The Government’s Cost Of Living Relief Doesn’t Go Far Enough

Josh Frydenberg has delivered the 2022/23 Federal Budget ahead of the upcoming election and, unsurprisingly, the cost of living was a major talking point.

If you’ve filled up your car, purchased literally anything, or just merely existed in the world recently, you’d know that inflation is bonkers right now. The cost of living has skyrocketed and wages haven’t been able to keep up.

According to the Australian Bureau of Statistics, wages grew by 2.3 percent in the last 12 months, which — in theory — is good, but means absolutely nothing when you acknowledge the fact that the cost of living jumped by 3.5 percent in the same time period.

Naturally, the last few weeks have been filled with speculation as to how exactly the Morrison Government would tackle this, if it stands any chance of winning the election. But while some relief has been offered, the support doesn’t go far enough to actually address the issues at hand.

What Do You Actually Get Out Of The 2022 Federal Budget?

We must give credit where credit is due here, the Morrison Government’s Budget does exactly what Josh Frydenberg promised: it offers temporary, targeted relief. And, for the most part, it will offer some immediate relief amid times of otherwise financial hell.

“Higher fuel, food, and shipping costs are increasing inflation and stretching household budgets,” said Frydenberg. “Tonight the Morrison Government announces a new temporary, targeted and responsible cost of living package to ease these pressures.”
From midnight tonight, the fuel excise — which previously accounted for the first 44c per litre you pay for fuel — will be halved to 22c for the next six months.

This is expected to offer immediate relief for perhaps the most obvious issue impacting Australians right now: fuel prices. Essentially, these savings should be passed on to the consumer as soon as your local petrol station exhausts the fuel it already has on site, with the ACCC stressing it will monitor petrol stations to ensure this happens.

“It will take a couple of weeks for these reductions to pass through,” said Frydenberg in a separate speech on Tuesday, noting that it may take longer to reach regional and rural areas than metropolitan areas.

However, you shouldn’t get too comfortable with lower fuel prices because the Budget papers stress that the excise will return.

“At the conclusion of the six month period the excise and excise-equivalent customs duty rates will then revert to previous rates, including indexation that would have occurred on those rates during the six month period,” the papers read, referencing the excise indexation that was initially due to kick in in August.

Considering fuel has been upwards of $2.20 in some areas in recent weeks, the temporary cut to the fuel excise is obviously a huge win to consumers — at least until September 28.

Introducing One-Off Cost Of Living Payments

Another immediate benefit that will be handed out by the Morrison Government comes in the form of a $250 cost of living payment for people on various welfare payments including JobSeekers, veterans, carers, and pensioners.

“Pensioners, carers, veterans, job seekers, eligible self-funded retirees, and concession card holders will benefit,” said Frydenberg.
Together, with existing indexation arrangements, this will see a single pensioner receive more than $500 in additional support over the next six months, just when they need it most. However, $250 really doesn’t stretch far right now.
The only other major cost of living measure implemented by the government in this Budget is a one-off cost of living tax offset for low and middle income earners under the LMITO.

“Individuals already receiving the low and middle income tax offset will now receive up to $1,500 and couples up to $3,000 from 1 July this year,” said Frydenberg. “This measure comes on top of the $40 billion in tax relief already provided by our Government since the start of the pandemic.”

This will directly benefit anyone earning under $126,000 during this financial year, which is undoubtedly a good thing. However, what Frydenberg neglected to mention in his speech is the fact that a vast majority of Australians will end up paying more tax from next year, when the LMITO is set to be axed.

While there are other measures such as $5,000 payments offered to new apprentices and wage subsidies to incentivise hiring apprentices, as well as medication subsidies, these incentives will only impact a portion of the population — while leaving a majority of Australians high and dry.

So, What’s Missing When It Comes To Cost Of Living?

Perhaps the most obvious red flag in this year’s Budget is that the measures offer temporary relief to the pain while giving no real solution to the problem: that wages aren’t growing as fast as inflation.

Until we actually address the issue of Australia’s stagnant wages and skyrocketing inflation, any temporary relief measures will be out of Australians’ pockets faster than they came in.

Despite Frydenberg’s repeated claims that lower unemployment will result in higher wage growth — a claim that has been made in years previous — there is no actual plan outlined in the Budget as to how this will actually happen.

This is despite countless calls from industry experts urging the government to actually increase minimum wage — calls that the government has rejected based on its policy of allowing FairWork to control this.
Just last week, Frydenberg asserted he would not “take lectures from the unions or the Labor party on wages” after ACTU boss Michele O’Neil asserted that the average Australian earning $68,000 annually is now $832 worse off as a result of inflation.

And What’s Albo Got To Say About It All?

In an interview with ABC’s RN Breakfast ahead of the Budget on Tuesday morning, Opposition Leader Anthony Albanese warned Australians not to trust the Government’s promises of wage growth, noting that the lower unemployment rate doesn’t account for underemployment and workforce casualisation.

“This government have promised on 55 occasions different wage forecasts and all 52 of them, guess what, they’ve missed,” Albanese told Patricia Karvelas. “And yet again in the lead up to an election, they’re saying, “Oh, your wages will go up. Just promises. Just trust us. Just give us a second decade in office.

When pressed by Karvelas on economist Chris Richardson’s belief that low unemployment results in higher wage growth, Albanese stressed that this mentality ignores changes to the workforce.

“Well, what that ignores, of course, is the changing nature of the workforce. The growth of casualisation, the growth of the gig economy, the growth of people who are outside the system,” he said.

“This is a government that can’t even stand up in the Parliament and show their support for people getting the minimum wage.”

According to the Australian Bureau of Statistics, the underemployment rate was reported at 7.475 percent in November 2021. And while the government will only offer temporary measures to address the cost of living issues impacting low and middle-income Australians, it has no issues offering major tax cuts to high-income earners — who stand to benefit from the previously announced $15 million worth of Stage 3 tax cuts.

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Lavender Baj is Junkee’s senior reporter, focusing on news, politics, and finance. Follow her on Twitter.