Former RBA board member Warwick McKibbin levelled the claim ahead of Tuesday’s budget, while economists warned bill relief would only stoke consumer demand.
Treasurer Jim Chalmers has dismissed allegations that using cost-of-living subsidies to lower headline inflation is a “political trick” that will fail to temper underlying price pressures or bring down interest rates.
The Albanese government argues lower headline inflation, even if artificially created with household subsidies, helps to slow price rises broadly because the figure is used in wage and contract setting.This was the argument made by Treasury Secretary Steven Kennedy after the 2023-24 budget, which included cost-of-living measures that put more money in people’s pockets but mechanically lowered CPI.
“You can play political tricks to get inflation at target,” he said, adding, however, it was unlikely the budget’s inflation forecasts would come to pass.
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