Tax cuts eagerly awaited as living costs rise

February 18, 2024 BY

Corangamite federal member Libby Coker spoke about the government's Stage 3 tax cuts reform plans in Parliament. Photo: SUPPLIED

THE Australian Bureau of Statistics (ABS) has released new figures showing a 6.9 per cent increase in living costs for employee households in the year to December 2023.

The data comes after the Albanese government’s revamp of the Stage 3 tax cuts to alleviate cost-of-living pressures for an estimated 13.6 million taxpayers.

Initially legislated before COVID in 2018, the Stage 3 tax cuts are being adjusted to reflect the present economic landscape.

ABS head of prices statistics, Michelle Marquardt said there had been a significant rise in annual living costs.

“Increases in annual living costs ranged from 4.0 per cent to 6.9 per cent depending on the expenditure patterns of the different household types, compared to a rise of 4.1 per cent in the Consumer Price Index (CPI) in the December 2023 quarter.

“Employee households recorded the largest annual rise in living costs, though the rise this quarter has eased from a peak of 9.6 per cent in the June 2023 quarter.”

Ms Marquardt noted self-funded retiree households saw a smaller increase in their living costs compared to other households or the CPI.

The ABS report also identifies insurance and financial services, housing, and food and non-alcoholic beverages as primary factors driving the yearly increase in living costs.

Insurance prices saw a record increase of between 16.6 per cent and 17.3 per cent across household types.

“Higher insurance premiums across house, home contents and motor vehicles contributed to the increase in living costs for all household types over the year,” Ms Marquardt said.

“Higher prices for rents, reflecting a tight rental market, and meals out and takeaway foods also contributed to rises in living costs.”

A key difference between the Living Cost Indexes and the CPI is that the Living Cost Indexes account for mortgage interest charges instead of the cost of building new dwellings.

Employee households felt the most significant impact from rising mortgage interest charges, which make up a larger portion of their spending compared to other household types.

In contrast, self-funded retirees, who tend to own their homes, were less affected by increases in mortgage interest charges or rents.

“Mortgage interest charges rose 40.3 per cent annually, down from a peak of 91.6 per cent in the 12 months to the June 2023 quarter,” Ms Marquardt said.

Corangamite Labor federal member Libby Coker spoke about the government’s reform plans in Parliament on Tuesday.

“On July 1 this year, every Australian taxpayer will get a tax cut,” she said.

“For an Australian worker on the average wage, this means $1,500 in their pocket.

“$1,500 they would not have received under the former Coalition government’s plan.”

“These tax cuts are aimed squarely at people who work hard to make a difference for themselves and their family.”