How government spending can reduce inflation | Between the Lines

Australian Treasurer Jim Chalmers delivers the 2024/25 Budget statement in the House of Representatives at Parliament House in Canberra, Tuesday, May 14, 2024. Australian Treasurer Jim Chalmers will hand down his third budget today.
AAP Image/Lukas Coch


The Wrap with Richard Denniss

Money can’t buy everything, but it may buy this government a reduction in inflation ahead of the next election.

As I wrote in the Nine papers this week, the government’s $3.5 billion Energy Bill Relief Fund is an innovative response to the unusual and challenging economic times we’re experiencing.

By reducing everybody’s energy bills by $300, they will lower the consumer price index (CPI) – and so are quite literally buying a reduction in inflation.

Plenty of commentators are up in arms about it, but it’s not even the first time it’s happened. By temporarily making childcare free during the pandemic, the Morrison Government lowered CPI by 1.1 per cent.

But despite this positive step by the Government, last week’s budget failed to address the big structural challenges facing the country. The changes to rent assistance, for example, are welcome, and by definition, they are better than nothing, but they aren’t going to do much to help low income earners who have seen their rents soar.

Likewise, by choosing not to raise the rate of JobSeeker, the government is leaving those without work well below the poverty line.

On the biggest issues, we’re mainly getting more of the same.

This week, the Productivity Commission released a report detailing the “unprecedented fall” in income inequality during the pandemic.

Why? The government chose to provide additional support to people who needed it.

The same choice is available to the current government, but as Greg Jericho points out, while the Productivity Commission is adamant that raising the rate of JobSeeker is “not fiscally sustainable”, it makes no such criticism of the cost of tax concessions for superannuation, the capital gains tax discount or indeed the Stage 3 tax cuts.

There is no economic justification for successive governments to give out billions of dollars in fossil fuel subsidies while people on JobSeeker can’t afford the basics. It’s just about priorities and political strategy.

Governments never like to admit it, budgets really do reflect their priorities. While it’s easy to give a speech saying tackling homelessness or climate change is a priority, it’s hard to hide the fact that, year after year, government after government, we spend far more on fossil fuel subsidies than we do reducing greenhouse gas emissions.

Likewise, the budget papers make clear that we collect more revenue from kids repaying HECS and on beer excise than we collect from the Petroleum Resource Rent Tax (PRRT).

Our governments choose for it to be like this.

Changing things is hard. Making the fossil fuel industry pay more tax would come at a political cost. Increasing unemployment benefits would upset some voters in marginal seats. It is up to our elected representatives to decide on their real priorities and what problems are just too hard, but it is up to us, as citizens, to make clear what our priorities and expectations are as too.

Australia is one of the richest countries in the world, and while we can afford to do almost anything we want, we can’t afford to do everything we want. That’s why our democratic choices are so important, and that’s why democracy thrives on high expectations.

— Richard Denniss, Executive Director of the Australia Institute

The Big Stories

Video Report: Logging the Promised Great Koala National Park

A new investigative video report from  Stephen Long, Senior Fellow and Contributing Editor at the Australia Institute has found that taxpayer-subsidised native forest logging is destroying hundreds of hectares of the future Great Koala National Park each week, despite the NSW Government’s election commitment to put the land aside for protection.

Our research has previously shown that the NSW Government plans to monetise the Great Koala National Park through the use of carbon credits.

As Stephen explains, this push for carbon credits creates a perverse incentive to continue logging, so the government can argue that the planned credits involve genuine “avoided deforestation.”

Watch now >>

Fossil fuel subsidies hit $14.5 billion in 2023-24, up 31%

New research from the Australia Institute has found that state and federal governments provided $14.5 billion in subsidies to fossil fuel producers and major consumers in 2023-24 – the equivalent of $27,581 for every minute of every day, or $540 for every person in Australia.

The analysis finds that over the forward estimates the Federal Government has budgeted $54 billion for fossil fuel subsidies, five times the amount it has committed to its key housing policy, the $10 billion Housing Australia Future Fund.

The biggest individual subsidy is the Fuel Tax Credit Scheme, which costs the Commonwealth Budget around $10 billion per year and largely benefits iron ore and coal miners.

Cutting these subsidies, as the OECD has recommended, would significantly increase government revenue to address climate issues while also reducing emissions.

“The FTCS costs more than Australia spends on our air force every year. It costs more than we spend on the army,” said Australia Institute Research Director Rod Campbell.

“It is well past time for Australia to eliminate all fossil fuel subsidies, particularly the FTCS. This would be not just good environmental policy, but also good economic policy.”


Six gas facts to help you cut through the fossil fuel spin

In this critical decade when fossil fuel use should be plummeting, Australian governments are investing in expanding the gas industry and telling us it’s both good for the climate and the economy.

But it’s not.

Liz Morison explains why expanding the gas industry is economically and environmentally reckless.


Punishment-by-process continues for Assange

The United Kingdom High Court decision to grant Julian Assange’s request to appeal against his extradition to the United States provides hope for the campaign to free him, while continuing his punishment-by-process at the hands of Australia’s closest ally.

“Reporting on a crime should not be a crime,” said Dr Emma Shortis.

“Assange, an Australian citizen, is being pursued by Australia’s most trusted and important ally for publishing the truth. The US-Australia relationship is supposedly based on ‘shared values’ – that is evidently not the case.”

