The Federal Government had next year’s federal election firmly in its sights with this budget, and retirees were among the beneficiaries of its fiscal largesse.
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Growing economic woes don’t bode well for retiree cost-of-living relief
Retirees looking to the Federal Budget on 14 May for some financial relief might be sorely disappointed. Treasurer Jim Chalmers, who was upbeat about the economy just months ago, has been far more sober in his economic analysis in recent weeks.
What has put a dampener of what was predicted to be an expansionary Budget was the unexpected pick-up in the inflation number to one per cent for the first three months to 31 March 2024, and growing evidence that the global economy is slowing after Chalmers heard from G20 finance ministers, the World Bank and the International Monetary Fund in a recent round of meetings in Washington DC.
On the inflation front, the market had expected an 0.8 per cent increase in the wake of the 0.6 per cent increase in the December 2023 quarter, with the higher number sparking calls from economic hawks for the Reserve Bank to tighten monetary policy.
The worsening international situation – geopolitical and economic – clearly has Chalmers worried. As he said following his Washington DC meetings, “we’re obviously monitoring very closely the situation in China (as well as) the implications of escalating tensions in the Middle East. So, our Budget will put a premium on responsibility and an emphasis on security.
“We want to align our national security and our economic security interests; this is how we help relieve cost‑of‑living pressures, repair our Budget and reform our economy as an antidote to the kinds of risks that we see escalating around the world.”
It’s a far different scenario from when the Government started its budget preparations at the beginning of the year when inflation was falling, employment numbers were healthy, and the economy, while slowing as higher interest rates kicked in, was still growing. It all seemed to be laying the groundwork for more cost-of-living relief when Chalmers addressed Parliament on Tuesday week – and retirees could have expected to benefit.
Certainly, there was no shortage of proposals in the pre-budget submissions to help retirees at a time when many Australians are feeling the pinch from rising costs for essential items such as utilities, food and fuel.
National Seniors Australia (NSA) put the case for budget relief succinctly. “While some sections of the community are doing okay, many are not. That is why we need a Budget that provides direct relief coupled with longer-term policy reform to ensure our standard of living does not go backwards.”
Among its suggestions it wants immediate relief for fuel and energy costs, extending the deeming rate freeze to ensure pension payments and concessions are maintained in the short term, policy reforms to allow additional concessions and support to those most in need and changes to the gifting rules to give older people a greater incentive to make financial contributions to charities and younger generations.
In housing, NSA is advocating policy changes to support older people either sharing their homes with other people or downsizing as well as boosting financial support for renters.
Housing, a strong pre-budget submission theme, also elicited a strong set of proposals from the Housing for the Aged Action Group (HAAG), a member-based, community organisation specialising in the housing needs of older people.
Among its recommendations are for government funding to build public and community housing for people 55 years and over unable to afford the private rental market. “This must include, at a minimum, housing for nearly 260,000 older people who are renting in the lowest income households, living in marginal housing and experiencing homelessness,” its submission said.
HAAG also wants funding for a range of housing options including affordable housing (capped at 30 per cent of household income) and other below market rate options such as co-operative housing, low-cost retirement housing or other co-housing models appropriate for people 55 years and over.
All these proposals have some merit. The problem for their advocates is that they have run up against a Treasurer who will want to deliver a budget surplus at a time of weakening government revenue and the economic reality that a spending spree could fuel inflation.
It all suggests retirees expecting cost-of-living relief – especially in what’s likely to be the last budget before the next federal election – are likely to see their hopes dashed.
