Extra household stimulus not on the table for budget
Treasurer Jim Chalmers has poured cold water on suggestions the budget will include a cash splash for households for cost-of-living relief.
Large stimulus packages won’t be a feature of the federal budget, the treasurer has confirmed, while downplaying warnings on government handouts from the Reserve Bank governor.
After lifting interest rates for the third consecutive meeting, RBA boss Michele Bullock cautioned against a cash splash for households, saying it could make fighting inflation harder in the long run.
But Treasurer Jim Chalmers said the comments by the board’s governor were merely a response to a hypothetical.
“The budget won’t be pumping a lot of extra stimulus into the economy. In fact, overall, we’ll be winding back spending in the budget,” he told ABC TV on Wednesday.
“There won’t be a heap of extra stimulus spending in the budget. We are managing the budget in the most responsible way we can.
“We understand and acknowledge these inflationary pressures were there in our economy before the war in Iran, but the war in Iran has made them much, much worse.”
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The RBA governor said additional spending made the job of reducing inflation more challenging.
“The extent to which government make up the shortfalls for households by giving them more money, it makes it harder to dampen demand,” she told reporters on Tuesday.
“When governments are spending a lot of money and we’re running up against capacity constraints, then they do need to think about whether or not there’s ways they can help the inflation problem by looking for ways to constrain demand.”
Ahead of handing down his fifth federal budget as treasurer on Tuesday, Chalmers still said the fiscal blueprint would be ambitious despite the economic challenges.
“What the budget will signal is … begin a year of more ambitious reform,” he told ABC Radio.
“I don’t think any responsible government can ignore the very real intergenerational pressures that are in our budget, in our tax system, in our housing market, in our economy and our society more broadly.”
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Opposition Leader Angus Taylor said the budget needed to address inflation.
“The starting point here is we want to see a solution to the underlying problem, not just a band aid on a bullet wound,” he told ABC TV.
“We’ll see what sort of relief proposal they put forward, what budget aggregates look like, because that’s what affects inflation, but what we need to see is containment of government spending.”
It comes as the budget will have specialist counter-terror investigators and analysts monitor high-risk online spaces, Home Affairs Minister Tony Burke said in a statement.
“We already have centres dedicated to protecting children and combating cyber crime; establishing a centre for online violence extremism and terrorism is the next logical step in a fast-moving threat environment,” he said.
“The capability we’ve always had to monitor extremists in the meeting room now extends to the chat room.”
Spy agencies are becoming increasingly concerned about young people being radicalised online – often targeted in seemingly innocuous spaces like gaming platforms and chat groups.
Since laws cracking down on the distribution of extremist material online took effect in 2024, 27 people have been charged with offences.
Of those, 15 were aged 17 years or under.
The funding is part of an $80 million package to be spent over two years, bolstering Australia’s counter-terrorism threats and striving to prevent violent extremism and youth radicalisation.
The cash splash follows Australia’s worst terrorist attack – the massacre of Jews celebrating Hanukkah at Bondi Beach on December 14, 2025.
The interim report of the Royal Commission into Anti-Semitism and Social Cohesion – announced in the wake of the mass shooting – recommended a review of Australia’s counter-terrorism network, including its leadership structures, team integration, systems access and information-sharing arrangements.
-with AAP
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