What can we expect from the incoming budget?
Treasurer Jim Chalmers is due to hand down his first budget on Tuesday night, but “pre-budget” announcements have shed some light on what we can expect.
The budget hand down will see Mr Chalmers explain how the global economy has deteriorated over this past year.
He has said it will probably be necessary to spend more money than the government will raise in taxes over the next couple years, making it a budget “deficit”.
While Mr Chalmers has spent the last few months lowering expectations in the lead-up to the reveal of the numbers in this budget, here is what we know about some of the major areas that will be affected.
Parental Leave
Australia’s current 20 weeks of paid parental leave will be extended to 26 weeks - but it won’t happen overnight.
The Labor government plans to stagger the increase, adding two weeks to the program every year.
The current scheme sees the primary caregiver receive 18 weeks of leave paid at the minimum wage, with two additional weeks for the partner.
In July 2024, 2025, and 2026, another two weeks will be added to the program, bringing it up to a maximum of 26 weeks (or six months) of paid parental leave.
The leave will also be more flexible, with parents able to split the leave more equitably or claimed in its entirety by single parents.
Childcare
With Labor promising to make childcare cheaper during the last election, the new government will be increasing the childcare subsidy in this budget.
Legislation has already been introduced to parliament to increase the subsidy for early childhood education for 90 percent of families earning $80,000 or less a year.
For every $5,000 families earn over $80,000 up to $530,000 a year, the subsidy will decrease by one percentage point.
The new subsidy is due to commence from July 2023 and is expected to cost $5.1 billion over the next four years.
A 12-month inquiry into rising childcare costs by the Australian Competition and Consumer Commission (ACCC) has also been announced, with the inquiry said to cost $10.8 million.
Aged Care and Health
In the wake of the royal commission into aged care, the government has introduced legislation to parliament to reform the sector, with an expected cost of $2.5 billion.
Recommendations made by the commission are also set to be adopted, including raising the standard of care, ensuring aged care homes have a registered nurse on-site 24/7, and increasing the transparency of the sector and its funding.
The government has also promised to increase wages for aged care workers, but have yet to disclose a figure.
New commitments to subsidise medicine and spend more on Medicare will also feature in this budget, with Health Minister Mark Butler saying that $9.9 billion would be invested in these measures.
Tax Cuts
While there have been no changes to the controversial stage three tax cuts in this budget, it has been announced that the Albanese government won’t be extending the low-and-medium income tax offset (LMITO) after it expired on June 30.
As a result, tax returns for the 2021-22 financial year will be the last where Australians earning under $126,000 will receive a tax offset of up to $1500.
Electric cars are in, fuel excise is out
The six-month fuel excise introduced by the Morrison government, which saw petrol prices drop by over 20 cents a litre, won’t be extended after it ended in September.
But, legislation has been introduced to make electric cars cheaper, such as removing fringe benefits tax and import tariffs from eligible electric vehicles.
It is hoped the changes will make electric vehicles more affordable, encourage their take-up and help the Albanese government meet its emissions targets.
NBN
Another of Labor’s election promises, the government will be injecting the National Broadband Network (NBN) with a $2.4 billion equity investment over the next four years.
The government has said the investment will give 1.5 million homes and businesses the option to upgrade to faster fibre broadband access by 2025.
Wellbeing and climate change
In a first for Australia, the budget will dedicate a chapter to wellbeing, including outlining how the government plans to measure wellbeing going forward.
For the first time since the Abbott government, the Treasury has also been asked to model the impact of climate change on the economy in this year’s budget.
Legislation has been introduced for a disaster ready fund intended to help fund projects that mitigate and prepare for climate change.
This will provide up to $200 million a year for projects such as flood levees, cyclone shelters, fire breaks and evacuation centres.
General expectations
Mr Chalmers has shared some predictions for what will happen over the next few years in relation to food costs, inflation and unemployment.
The Treasurer said it’s expected that the price of food will increase significantly later this year due to the floods across NSW, Victoria and Tasmania.
He said Treasury officials think annual inflation will peak at around 7.75 percent at the end of this year before declining in mid-2023, while unemployment will likely rise from its current 3.5 percent to 4.5 percent in 2023-24.
Image: Jim Chalmers MP (Facebook)