Treasurer Jim Chalmers has recognised millions of Australians are “under the pump” and this month will start to pump up ‘the income from Canberra process’, with billions of dollars of targeted measures to help offset the impact of the rising cost of living.

But will it really help expedite the arrival of falling interest rates, which is arguably the great pump factor for many Australian households? Remember, inflation is falling. Last week’s monthly look at annual inflation saw a drop from 5.4% to 4.9%, when economists tipped it would be 5.2%. That means inflation is falling faster than expected.

Here are the rescue measures:

1. On September 20, 782,000 people on JobSeeker will get $40 a fortnight increase in pay.
2. 222,000 on the Youth Allowance will also get $40 a fortnight; and
3. So will 64,000 families on the partnered parenting payment.
4. 57,000 families receiving the sole parenting payment will no longer lose the $176.90 a fortnight when their youngest child turns eight. The payment will go until the child hits 14.
5. 1.1 million Australians on rent assistance will see the maximum rate of help pushed up by 15%.
6. Millions of Australians with chronic health conditions now can see a halving of the cost of their medicines. What this means is that nownearly 100 common medicines listed on the Pharmaceutical Benefits Scheme (PBS) will have the option of a 60-day prescription. This meansmany patients can now receive twice the medication for the cost of a single prescription, which is expected to free up doctors from losing time doing simple issuing of prescriptions.

“Whether it’s cheaper medicines, more support to pay the bills or a bit of help to pay the rent, these policies and programs are targeted to take the pressure off while times are toughest,” the Treasurer said. And Ellen Ransley of news.com.au reported that the Treasurer said the supportive measures won’t add to inflation.

This is how Health Minister Mark Butler saw the impact of this PBS change: “Pensioners with a heart condition, children with Crohn’s disease, veterans with high cholesterol, mothers with osteoporosis and fathers with high blood pressure will get important cost of living relief.

“Every single Australian will benefit from the freeing up of millions of much-needed GP visits, so our doctors have more time to diagnose and treat conditions, instead of simply issuing routine, repeat scripts.”

These are all socially valuable measures to help families under financial pressure with rents rising, power bills going through the roof and inflation still around 5%. The only matter where the Treasurer might have exaggerated a little is that the measures are not inflationary.

Economists would argue that the RBA has been trying to squeeze spending by Australians to eventually hurt demand for goods and services so that price-setters will find it hard to keep raising prices. The 12 interest rate rises were aimed at doing exactly that.

This was on top of the hip-pocket hurting, inflation effects on households’ ability to buy things, which also curtails demand and eventually rising prices.

These good welfare measures give money to lower income people, who economists would say have a higher propensity to consume compared to wealthy people.

This means a lower income person might spend 100% of any new income, while a wealthy person could save the lot! As these welfare measures will help spending stay higher than it would if they weren’t introduced, they are a little inflationary. But that’s life in the fast lane. Sometimes those who are flying higher than others have to cop it to help those stuck in the slow lane.