Bill relief and tax cuts announced in yesterday’s budget will be “gobbled up quickly” by rising costs and continued mortgage pressure, according to Compare the Market economic director David Koch.
While any relief would be welcomed, Mr Koch said the government had missed an opportunity to funnel greater support to vulnerable people and regular working families.
“Every dollar counts but $5 a week isn’t going to make a huge impact, particularly when you start looking at some of the forecasts going forward around CPI,” Mr Koch said.
“The prediction is that the cost of living CPI index will go up from two and a half percent to 3% in the next 12 months. Your supermarket shop is going to stay high and I doubt there will be an interest rate cut in this environment.
“So with that considered, that $5 a week is going to get swallowed up really quickly. It’s not even going to cover a coffee, when the credit card fee is added.”
Mr Koch said it didn’t make sense for wealthy households to receive the same energy bill relief as regular Aussie families.
“While everyone has felt the impact of rising costs, the way people have experienced and coped with this cost-of-living crisis has varied widely,” Mr Koch said.
“For some people, $150 may be a bit of pocket money to take on a holiday – for others it could mean having a full fridge and enough to feed the family for a week.
“If a means test is not the answer and just can’t be done, why not just focus on those that are on hardship programs or already receiving a concession like pensioners or students.
“I don’t need an energy rebate, but I would be very happy to see that money go to someone who does need it. The current strategy is there purely because they want to artificially reduce the CPI figure – but Michelle Bullock and the RBA are smarter than that.”
The number of households accessing electricity hardship programs reached a five-year high in 2023-24, with more than 131,700 customers requiring support to keep the lights on.*
Mr Koch urged families to shop around and make sure they are on the best possible energy deal, to maximise the impact of any rebates and concessions in future.
“We’ve just heard that energy bills could be going up as much as $200 in some parts of the country, so for those families this bill relief won’t even cover the cost of the increase,” Mr Koch said.
“If you live in a metropolitan area, and you haven’t switched providers for more than a year, you could be throwing your hard-earned money away. Shop around and make sure you’re not paying more than you need to.”
However, Mr Koch praised the decision to boost bulk billing, with an aim to cover 9 out of 10 GP visits by 2030.
He also commended the decision to wipe $16 billion from student loan accounts. It follows an early decision to allow banks to disregard manageable amounts of HECS debt while assessing people’s suitability for a home loan.
“HECS was never supposed to be prohibitive, but in recent years it has been a major stressor for young people trying to get ahead,” Mr Koch said.
“For years working Australians have forked out thousands of dollars to pay off their debts, only to see amounts piled back on due to indexation. It is great to see some work done to put the situation right in this year’s budget.”
