Extra cost of living relief could be on its way for struggling households in the upcoming federal budget but the treasurer warns the support will be minor or risk jeopardising the fight against inflation.

Treasurer Jim Chalmers says there will be additional cost of living relief in the budget but “it won’t be anywhere near the magnitude” of the stage three tax cuts due to start mid-year.

“Any extra help will be targeted, responsible and affordable,” he said at the Committee for Economic Development of Australia event in Sydney.

“There will not be big cash splashes in the budget, simple as that,” he said, noting that budgets should be shaped by the “economic cycle not the electoral cycle”.

“Anything that’s too costly, too splashy, risks undoing the good progress we’ve made together on inflation.”

With just two months to go, Dr Chalmers has been laying the groundwork for the May 14 budget that is landing at a critical juncture in the prolonged battle to bring consumer price growth back within the two-three per cent target band.

Aggressive interest rate hikes have been working to rein in spending and demand for goods and services, leading to discounting and therefore lowering inflation.

The Reserve Bank is aiming for the sweet spot between weakening economic activity just enough to bring inflation down without stalling the economy entirely and leading to job losses.

With inflation moderating but still a while away from target and growth already very weak, Dr Chalmers said his government’s economic management priorities were shifting “a little bit but not a lot”.

The treasurer said inflation remained the primary focus, with building defences to global uncertainty and adapting to slowing growth also considered important.

The government’s plan to keep the economy growing is more “protein” than carbs” – that is, Dr Chalmers said, there would be no “cost of living help as stimulus” as seen during the pandemic or the global financial crisis.

Rather, there would be a bigger emphasis on investment as a driver of growth, with work already underway on whole-of-government strategy to better co-ordinate efforts.

“As we work through other ways to invest in emerging industries and the broadening and deepening and modernising of Australia’s industrial base,” he said.

“This will require different parts of government to work better together.”

“Enablers of investment” included agenda items like faster environmental approvals, better access to critical infrastructure (including renewable energy), improved access to skilled migration and more efficient screening of foreign investment.

The treasurer also played down the likelihood of a second budget surplus in 2023/24.

The government is still “shooting for a surplus” but softening iron ore prices and the weakening jobs market mean revenue upgrades will be smaller.

Because the upward revision is likely to be smaller, the treasurer said a substantial amount would be banked “but not all of it, in all likelihood not as much as we did in the first two budgets.”

This post was originally published on Michael West.