If budget week taught us anything, it’s that the political fight is going to be increasingly about winning over “middle Australia” on cost of living and it could get nasty.
Treasurer Jim Chalmers has tried to walk a tightrope between acting in the best interests of the economy and shoring up Labor’s political fortunes., while staring down the left’s demands for even larger increases to JobSeeker, rent assistance, support for single mums and energy bill relief.
Chalmers says Dutton is “divisive” and that Labor will “not carve up Australians into different groups and try and pit them against each other”, but rather govern for everyone – the vulnerable and middle class.
The risk for Labor is that the government could “wear” the pain among over-leveraged home borrowers. A person with a $1 million variable rate home loan faces monthly mortgage repayment increases of more than $2000 since May last year. Some of the measures, such as power bill rebates, childcare subsidies and cheaper medicines will mechanically reduce the price of items directly measured in the consumer price index .Economists such as Outlook Economics’ Peter Downes and Barrenjoey’s Jo Masters say this will help reduce inflation expectations and lower inflation-linked pay rises for workers, including by the Fair Work Commission.
The section of the updated fiscal strategy now reads: “The government will improve the budget position in a measured way, consistent with the overarching goal of reducing gross debt as a share of the economy over time. “The budget is still unlikely to be a core factor for the rate decision in August, but may delay the timing of the first rate cut in 2024,” Evans said in an updated research note on Friday.
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