ANZ's dark warning over Anthony Albanese's $300 cost-of-living electricity rebates

The ANZ bank is warning electricity rebates will only add to inflation because Aussies will now have a lot more money in their pockets.

Prime Minister Anthony Albanese's last Budget introduced $300 rebates for every Australian household, regardless of their wealth, in four quarterly instalments of $75.

Queensland has gone even further, with Premier Steven Miles announcing $1,000 electricity rebates as Labor battles to win a fourth consecutive term of government in October. 

In its May Budget Western Australia announced a $400 one-off electricity bill credit. 

ANZ economists Madeline Dunk, Arindam Chakraborty and Catherine Birch have warned these electricity rebates will only fuel inflation by giving households more money to spend on other things.

'Some of this cost-of-living support, like the energy rebates, will mechanically lower inflation temporarily,' they said.

'However, it could add to demand if households then spend some of the savings.'

ANZ's warning contradicts Treasurer Jim Chalmers who in May argued the $300 electricity rebates would bring down inflation. 

'The primary focus of our economic plan and Budget is to ease pressure on Australians and put downward pressure on inflation, and our new power bill relief does both,' he said.

Financial comparison group Finder estimates New South Wales has the most expensive average electricity bill of $430 a quarter, or $1,720 a year.

Western Australia had the cheapest average quarterly bill of $280, working out at $1,120 annually. 

Inflation in the year to May climbed by 4 per cent, putting it further above the Reserve Bank's 2 to 3 per cent target.

But electricity bills over the year rose by 6.5 per cent, the monthly Australian Bureau of Statistics data showed. 

The Reserve Bank in June left interest rates on hold at a 12-year high of 4.35 per cent but warned the effects of electricity rebates will only temporarily reduce inflation.

'Recent budget outcomes may also have an impact on demand, although federal and state energy rebates will temporarily reduce headline inflation,' it said.

The cost of living crisis has seen state governments increase their spending with coal-rich Queensland going from having a record $13.93billion surplus in 2022-23 to a deficit of $2.631billion in 2024-25. 

'A key theme has been the growing role of government in supporting the economy and households facing cost-of-living pressures,' the ANZ economists said.