Chalmers ends energy rebates as budget bites
The Albanian government’s $300 electricity bill subsidy will be canceled at the end of the year, Finance Minister Jim Chalmers announced in a press conference that heralded tough calls for a budget update later this month.
“This marks a shift in the way we provide cost of living relief,” Chalmers said at a press conference in Canberra. “This is a shift from temporary measures first agreed when inflation was almost 8 per cent to ongoing cost of living assistance.”
“This was not an easy decision, but it was the right decision. It was a difficult decision we made as a cabinet, but it was the right decision.”
“He recognizes the pressures on the budget, recognizing that there is more than one way to provide this cost of living relief that people still need in their household budgets.”
The subsidy, which provides a $75 discount on three-month electricity bills to all households and many small businesses, was extended by six months in this year’s budget. Along with significantly larger state government subsidies, it also helped lower electricity prices.
Without these subsidies, electricity prices would have increased by 22.2 percent since mid-2023. Instead, it rose 8.2 percent.
Extending the subsidy until 2026 would cost the government an estimated $2 billion.
Chalmers said the next phase of Labour’s tax cuts would deliver more effective cost-of-living relief than energy subsidies.
“We provide assistance with utility bills through the tax system and by providing other cost-of-living assistance, and as I have said several times, that cost-of-living assistance changes over time, but our commitment to providing meaningful and responsible assistance remains constant,” he said.
“We will provide other forms of cost-of-living assistance.”
Chalmers refused to answer questions about further cuts.
“I am not ready to go into detail about these. I have already announced a difficult decision we made as a cabinet today. There will be other difficult decisions in the mid-year budget update,” he said.
On Monday morning, Deloitte Access Economics warned that the federal budget will never come ashore again, amid calls for the Albanian government to make radical reforms, including a $54 billion overhaul of personal income taxes and cuts to generous tax incentives for real estate investors.
Shane Wright- Shane is the senior economic correspondent for The Age and The Sydney Morning Herald.Connect with: excitement or email.
