Prime Minister Anthony Albanese and Treasurer Jim Chalmers have responded to criticism of the government’s $300 energy rebate going to ultra-rich Australians, amid fears the federal budget could also fuel inflation.

Labor’s third budget includes the energy rebate for all households, as well as a price cap on medicines, a boost to rent assistance and tax cuts that kick in from July.

Albanese said every Australian deserved cost-of-living relief, including the nation’s highest earners.

“We want to make sure that every Australian gets support during what is a cost-of-living crisis, which everyone is feeling,” he told Nine’s Today show.

Asked on Wednesday if billionaire mining magnate Gina Rinehart also needed help with her power bills, Albanese stood by the idea.

“This is the most effective way to deliver support across the board,” he said.

“Gina – if she pays income tax – will get a tax cut, as well as every Australian.

“That is because right throughout the income scales, there are pressures on that as well.”

More than 10 million households will receive the $300 energy bill rebate, to be paid as a $75 credit on each quarterly bill.

Eligible small businesses will receive $325.

At the National Press Club on Wednesday, Chalmers said the rebate was “the quickest, most meaningful way” to provide relief.

He was also asked why, in the age of AI and quantum computing, energy retailers could not means test customers to ensure the needy got the credit.

Chalmers said the government was restricted by data-sharing capabilities.

“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 among the energy retailers, we made the assessment that the best way to do it was to provide it broadly,” he said.

Commonwealth rent assistance has also been bolstered by 10 per cent – representing an average of an extra $19 a fortnight to those who receive it.

The cost of medicines will be frozen, with prescriptions for medicines on the Pharmaceutical Benefits Scheme capped at $31.60, as well as limits of $7.70 for concessions and pensioners.

Dutton reacts to budget

Opposition Leader Peter Dutton has said the Coalition will support measures that provide relief, but he is worried about the budget’s impact on inflation.

“The best thing that the government could have done in this budget was to be responsible to take the pressure off home-grown inflation and to try reduce interest rates,” he told ABC radio.

“This is a smoke and mirrors game going on here and giving $300 to people … is just not going to cut it for the average family.”

Dutton also accused the government of using the budget to prepare for a federal election.

“They’re trying to buy themselves an interest rate cut before the election and pretend that everything’s OK,” he said.

The Australian Council of Social Service said the budget had a “gaping hole” by not increasing unemployment payments and income support.

“It cruelly denies the increase in income support that over one million people struggling to survive on JobSeeker and Youth Allowance desperately need,” the organisation said.

“Extending [the energy rebate] to everyone – regardless of income – is extraordinarily wasteful.”

Greens leader Adam Bandt said the budget betrayed renters, women, students and mortgage holders.

He said the government was posting an expected $9.3 billion surplus for 2023-24 at the expense of many of those hit by high prices.

“Labor has found billions for the bad guys in this budget, while you are left doing it tough,” he told ABC.

Inflation fears

Analysts warned that the broad cost-of-living relief, such as energy rebates and tax cuts, could make inflation worse.

Treasury forecasts in Tuesday night’s budget showed the cost-of-living measures will reduce inflation by about half a percentage point in the next financial year, possibly as early as Christmas.

But Committee for Economic Development of Australia chief economist Cassandra Winzar said payments, including stage-three tax cuts and energy bill support, that were not means tested risked working against the central bank.

“Electricity rebates may alleviate headline inflation but will drive spending elsewhere,” Winzar said.

The stage-three tax cuts take effect from July 1.

Chalmers defended the decision to provide relief for all Australians, pointing to Treasury’s forecast that it wouldn’t be inflationary.

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

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

Economist and budget expert Chris Richardson said the budget was expansionary, with $9.5 billion in new spending in the next 12 months.

“The government said it wouldn’t front-load stuff, it would be careful not to poke the inflationary bear, it would put it at the back – they have absolutely got it in the front,” he said.

The next federal election must be held by September 27, 2025.

Business Council of Australia CEO Bran Black said he hoped Treasury’s prediction that inflation would fall on the back of the budget measures turned out to be right.

“We do note that when you’ve got more money in the economy, that means that there is the potential for people to be spending more, and that can put pressure on inflation,” he said.

“We hope that that’s not the case, but we’re mindful that there is that risk.”

-with AAP