Australians have been told to expect little extra help with soaring living costs as the treasurer signals a tightening of the budget as he tries to rein in persistent inflation.
The mid-year budget update, to be released in December, would include more savings as the government faced billions of dollars in higher debt repayments due to rising borrowing costs, Treasurer Jim Chalmers said.
While Labor was yet to finalise the fiscal blueprint, he hosed down expectations of cost-of-living help for households.
“I think people understand that the mid-year update will necessarily be a pretty tight ship and that’s because of pressures on our budget,” Dr Chalmers told ABC’s Insiders program on Sunday.
“One of the primary influences will be the need to find more savings.”
The government has all but ruled out reinstating the fuel excise cut introduced in April to help motorists deal with high prices driven by war in the Middle East.
Tightening of disability and aged care spending were both significant features in the May budget, but Labor has also faced broad criticism for running consistent deficits at a time of high commodity prices and tax receipts.
Australia’s annual headline inflation rate climbed to four per cent on Wednesday as the impact of high oil prices continued to filter through the economy.
A day earlier, the Reserve Bank hiked interest rates to 4.6 per cent, the fourth rise of the year.
The bank’s former governor Philip Lowe said the government should run large budget surpluses – not deficits – and cut spending to take pressure off inflation.
Australia’s final budget outcome for 2025/26, released on Monday, was a $22.3 billion deficit.
That was about $6 billion better than the figure projected in the May budget, but higher government borrowing costs as global bond yields spike have hit the bottom line.
Dr Chalmers maintained budget settings were not the primary driver of inflation, again pointing to the impacts of the Iran-US war as the primary cause.
“There is very, very substantial and intensifying pressure, not just on our budget, but on budgets right around the world,” he said.
Reserve Bank governor Michele Bullock recently said Australia’s unemployment rate, which was at 4.6 per cent in August, needed to rise to help bring inflation under control.
The nation’s jobless rate is below the OECD average and that of several comparable countries, such as Canada and New Zealand.
But assistant minister Andrew Charlton said touting higher unemployment as a solution was fundamentally against Labor values.
“As a Labor government, it is a big priority for us to make sure that we don’t go into a recession that drives a lot of people into unemployment,” he told News24’s Sunday Agenda.
Shadow treasurer Tim Wilson said Labor’s economic management had been a disaster for household budgets.
“This government continues to spend with abandon,” he said.
“They have little concern for the impact that they’re having on the Australian taxpayer.”
Mr Wilson did not disclose how a coalition government would bring the budget back into surplus, saying the opposition would announce clear policies before the next election.
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