On Tuesday, we spoke to Jennifer Robinson, Julian Assange’s legal advisor for a webinar about what’s next for the Wikileaks founder.

Watch >

Robinson said the Biden administration can choose to stop their pursuit of the WikiLeaks founder at any time.

“All they need to do is decide to stop it.”


The Circular Economy and Decarbonisation

On Thursday we were joined by Planet Ark’s Head of Circular Economy Development, Nicole Garofano, talking to the Australia Institute’s Circular Economy & Waste Director, Nina Gbor, about how different sectors and products can improve their practices and achieve net zero.

Watch the webinar recording >


Jess Hill on the Domestic Violence Crisis | Follow the Money

A series of recent high-profile incidents has thrust the national crisis of domestic violence into the spotlight. Clearly the current approach to violence against women isn’t working, so what can be done?

Jess Hill, investigative journalist, educator on coercive control, and author of See What You Made Me Do, joins Ebony Bennett on this episode of Follow the Money.

1800RESPECT is the national domestic, family and sexual violence counselling, information and support service. Call 1800 737 732, text 0458 737 732, chat online or video call via their website.

Listen now:

Poverty is a policy choice | Dollars & Sense

According to the Productivity Commission, wealth inequality declined during the COVID years due to boosted government support payments. And when those payments finished, predictably inequality went back up.

The overwhelming majority of gains from economic growth since the GFC have gone to the wealthiest people. On this episode, Greg Jericho discusses inequality, poverty, and government

Listen now:

The Quote

“Given that we’re talking about this really radical agenda… I think we should be asking deeper questions about whether we would even want to continue with a deal like AUKUS under a future Trump administration.”

— Dr Emma Shortis joins Patricia Karvelas  on RN Breakfast to discuss the 900-page right-wing blueprint for the next conservative president of the United States, and what it would mean for Australia.

The Win

Walkleys dump fossil fuels

The Walkley Foundation has changed its donations policy, committing to work only with organisations that offer tangible benefits to humanity.

This means the end of the road for its dealings with fossil fuel company Ampol after its two-year sponsorship of the Walkley Awards, Australia’s top media prizes, comes to an end in October.

The decision comes after significant public criticism and a boycott of the 2023 awards by prominent political cartoonists.

The Bin

Eraring coal-fired power station gets two extra years

The Eraring Power Station – Australia’s largest coal-fired power plant – has had its life extended and will remain open until August 2027,  having previously been scheduled to close next year, following an agreement between Origin and the NSW Government.

The deal will see the NSW Government cover losses of up to $225 million a year.

As Richard Denniss described it, this is “Australia’s transition away from fossil fuels explained in one headline…”

What’s On

Unequal Australia: What Went Wrong and How We Fix It | Richard Denniss National Speaking Tour

We’re coming to a city near you!

Australia is one of the richest countries in the world but while we can apparently afford tax cuts for high income earners and submarines, we “can’t afford” to increase unemployment benefits, address child poverty or even protect our endangered species from the climate change we do so much to cause.

Join Richard Denniss to debunk the nonsensical economic arguments used to justify our ongoing failure to reduce inequality and discuss the simple solutions available for any parliament that is serious about reducing poverty, making housing cheaper, reducing Australia’s emissions…or all of them at once.

Join the waitlist for sold-out events to be the first to find out about possible new dates.

Livestream | 7:00pm ACST, Thursday 20 June

Richard Denniss’ presentation to the 2024 Wilks Oration in Adelaide, will be livestreamed.

Get your tickets to watch the stream online here.

Tour info >

Unparliamentary with Paul Bongiorno | 1pm AEST, Tuesday 28 May

Unparliamentary with Paul Bongiorno

Looking for the scoop on what’s happening in federal politics?

Unpack the big political and policy issues with Paul Bongiorno, columnist for The Saturday Paper and The New Daily, in this edition of our Unparliamentary webinar series.


Politics in the Pub: No Greater Ally? Re-assessing the Aus-US Alliance | 6.30pm AEST, Wednesday 5 June

This year, the United States faces what will likely be its most important presidential election in generations.

The US has claimed that it has “no greater ally than Australia”, but what will that mean on the morning of the 6th November? What are the risks, and the rewards, of waltzing in step with the world’s greatest superpower, no matter who is in charge?

Join Zoe Daniel, Independent Member for Goldstein, and Dr Emma Shortis, Senior Researcher in the Australia Institute’s International & Security Affairs Program, in conversation for this Politics in the Pub.


Work with Us

Are you curious about how to undertake research that changes minds? Do you want to learn how to address complex problems with people who know how to make a real difference?

We’re looking for the next generation of change-makers to join the Anne Kantor Fellowship, a unique 12-month paid training opportunity at the Australia Institute that nurtures new voices in Australia’s policy and democratic debates.

Applications close Sunday 2 June.

Learn more >

Do you have information?

Almost half of Australia’s public universities have a centre or program funded by a fossil fuel company.

Do donations from fossil fuel companies influence the research conducted at Australian universities? Do they result in the publication of favourable research? Are fossil fuel companies buying the reputation of Australian universities? Are researchers pressured to produce results that make corporate donors look good?

The Australia Institute is looking to answer these questions and we want your help. If you have any information, data or experience that can contribute to our understanding, please contact us at

Thank you for supporting the Australia Institute. We’re ready to tackle some massive issues this year and we couldn’t do it without supporters like you.

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