Cost-of-living relief could be coming for more Australians in 2024
The Age
December 22, 2023
Millions of working Australians are in line for more cost-of-living relief after Prime Minister Anthony Albanese admitted households were still doing it tough.
In his clearest message yet that the government will use the new year to deal with the financial pressures faced by many, Albanese said relief for low and middle-income earners was under active consideration.
Anthony Albanese says the government will consider further cost-of-living relief in the new year.
“We’ll continue to look at what we can do for cost-of-living relief going into the new year,” he said on ABC TV’s 7.30 on Thursday night.
“It’s something that we examined in the lead-up to MYEFO and the lead-up to the budget in 2024; we’ll be giving proper consideration for how we assist, particularly low and middle-income earners who we understand are under pressure.”
The spending power of Australian households has gone backwards due to the combined pressures of high inflation, high interest rates and growing income tax payments.
Higher interest rates, tax payments drive real incomes to record lows
Wages have risen, which has increased how much tax workers pay. But that wage growth has not kept pace with inflation, meaning real household disposable incomes have gone backwards by 5.6 per cent, a rate never seen before, according to Commonwealth Bank analysis.
The increase in income tax payments, which was buoyed by a surge in people in work as well as the end of the low and middle-income tax offset, helped deliver the first budget surplus in 15 years and has put a second surplus for 2023-24 within the government’s reach.
The government has revised its forecast income tax take for this financial year, and now expects to collect $328.8 billion from working Australians in 2023-24.
From July 1 next year, all workers earning over $45,000 will get to keep more of their income when the stage 3 tax cuts come into effect. However, higher earners will get the lion’s share of the roughly $20 billion a year that is being put back into worker’s pockets.
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Those on a median income of about $60,000 would get $375 back each year, or $14.42 a fortnight, while those earning $140,000 would get to keep an additional $3275 a year or nearly $126 a fortnight, according to Anglicare Australia analysis.
While the federal government decided not to extend the low and middle-income tax offset, which ended in 2021-22, the low-income tax offset remains in place for workers earning up to $66,667. That tax offset, of up to $700 depending on an eligible worker’s income, was first introduced 30 years ago.
Independent economist Chris Richardson said it was very difficult economically to help with cost-of-living pressures without making the problem worse. Giving people more money through tax cuts would lift spending, which would add to inflation and could mean interest rates stayed high for longer.
But he said if the government did want to take action, increasing JobSeeker and rent assistance would help those struggling the most, while temporarily increasing the low-income tax offset was another option.
“It may be the sort of thing the government is looking at. Maybe they’re looking at other things,” he said, noting the next federal election was drawing nearer.
“The politics of doing something are strong and getting stronger; the economics have always been the challenging part.”
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