22 Apr Federal Budget 2022-23 Overview
Federal Budget 2022-23 Overview
On 29 March 2022, the Morrison Government unveiled the 2022-23 Federal Budget. With an election looming, this year’s budget aimed to ease the rising cost of living. Australians will be able to claim short-term relief through one off payments and fuel excises. The budget is estimated to have a deficit of $78 billion in 2022/23, narrowing to $43.1 billion by 2025. Here are the biggest takeaways from this year’s Federal Budget.
Note, these are proposals and are subject to being passed through Parliament.
Some favourable outcomes applicable to the general public include the fuel excise being cut in half (from 44c to 22c per litre) for the next 6 months and the cost of taking a compulsory work-related COVID-19 test being tax deductible and exempt from Fringe Benefit Tax.
Low- and middle-income earners
Low- and Middle-Income earners will receive a tax offset of up to $1,500 this year. This is a $420 bump up to the previous $1,080 tax offset scheme that was originally anticipated to come to an end this tax year.
Expecting couples or parents with newborns will enjoy a modified Paid Parental Leave (PPL) scheme. What was originally two separate payments of two weeks for “Dads and Partners” and 18 weeks of “Parental Leave Pay” will be combined into one offering of 20 weeks. This will give couples the flexibility to choose how to split the leave amongst themselves.
Regional Australia and Farmers
The Morrison Government has budgeted $7.1 billion towards infrastructure in regional towns of Central Queensland, Hunter (NSW), Northern Territory and Pilbara (WA). A further $2 billion is set to be invested in improving skills, education, exports, and supply chain logistics and $800 million towards improving phone service coverage in regional Australia.
Farmers who are in the business of selling carbon credits will receive a tax concession so that income from carbon farming is treated like other primary production income for tax purposes. Existing measures benefiting exports and agriculture will be strengthened.
People receiving Centrelink payments, such as pensioners, carers, veterans and job seekers will receive a one off payment of $250.
First Home Buyers
The First Home Buyers scheme is being expanded to include a further 10,000-35,000 places a year, meaning that, subject to eligibility, more people will be able to purchase a house with only a 2% deposit and no Lenders Mortgage Insurance (LMI). It will include a special scheme for regional housing from 1 October for first home buyers or for people who haven’t owned a house in the last five years.
The Family Home Guarantee scheme is also set to be extended to include single parents wanting to enter the property market.
Small and medium businesses (SMEs) will be rewarded with an additional 20% tax deduction (total 120%) on expenditure relating to employee training and digital adoption. Eligible COVID-19 business support grants will be treated as non-assessable non-exempt income until end of June 2022.
Access to employee share schemes in private companies will be improved and business registry fees will become more streamlined.
Innovation will be incentivised by the provision of an effective tax rate of 17% for innovation in agriculture, veterinary and emission reduction technology.
Trust and beneficiary reporting will become digitalised, payroll processes will be streamlined, and businesses can choose to have their PAYG instalments calculated on current financial performance for tax purposes.
The Environment (to some extent)
The Government is budgeting $60 million towards better technology for the recycling of plastics.
$1 billion towards saving the Great Barrier Reef was also confirmed. This will go towards research, technology, management and improving water quality.
Nevertheless, the silence on targets and budgeting for climate change and the reduction of carbon emissions was resounding.
As a result of rising interest rates, wages are not predicted to increase until at least the back half of this year. The budget indicates the gap between wages and inflation will remain tight, meaning that cost of living pressures experienced by most Australians will continue.
Renewable Energy projects will receive no direct funding in the 2022 Federal Budget. The outlook on the development of future Australian renewables is grim, with funding set to decrease by as much as 35% over the next four years.
Given that relieving fuel prices for motorists was a major issue, it is surprising that electric vehicles did not gain any attention under the new budget.
Aged Care Services
Whilst the budget has committed $49.5 million towards training services, the aged care sector maintains that a structural overhaul is necessary. Members of the aged care sector have criticised the funding, saying that the government has failed to address the key issues that the aged care royal commission identified.
The budget also failed to address the main reason the aged care sector is experiencing a shortage of workers- low wages. The royal commission into aged care warned that workers are under-paid and under-skilled. The Federal Government has also refused to back a case in the Fair Work Commission to increase the wages of aged care workers.
In a response to the budget, opposition leader Anthony Albanese promised that a Labor government will fully fund the case in the Fair Work Commission. He vowed that wages in the aged care sector would increase under a Labor government.
Renters and Young People in the Housing Market
With home and rent prices continuing to rise, many people have been priced-out of the housing market, and in conjunction with the high cost of living, have struggled to afford rent payments.
Despite the 2022 Budget expanding the first home buyer’s scheme, critics have warned that the adjustments will do little to address the issue of rising house prices and people will still be unable to afford homes
The Morrison government continued its strong support of Ukraine in the budget. The budget outlines over $156 million in assistance to Ukraine. The commitment comprises of $91 million in military equipment, and $65 million in humanitarian assistance.
The Arts sector was heavily impacted by the pandemic and is still yet to recover. With the winding down of pandemic relief schemes, funding towards the Arts is set to be slashed in the coming years. Funding has fallen to $799 million this year, down from $989 million in 2021. The budget indicates that funding will fall even further to $736 million in 2023.
Live performance attendance is down considerably in comparison to 2019 numbers, with many establishments struggling to remain open.