Australia grapples with rising living costs as rates touch seven-year high

Reading Time: 2 minutes

SYDNEY, Sept 7 (Reuters) – The Australian government on Wednesday unveiled measures to lower the cost of medicines and make the downsizing of homes cheaper for pensioners amid soaring inflation and interest rates touching their highest levels in seven years.

Australia’s central bank raised its cash rate 50 basis points to 2.35% on Tuesday and left the door wide open for yet more tightening ahead to tame inflation which has spurred a sharp rise in living costs.

In a bid to ease the pain on families and ahead of a federal budget next month, Prime Minister Anthony Albanese said the government will introduce legislation to lower the maximum co-payment to A$30 ($20) from A$42.50 per prescription on its pharmaceutical benefits scheme, helping 3.6 million people.

But Albanese warned Australians to brace for tough decisions in the budget amid ballooning government debt.

“It is what it is. I was just being straight … with the people of Australia. When interest rate rises, so do the repayment costs on (the government debt),” Albanese told reporters. “What that means is that we can’t do everything that we would like to do.”

Even as families face financial stress, the recently elected centre-left Labor government has so far refused to extend a cut in fuel excise duty put in place by the former coalition earlier this year and ahead of the May election.

Finance Minister Katy Gallagher told ABC television the government was looking to bring some short-term relief but can’t “pretend there is a magic wand that we can wave and these pressures will be relieved overnight.”

The government will offer financial incentives for pensioners that would make it cheaper for them to downsize homes, lessening the impact on pension money when they make profit from a property sale.

Legislation will be introduced to extend the asset test exemption on the sale proceeds to 24 months from 12, giving pensioners more time to prepare a new home before their pension gets impacted.

($1 = 1.4861 Australian dollars)

(Reporting by Renju Jose and Lewis Jackson; Editing by Simon Cameron-Moore)

Once you're here...

%d bloggers like this: