Australia’s center-left Labor government said on Monday it would include A$14.6 billion ($9.84 billion) over four years in the federal budget to provide for families and businesses, promising not to fuel inflation.
The federal government said the plan is designed to directly mitigate pressures on prices and inflation, which fell in the first quarter but remained near 7.0%, its highest level in 30 years.
“The centerpiece of the budget … will be cost-of-living relief that won’t make inflation worse,” Treasury Secretary Jim Chalmers said in a statement ahead of the federal budget on Tuesday.
“People are under the pump. We’ve carefully calibrated and designed this budget to relieve pressure on the cost of living rather than exacerbate it.”
The government is expected to unveil budgetary financial aid for more than 5 million low-income families, small businesses and retirees struggling with high electricity bills.
Chalmers has said repeatedly that his budget will be moderate in spending so as not to increase inflationary pressures, while providing some relief, after the Reserve Bank of Australia surprised the markets last week by raising its rates, defying the expectations of traders who had been planning for a long pause.
The Reserve Bank of Australia warned on Friday that inflation risks are rising due to weak productivity growth, rising energy prices and rising rents.
The latest relief measures come after the government set aside A$11.3 billion to increase wages for the elderly over four years, while announcing an additional 5% tobacco tax and A$2.4 billion in additional taxes on oil and gas producers.
The budget is expected to show a sharp contraction in Australia’s deficit as its coffers fill up with tax revenues from commodity exports, but the outlook will be muted as fiscal challenges loom on the horizon.
($1 = 1.4830 Australian dollars)