Acting Prime Minister Julia Gillard says looming tax cuts will lift the pressure off struggling families, as fresh statistics show consumer confidence has slumped to recession levels.
The latest Westpac-Melbourne Institute index of consumer sentiment shows confidence has fallen to its lowest level since 1992, when Australia was emerging from recession.
Ms Gillard said times were difficult.
"People are doing it tough," she told the Nine Network.
Tax cuts, which would kick in on July 1, would help.
"Those tax cuts are about lifting the pressure, particularly for low and middle-income earners," she said.
"Tax cuts are direct dollars in the pocket."
The Rudd government had inherited an inflationary environment which was bad news for consumers, whether they had bought their own home or were renting, Ms Gillard said.
The government had sought to take inflationary pressure off the economy in the recent budget, through a $55 billion package for working families, she said.