Once-off Budget measures will insulate ‘most households’ – ESRI
September 30, 2022
The package of once-off measures announced as part of this week’s Budget will insulate “most households” from higher energy prices this winter, according to the ESRI.
The analysis, which will be presented at a post-Budget briefing today, also warns that unless the once-off measures are repeated next year, many low-income households will see real cuts in living standards.
The analysis from the ESRI is done after every Budget to gauge how changes to welfare payments and taxes will affect different income groups.
It says when the planned welfare increases next year are combined with the once-off payments, lowest-income households will be better off on average even if welfare payments had been fully indexed to keep up with inflation.
But if the once-off measures are not repeated, then many lower-income households will see their living standards cut in the second half of next year.
It also says that because many lower income earners do not earn enough to pay much income tax, they will not benefit from the raising of the standard rate band.
It also points out that while those who use childcare through the National Childcare Scheme will benefit from the reduction in fees announced in the Budget, one third of parents use informal arrangements and so will not benefit.
On the proposed concrete levy, it says the burden of this is likely to fall on residents of newly built homes rather than the construction industry.
Senior Research Officer with the ESRI Karina Doorley said: “The one-off measures announced as part of Budget 2023 will substantially cushion real incomes.
“However, most of the permanent changes to tax and welfare measures benefit those on higher incomes.”
Research Officer with the ESRI Barra Roantree said: “…targeted welfare measures combined with universal household energy credits will do more for most lower income households this winter than had welfare payment rates risen in line with inflation both this year and next”.