As the Australian federal election date approaches, politicians are grappling with the challenge of balancing economic responsibility with public pressure for relief from inflation. The article explores the delicate balancing act between fiscal policies that support the Reserve Bank's efforts to control inflation and the need to address the financial struggles of Australian households.
As the latest possible federal election date of May 17 approaches, politicians across the spectrum are gearing up to fight for the votes ofBoth the government and the Coalition have spent most of the current parliamentary term talking about responsible spending, and they’ve been right to do so because since the 2022 election, the Australian economy has gone through serious turmoil.
This is important. Let’s take a hypothetical scenario: say inflation is coming down slowly and the RBA is happy with the economy’s progress, but then the government decides households are struggling too much, so it is now going to give every working Australian a one-off cash injection of $500 to help tide them over.Most economists would expect most people would spend the bonus pretty quickly which, in turn, would tip a bunch of extra cash into the economy.
This all sounds well and good from a policy standpoint, but it’s trickier from a political perspective. When households around the country are still smarting from years of rapid price increases in everything from groceries and utility bills to housing costs, they want the government to do something about it. For the government, it gets even trickier when you’re trying to encourage those same people to either elect you or put you back in power at the same time.
Admittedly, tax reform policy isn’t something that can be done on the run – it takes time to formulate. But luckily for Labor and the Coalition, independent MP Allegra Spender has done a lot of the groundwork already.on the country’s tax system that handily highlighted six priority areas for reform that could assist the economy, including rebalancing tax so that it favours home ownership over investment in existing dwellings, and so that it doesn’t penalise certain groups.
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