Budget Cuts To Hit Australians Hard In The Coming Months

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The most significant problem Australians face currently is the overwhelming cost of living, and on that topic, the Budget has some grim news.

The budget showed that while wages will be higher than initially expected, inflation rates will rise much more sharply. Inflation rates will jump to nearly 8% by the end of this year and won’t begin decreasing for over a year. We won’t see wages growing faster than prices until 2024-25.

When asked about his say on the matter, Treasurer Jim Chalmers stated that “tough decisions had to be made” in light of the government’s spending. This includes cutting $17 billion from JobKeeper and other social welfare programs and slashing funding for universities and healthcare providers.

Australians will feel the brunt of these budget cuts, and the result is that Australians are being left behind. Your salary may increase, but it doesn’t go as far at the store as before. It’s a terrible way to think about things. Things are likely much worse for you if you don’t use wages to buy your daily bread. 

If you have savings, they’re probably going backward even more quickly than your wages. A 6% rise in prices this year, coupled with a mere 2% interest rate on your savings account, results in a 4% decline in buying power. In other words, you can buy 4% less this year than last year.

“We know that the cost of living is something that troubles Australians every day, and we have made tough decisions to address this pressure,” Chalmers said.

But these “tough decisions” only worsen the problem, leaving everyday Australians struggling even more than before. It’s a harsh reality but one we must face in the coming months.

The calculation might be even worse if your superannuation is invested in stocks. A 10% decrease in your portfolio’s value means that your super’s buying power has also decreased by 16%.

The best way to see how this affects consumers is by looking at the Budget’s Budget’s forecast for consumer spending.

The data shows that in 2023-24, household consumption will grow at 1.25%, a significant decrease compared to the 6.5% growth this financial year. This lower rate of growth is also lower than projected population growth (at 1.4% in 2023-24), meaning we can also expect a decline in per capita spending. Ultimately, this weaker consumer spending drags economic growth as a whole.

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