Popular EV, battery perks at risk as razor gang debates new cuts

Detailed summary

Subsidies for household batteries and EVs could be pared back further, although no final decisions have been made and either may still be untouched.

Tax breaks for electric vehicles and home batteries could be on the chopping block as Labor looks for billions in spending cuts to lower inflation, while Treasurer Jim Chalmers pushes for AI adoption among small businesses to revive productivity growth.

Labor is under internal and external pressure to develop policies to help the Reserve Bank combat inflation after five rate hikes this year spurred by the war in Iran, the data centre boom, high federal and state spending and weak domestic productivity that has limited growth.

Sources in the government briefed on preparation for December’s mid-year budget said subsidies for household batteries and EVs could be pared back further, although no final decisions have been made and either may still be untouched as ministers weighed up the policies that have helped push toward ambitious climate targets.

The cabinet’s expenditure review committee is also seeking to defer spending in parts of the infrastructure budget and other areas, the sources said. However, the contentious Victorian Suburban Rail Loop, which Prime Minister Anthony Albanese supports against the wishes of some colleagues, is viewed as off limits due to the timing of the Victorian election this month.

Sources said the government was also trying to make savings in the public service after the Commonwealth bureaucracy’s wages bill rose by 7 per cent last week. This masthead previously reported ministers were searching for Senate-proof cuts after the Coalition and Greens blocked recent attempts to reduce near-record levels of government spending.

Labor is also looking for more savings on the use of contractors, a common accounting move that economists have suggested is not a proper saving because full-time workers are required to do the work that consultants would have completed.

The December budget review has been imbued with increased political importance since inflation has risen above expectations and anxiety has grown about poor productivity stopping the…

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