On Tuesday, 25 October 2022, Treasurer Jim Chalmers handed down the 2022-23 October Federal Budget. The second Budget for this year updates economic forecasts and outlines the new Labor Government’s priorities following the May 2022 Federal election.

The Budget estimates an underlying cash deficit of $36.9 billion for 2022-23 and $44 billion for 2023-24. While the economy is expected to grow by 3.25 per cent in 2022-23, it is predicted to slow to 1.5 per cent for 2023-24, a full percentage point lower than forecast in March 2022.

Inflation is expected to peak at 7.75 per cent later in 2022 but is projected to moderate to 3.5 per cent through 2023-24 and return to the Reserve Bank’s target range in 2024-25.

Against this backdrop, the Treasurer has sought to exercise fiscal restraint so as not to put more pressure on prices. Rather, the Budget sets out a 5-point plan for cost-of-living relief in the areas of:

  1. childcare
  2. expanding paid parental leave
  3. lessening the cost of medicines
  4. affordable housing
  5. wages growth.

While the Budget does not contain major tax changes it does seek to begin some Budget repair work via tax integrity measures. “By making sure multinationals pay a fairer share of tax in Australia, by extending successful tax compliance programs, and by giving the ATO the resources they need to crack down on tax dodging. Together, these initiatives save a further $4.7 billion over four years”, Dr Chalmers said.

The reported winners from the Albanese Government’s first budget are as follows:

  • Young Families:

Young parents were winners from the Federal Budget, with eligibility for Paid Parental Leave expanded to families earning up to $350,000 per year. The government will also expand paid parental leave from 20 to 26 weeks in stages over the years until 2026, with parents deciding on how to split the leave between them. To ramp up the scheme, the budget commits more than $530 million between now and 2026.

Alongside the expansion of paid parental leave, the budget subsidises more childcare places, claiming that the higher subsidies will make early childhood education and care more affordable for more than 1.2 million Australian families.

  • Apprentices and Trainees:

The budget commits $1 billion in a deal with the states and territories to fund fee-free TAFE and vocational educational places, equivalent to 180,000 places next year.

The budget also commits $485 million to create 20,000 new university places over the next two years for students from disadvantaged backgrounds.

  • Home Buyers and Renters:

A new national Housing Accord has been established. The Accord sets an aspirational target of one million new, well-located homes to be delivered over 5 years from mid-2024 as capacity constraints are expected to ease. Under the Accord, the government will provide $350 million over 5 years, with ongoing availability payments over the longer term, to deliver an additional 10,000 affordable dwellings.

  • Renewable Energy:

The budget spends on energy transmission through the “Rewiring the Nation” program, aimed at improving the connection of renewable energy to the grid, with a $20 billion fund to connect development such as the Marinus Link in Tasmania and planned offshore wind farms in Victoria.

There is also $800 million earmarked for a Powering Australia plan that cuts taxes on electric vehicles, invests in a national EV charging network, and provides solar battery storage for up to 100,000 homes. This is in addition to a renewed focus on the environment, with a $275 million spend to support the Department of Climate Change, Energy and Water improve its capacity.

The budget also focuses on repair measures by targeting government consultants, multinationals and fraudulent NDIS activity.

Budget repairs measures though have hit regional communities with $10.2 billion in funding programs to regional Australia being cut or scrapped.

For a quick snapshot at the major Budget announcements please refer to October 2022 Budget Snapshot