Australia is lucky to have a strong economy, but despite that so many Australian families are doing it tough after petrol price rises and inflation rising. This week the LNP Government delivered a budget that will provide sensible support while still seeking to manage our budget in the face of rising inflationary pressures.
Prices are rising for two main reasons.
First, governments have rightly spent a lot of money to support people and businesses through the pandemic - Australia has spent $314 billion - and interest rates have been kept at historic lows. While this was the right prescription for a pandemic, more government spending and low interest rates do create inflation, and that is what we are seeing around the world.
Second, commodity prices are skyrocketing thanks to ridiculous green restrictions on production in western countries and the war in Ukraine.
We do not have a button that will bring down prices immediately but we can help.
So in this week's budget the Government has halved the excise on petrol which will lower prices by 22 cents a litre over the next six months. This gives some relief to the 30 cents per litre increase we have seen in average petrol prices since war broke out in Ukraine.
In addition, we are extending and increasing the low and middle income tax offset for Australians who earn less than $126,000 per year. This offset will be increased by $420 a year to provide a $1500 tax relief. And, the government will provide a $250 cost of living payment to pensioners, welfare recipients, veterans and concession card holders
These measures are temporary, and targeted to those who need it, because in the long term we have to reduce government spending to help keep inflation under control. Government spending is set to fall from over 31 per cent of GDP to 26 per cent of GDP over the next three years.
This relief for battling families is affordable thanks to our booming farming and mining industries. While the cost of living relief will cost $8.6 billion, Federal Government revenues are projected to increase by $40 billion next financial year, thanks largely to surging commodity prices.
Beef prices are at record levels and coal prices are more than 50 per cent higher than the previous records. The nation does not thank the hard working men and women in our farming and mining industries enough. The Budget the other night demonstrates why they deserve more gratitude.
It is not just the cost of living relief that we owe thanks for. While the Ukrainian war will put a massive strain on countries that import their food and energy we are somewhat insulated thanks to the strength of our primary industries.
As the Budget says "A smaller set of net commodity-exporting countries, like Australia and Canada, will be somewhat protected from the inflation impacts of higher energy prices, and will potentially benefit from a positive terms of trade shock as export prices rise."
To deal with the inflation that comes from higher commodity prices, we should invest in the parts of the nation that make our wealth and can make more in the future. That is why the Budget identifies Central and North Queensland as one of four key regional hubs.
Almost $2 billion will be invested in our region to build the Urannah dam, upgrade our roads and support job creating investments.
We have a strong economy thanks to the focus the LNP Government has on our productive industries. We will continue to invest in jobs in farming and mining so that we can remain a strong nation in these uncertain times.