Signalling a new direction . . .
On October 25, Australia’s Treasurer, Jim Chalmers, released the governing Australian Labor Party’s first budget after winning the country’s general election in May. As predicted, the budget re-cast Australia’s socio-economic priorities after the conservative Liberal/National coalition’s near decade in power. Key among the changes is a move away from the Liberal/National coalition’s support for fossil fuel-generated energy, a promise to build one million affordable housing units from 2024 to 2029, and family-friendly policies in the form of less expensive child care and an expansion of paid parental leave. Chalmers positioned the budget as “responsible, not reckless” while beginning to address cost-of-living concerns as inflation reaches its highest level since 1990.
Addressing surging energy prices . . .
Of major concern in Australia, as in most other countries, is the rapidly increasing cost of energy. Pre-budget forecasts indicated an increase in average retail electricity rates of 56 per cent over two years and a significant bump in natural gas prices. Labor’s budget includes a C$17.6-billion fund focused on energy transmission, which will facilitate the connection of low-cost wind and solar energy to the country’s existing energy grid. At the same time, Labor has requested the Australian Competition and Consumer Commission review the code of conduct of the country’s natural gas industry to reduce prices charged to Australian consumers, both households and businesses. Australia is the world’s largest exporter of LNG, and prices paid by Australian consumers reflect spiking global prices following Russia’s invasion of Ukraine.
Delaying a tough decision on tax rates . . .
One controversial policy Labor did not address in the budget is what is being referred to as ‘stage three tax cuts,’ essentially the reduction of tax rates on employment income between A$45,000 and A$200,000 (C$39,630 and C$176,130). These tax cuts were passed in 2019 by the then-governing Liberal/National coalition, with Labor’s support, and Labor campaigned on a promise to keep the cuts in advance of the election earlier this year. But many analysts point out that while Labor is uncomfortable with upper-income earners paying relatively less tax at a time when fiscal pressures are escalating, and a relatively higher tax burden is being borne by lower- and middle-income earners, Labor’s traditional supporters, it also needs to keep its pre-election tax promise to demonstrate to the electorate that it can be trusted.
- Australian Broadcasting Corporation: The dirty secret at the heart of the federal budget – the poor will pay, and the government needs them to
- The Guardian: Federal budget: Jim Chalmers flags intervention in energy market as prices surge
- The Sydney Morning Herald: Labor talks tough on power bills as unions, industry call for faster action