The “cost of living crisis” has eventuated as an abstract, all-inclusive term.
Complex factors that warrant their own analysis, and occupy the economic landscape in drastically different ways, have been conflated into the all-inclusive term. Interest rates, a supermarket duopoly, placement poverty, and housing supply ostensibly all fall under the “cost of living crisis”, but these aggressors must be critiqued more incisively — they are governed by varying factors, parties, and consumer bodies.
This year’s 2024-25 Budget announcement has been purportedly dedicated to relieving the cost-of-living fatigue that continues to impact students, welfare systems and everyday Australians through a $7.8 billion investment. How these objectives will tangibly provide practical relief for Australians is unclear, specifically in how it will substantially alleviate inflation.
The target range for inflation should sit between 2-3%. However, a 7.1% peak in December 2022 has critically deviated from this target range. This was the highest peak in more than three decades, aggravating the cost-of-living crisis. With the inflation forecasted to drop to 3.5% this year by some economists, the Labor Government is trying to justify that their measures correct the economic cavities proliferating across the country.
Treasurer Jim Chalmer’s Budget attempts to materialise this mythology with the widespread rollout of the Stage 3 tax cuts, purported HECS debt relief, selective rent assistance and claims of fee relief and student payments.
With the cost-of-living crisis remaining a mounting pressure on Australians, the Government’s budget measures reveal attempts to place downward pressure on inflation and aim to seek trust from the public, which has been rescinded by many.
Housing
The health of Australian housing access and rental aid is intrinsically linked with relieving the cost of living. Promises bouncing back and forth between the Greens and Labor have seen fickle narratives arise on how the housing crisis will be addressed. In this Budget, the development of 1.2 million homes by 2029 found through the Housing Accord remains an ambitious and unlikely target when considering national workforce shortages in construction industries, demand versus supply concerns, and the growing outsourcing of the rental market following investment incentivisation through the ‘Build to Rent’ program.
A more precise measure can be identified in the $1.9 billion in Commonwealth rent assistance, which will increase welfare payments by about $25 a week, platformed to assist with rental stress. Those who receive certain social security payments (including the Disability Support Pension and Newstart Allowance) and who don’t live in public housing are eligible to receive the assistance. The Budget aimed to underpin housing as a key target area — however a lack of social housing prioritisation and practical measures in addressing construction capacity leaves their initiatives untethered.
Student Debt, New Energy Bill & Tax Relief
Following major backlash on the indexation increase of last financial year, the Government has waived $3 billion in HECS debt by capping the indexation rate of student debt and tying them to the whichever of the Consumer Price Index (CPI) or Wage Price Index (WPI) is lower.
USyd’s SRC President, Harrison Brennan, told Honi that these measures are not enough, and that “many of the politicians in parliament right now, responsible for this budget, including Anthony Albanese, went to university when it was debt-free”, demanding a return to “free education to widen access to university”.
For families, the Government’s changes will bring about a combined tax cut of $2,740 and an additional $2,430 in childcare subsidies to address the recent hikes in childcare fees. These initiatives, however, fail to consider the pattern of unregulated childcare fees increasing in accordance with new subsidies being made available to families. Controlling this metric would see a more robust impact for families depending on childcare.
Moving to the new energy bill relief rollout: the rollout includes approximately $3 billion of household relief and similar measures for one million small business owners. This is a considerable improvement for household relief however many, like Greens leader Adam Bandt, argue that electricity bill relief and a lack of substantial improvement to JobSeeker or Youth Allowance are sorely overlooked.
Following the official Stage 3 tax cuts announcement earlier this year, taxpayers can expect the changes to commence in the next seven weeks with adjustments to the income tax threshold and reductions to tax rate.
Placement Poverty
On face value, placement poverty has also been addressed with weekly payments of $319.59 to eligible students which has been benchmarked to the Austudy fortnightly rate. For many students this is plainly lacklustre, considering the expected hours of this placement that inhibits regular work weeks and the expectations of study upkeep, rent and general living expenses. It would be remiss to not acknowledge the glimpse of progress that this payment offers, however this model is only accessible for nursing, social work and education students, excluding dentistry, veterinary, medical students and many others. Not to mention the accessibility requirements that consider financial means testing or a work-related eligibility criterion.
USyd’s SRC president, Harrison Brennan, told Honi that “the slew of requirements that restrict access to this pittance of a support payment only aim to restrict access to it”. Brennan references accessibility barriers and the ongoing battles against Placement Poverty which often leads to course dropouts, moves to part-times and unsustainable work weeks. See Honi’s in-depth look into the impact of the new paid placement model here.
Social Welfare
Social Welfare institutions have seen funding injections, and also conspicuous omissions. Community legal centres such as Welfare Rights Centre, which was a key advocacy service during crises like Robodebt, Covid-19 and the Bushfires, have been forced to reduce their services in the absence of any additional funding to their sector.
Increases to welfare payments such as Job Seeker and Youth Allowance were not addressed in the budget. According to the Henderson Poverty line, consolidated by the Melbourne Institute, the benchmark poverty line for a single person in the workforce is $609, excluding housing costs. Placing this line against the current Job Seeker which sees approximately $408.45 for an individual without dependent children (subject to requirements), the Budget has done little to alleviate everyday pressures other than expand who can access this payment. This does not even consider the Age Pension ($558/week) or Youth Allowance ($319/week) both of which remain under the poverty line and swept under the rug more broadly. Following the Budget announcement to social welfare, many wonder why two serious calls for direct cost-of-living relief remain unheeded.
Ngaire Bogemann, the 2024 President of the National Union of Students, calls on the Labor Government to address the student and broader poverty demand in a list of these demands:
- Lower the Centrelink Age of Independence from 22 to 18 years old
- Raise the rate of student income support payments above the Henderson Poverty Line to at least $88 a day, including Youth Allowance and Rent Assistance;
- Immediately freeze HECS indexation, introduce a cap on HECS indexation of 4%, and repeal the Job Ready Graduates scheme;
- Ensure all mandatory placements and internships are paid at least at a minimum wage rate; and
- Introduce a rent freeze and rent caps in both the private and purpose-built student accommodation markets.
It seems when the Budget takes one step forward, the display of priority drags them many steps back. This Budget does not prioritise social reform, student poverty or welfare support, leaving vulnerable Australians who seek guidance or support during cost-of-living crises in a bottlenecked welfare system.
What now?
Labor has carved their Budget with squeaky clean rhetoric to alleviate cost-of-living pressures, drive downwards inflation and address the housing crisis with the intention of convincing you that they are better than their forebearer (famously easy to achieve). Aside from all the buzzwords and charismatic taglines, the oscillating reactions to how this Budget will make meaningful and direct change to the cost-of-living conditions in Australia will present themselves in next year’s election, as voters reflect on whose hands their interests are held in.
