'Relief and restraint': budget to inject billions to stimulate growth

The budget injects billions of dollars into the economy in a bid to stimulate growth, with cost-of-living support, tax cuts, cheaper medicines, housing and infrastructure investments, along with tax incentives for clean energy projects.

The centrepiece of support for struggling families and business owners is $3.5 billion worth of power bill relief, in the form of a rebate to be administered by states and territories with electricity providers over the coming financial year.

Households will save $300 each and about a million small businesses will save $235.

A further 10 per cent boost to Commonwealth rent assistance will cost $1.9 billion over five years, with $390.5 million of this to be delivered by June 2025.

The budget forecasts that these two measures will reduce headline inflation by half a percentage point in 2024-25 and will not add to wider inflationary pressures.

It says the Reserve Bank's target band of 2-3 per cent could be reached by the end of this year.

This will be crucial to securing an interest rate cut for Australians with mortgages before the next election, due in May.

"Responsible relief that eases pressures on people and directly reduces inflation" is how the Treasurer describes the cost-of-living package in his speech to Parliament.

"We're not spraying around big cheques to people," he told reporters in Canberra.

Asked if he could have done more in the budget to tame inflation, Dr Chalmers said: "This budget is primarily focused on the inflation fight."

Higher education also gets a boost in the budget, with $1.6 billion over five years to kick off reforms to the tertiary sector.

While a second surplus of $22.1 billion is forecast for 2023-24, the budget will slide back into the red the following year with a forecast deficit of $28.3 billion in 2024-25, as the government spends big on cost-of-living support and the rising costs of delivering on defence, health, aged care and the NDIS.

Finance Minister Katy Gallagher said two-thirds of the budget's net increase in spending was allocated for "unavoidable" government outlays on expensive but necessary programs, with the remaining one-third earmarked for cost-of-living relief.

Dr Chalmers said the government's commitment to fund the Fair Work Commission's wage increase decision - the timing and staging of which is yet to be known - was behind a higher-than-usual contingency reserve.

"We've made a big commitment to workers in the care economy that they be paid fairly," Dr Chalmers said.

The budget invests $22.7 billion over the next decade for the Future Made in Australia plan to subsidise investment in clean energy, including a new $1.7 billion innovation fund and tax incentives for hydrogen and critical mineral production, to cost about $13.7 billion between them over the medium term.

"This is not some sort of a free-for-all of public money," the Treasurer told reporters in Canberra when asked if the Future Made in Australia funding was unnecessary.

He said safeguards within the National Interest Framework to guide the scheme would ensure that the government got value for money, with incentives targeted to leverage private investment in areas that would benefit Australia.

Prime Minister Anthony Albanese and Dr Chalmers said in a joint statement that the plan would "help Australia build a stronger, more diversified and resilient economy powered by clean energy, to create more secure, well-paid jobs" and ensure the nation remained competitive with other countries around the world.

A new National Interest Framework will determine which projects are eligible for tax breaks across renewable hydrogen, critical minerals processing, green metals, low carbon liquid fuels and clean energy manufacturing (including battery and solar panel supply chains).

The government will apply "community benefit principles" to investments in priority industries in a bid to promote diverse workforces and secure jobs.