medicines, paid parental leave – that’s what all of this was designed for.”

Meanwhile, all federal politicians will receive a pay rise on Monday following a decision by an independent adjudicator, the Remuneration Tribunal.

Mr. Albanese will receive a $20,543 raise, bringing his annual salary to $607,500, while Deputy Prime Minister Richard Marles will receive a $16,197 raise, bringing his annual salary to $478,983.

Opposition Leader Peter Dutton will receive a pay rise of $14,617, taking his annual pay to $432,250.