Treasurer Jim Chalmers has ruled out an immediate extension of the 26-cent cut to the fuel excise in next week's federal budget, while downplaying expectations for further tax relief for workers. In what he describes as the government's fifth and most responsible budget yet, Chalmers emphasised that there will be limited room for additional cost-of-living support.
Budget to Play Helpful Role in Inflation Fight
Speaking ahead of the Reserve Bank's monetary policy meeting, which is widely expected to result in a third consecutive interest rate hike, Chalmers assured that the budget would play a helpful, not harmful, role in combating inflation. He noted that Australians are already bearing a heavy price due to the Middle East conflict, which has exacerbated existing inflationary pressures.
Chalmers stated, 'That's one of the reasons why the budget must be, and will be, so responsible. We will save more than we spend in the budget.'
Fuel Excise Cut Not Extended
The treasurer confirmed that the temporary halving of the federal fuel excise, which is set to expire at the end of June, will not be extended in the upcoming budget. He pointed out that petrol prices have fallen substantially from their March highs. However, he left the door open for future action if the economy deteriorates more quickly than anticipated.
Possible Changes to Investor Taxes
Chalmers also addressed potential changes to negative gearing and the capital gains tax discount, which are being considered as part of reforms aimed at intergenerational fairness. While these changes would break a pre-election promise not to alter negative gearing, the treasurer argued that trust is built by taking the right decisions for the right reasons and being upfront about evolving views.
He clarified that any revenue from these investor tax changes would not be used to fund additional tax relief for workers, noting that the government has already implemented tax cuts and has more scheduled. The budget will also include over $2.5 billion spent on the fuel tax cut and the standard deduction, providing some additional relief.
Limited Room for Cost-of-Living Support
Chalmers warned that there is little scope for further cost-of-living measures in this budget, as the government focuses on fiscal responsibility. He emphasised that the budget must be calibrated to current economic conditions and the pressures people are facing, both now and in the long term.
