Yahoo Finance Treasurer's major $7.8 billion cost-of-living relief update: 'More help on the way'
Billions of dollars has been thrown at solving the cost-of-living crisis, but will you benefit from relief rolling out in September.
The cost-of-living crisis has reverberated into almost every household across the country. From expensive energy and under-pressure mortgage holders to those struggling to put food on the table.
Treasurer Jim Chalmers acknowledged Aussies are "under the pump" on Monday and delivered an update on the cost-of-living relief rolling out in September. The government committed $7.8 billion to tackling the crisis and claimed inflation is coming down because of it.
Chalmers tracked back on the tax cut we all got on July 1, energy rebates taking a slice off your bill each quarter and a rise in the minimum wage.
But as for the September stuff, the big winners are renters, pensioners and those struggling with the cost of prescription medicine.
So, what benefits does the government say is rolling out in September and will they help you?
Commonwealth Rent Assistance: This one only benefits those on Centrelink payments, like JobSeeker or the aged pension — around one million households. The payment goes up by 10 per cent from September 20. Check out our explainer here.
JobSeekers cash boost: Despite calls to boost JobSeeker payments, the government opted not to increase the payment but to expand how many people could get a higher rate. If you can't work more than 15 hours, you could get "at least an additional $54.90 a fortnight". Check out our explainer here.
Cheaper medicine: This isn't making drugs cheaper, but making it cheaper for you to access them. Aussies often have to fork out to go to the doctor so to reduce the number of trips you need to make, more medicine is being added to the 60-day script program. This means fewer visits to renew prescriptions for common ailments like acne, asthma, depression and glaucoma. Check out the list here.
Welfare indexed: Inflation has made things more costly, so the government increases annual Centrelink payments through indexation. This means those on Jobseeker, the age pension, disability support pension, carer payment and parenting payment will get a boost. Check out our explainer here.
"This support is on top of the billions of dollars of relief that has been rolling out to millions of Australians to help ease the cost of living since July," Chalmers said.
He pointed to some other things Aussies are yet to see which include:
A freeze on the maximum price of Pharmaceutical Benefits Scheme co‑payments for one year for everyone with a Medicare card, and a five‑year‑freeze for pensioners and concession card holders.
More action on checkout prices with the ACCC undertaking an inquiry into pricing and competition in the supermarket sector.
$18.6 million to remove barriers to employment for Carer Payment recipients by providing more flexibility around work commitments.
Waiving $3 billion in student debt for more than three million Australians to make student loans fairer.
$1.1 billion to pay superannuation on government-funded Paid Parental Leave.
$138 million to boost funding for emergency and food relief and financial support services.
Some have argued cost-of-living relief delivered across the country could spell bad news for those hoping for an interest rate cut this year.
The relief didn't get handed to Aussies, but the energy retailers, essentially bringing down prices.
The latest data from the Australian Bureau of Statistics (ABS) found electricity prices dropped to 5.1 per cent in the 12 months to June.
However, the ABS estimated that electricity prices in July would have risen 0.9 per cent if the impacts of the rebates were stripped away.
At best, rebates shave a smidge off underlying inflation by tempering expectations of future price rises and nipping any pre-emptive markups in the bud," economist Harry Murphy Cruise from Moody’s Analytics said.
"At worst, they free up money for discretionary spending, adding demand to the economy and leading to higher underlying inflation; put another way, what rebates chip off headline inflation may ultimately end up being added back to underlying prices."
If those savings are used to get on top of mortgage payments or top up savings, inflation would come down, but Murphy Cruise warned if they are spent "the RBA’s fight against inflation will get a whole lot harder".
Economist and Yahoo Finance contributor Stephen Koukoulas said the rebates were "fair and decent" at a time Australians were struggling, and argued they would not impact inflation enough that the Reserve Bank of Australia would be forced to tighten monetary policy again.
"It also has the effect of lowering the inflation rate as the price we all pay for electricity falls," he wrote for Yahoo Finance.
"Decent governments implement policies to help the people."
The annual rate of headline inflation fell to 3.5 per cent in July, down from 3.8 per cent in June, the ABS found.
Chalmers said this was still "higher than we’d like", but argued assistance would not have a negative impact. It’s less than half its peak and much lower than the 6.1 per cent we inherited from the Coalition," he said.
