Treasurer says $300 energy bill relief could not have been means tested

Treasurer Jim Chalmers has defended giving a $300 energy bill discount to every household, arguing a universal approach was the only practical way to provide the support to middle earners.

Welfare advocacy group ACOSS said the bill relief, which was the centrepiece of Tuesday's federal budget, was "extraordinarily wasteful" and that the money should instead have been used to "target support to people most in need."

But Mr Chalmers told the National Press Club on Wednesday the relief could not have been restricted to households below a certain income, because it as not possible to share the relevant information with energy companies.

"The [tax office] has tax information, but they have no arrangements to share that with energy retailers," he said.

"We would have to change fundamentally the data-sharing arrangements, that would take time and money in order to do that."

Mr Chalmers said the only other immediate alternative would have been to target the relief to those who receive government payments such as the age pension or the unemployment benefit, since those people could be easily identified, an approach the government used previously when delivering energy bill relief.

But he said the government had decided against that approach because it also wanted to help middle earners.

"The judgement that we made was that the most efficient way to give cost-of-living relief to people on low and fixed incomes, but also people on middle incomes … was to provide it to every household.

"People on the highest incomes are not our focus, they're not our concern. But in the absence of redesigning or designing a new system of data-sharing and means testing amongst the energy retailers, we made the assessment that the best way to do it was to provide it broadly." 

David Pocock calls universal support "ridiculous"

The full package of energy bill relief, which also includes $325 in bill relief for a million small businesses, costs $3.5 billion. It will apply to bills in the 2024-25 financial year.

It will first require legislation, which the Coalition has signalled it will support despite Shadow Treasurer Angus Taylor accusing the government of taking a "bandaid" approach to cost of living pressures rather than addressing the underlying causes of inflation.

But the Greens and independent senator David Pocock have been more critical.

Senator Pocock told the ABC it was "ridiculous" to make the measure universal.

"I think maybe politicians are just out of touch. We've got three million Australians living in poverty in this country, and you're going to give me and other politicians on six figure salaries $300," he said.

"It doesn't make sense to me."

Grattan Institute CEO Aruna Sathanapally agreed the measure was not "well-targeted", suggesting this was not the optimal way to design cost-of-living relief.

ACOSS chief executive Cassandra Goldie said the energy bill relief, combined with the universal tax cuts announced earlier this year, made for a "gaping hole" in the budget.

"The government is deliberately and cruelly denying people receiving unemployment payments decent income support … The $300 energy rebate will be the only cash support the majority of people on JobSeeker and Youth Allowance will receive."

Chalmers says support will 'take the edge off inflation'

Mr Chalmers has also denied the energy bill relief would add to inflation.

"The very clear advice we got from Treasury was that by designing our cost-of-living package the way we have, we will take the edge off inflation and won't add to inflationary pressures elsewhere in the economy.

"We took that advice very seriously and we proceeded on that basis."

Shadow Treasurer Angus Taylor said the energy bill relief was "not going to the source of the problem."

"They are putting a band-aid on a bullet wound… When you plan to spend money it is inflationary… When you have $4 of spending for every dollar of savings, you are not fighting the inflation dragon that homegrown inflation that so many Australians are suffering with."

Greens leader Adam Bandt also called the measure a "bandaid" measure, arguing the government should have gone further.

"We would like to see electricity treated as an essential service. There's a lot more that could be done to bring down the cost of electricity… [the] budget is a betrayal of people who are doing it tough."