Opposition proposes $31 billion spending cuts amid inflation concerns

Opposition leader Angus Taylor announced a plan to cut $31 billion from the federal budget, citing inflation pressures and the need for lower taxes. The proposal includes $7.3 billion from reductions in subsidies for firms and tax credits for critical minerals, $4.7 billion from scrapping housing schemes, and $2 billion from limiting certain disability and welfare payments for permanent residents. A major component is a $9.4 billion reduction in agencies that support emissions-reduction targets, along with the removal of home-battery incentives and electric-vehicle tax breaks. The Clean Energy Finance Corporation would be the only climate-focused entity retained.

Finance Minister Katy Gallagher responded that the opposition’s cuts overlook the composition of current spending, noting that most of the budget is allocated to social security, welfare, defence, state payments and Medicare. She argued that excluding disability assistance would make current spending lower than under previous prime ministers.

Prime Minister Anthony Albanese, during question time, highlighted that Australia’s budget deficit is smaller than those of G7 nations and suggested that the government’s spending stance aims to protect jobs. Treasury spokesperson Jim Chalmers said external factors such as Middle-East volatility add to domestic economic challenges and emphasized that it is the government’s responsibility to identify appropriate spending reductions.

Economists offered mixed commentary. UNSW economist Richard Holden said the opposition needs to present a clear plan, while independent economist Chris Richardson suggested trimming federal-state infrastructure funding and “pork-barrel” grants could signal fiscal resolve, though the financial impact would be modest. KPMG chief economist Brendan Rynne noted that public spending has expanded over successive governments.