Stabilising debt through economic growth

CommBank’s Chief Economist Stephen Halmarick discusses the highlights of the 2022–23 Federal Budget and what they mean for different industry sectors.

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Federal Budget highlights 

The Government’s 2022-2023 Federal Budget moves Australia’s recovery into the next phase. It aims to help offset the rising ‘cost of living’, support small business cash flow, fund skills training, improve manufacturing capability and there’s more spending on infrastructure, trade and tourism.

For Individuals

  • The fuel excise tax will halve from 44.2 cents per litre to 22.1 cents per litre for six months, coming into effect from Budget night 2022. This will help alleviate the impact of rising oil prices as a result of the Ukraine conflict.
  • A one off $420 cost of living tax offset for workers eligible for the low and middle income tax offset will come into effect from 1 July 2022 to help manage rising living costs.
  • Pensioners and other welfare recipients will receive a $250 one off cash payment, to be paid within weeks of the 2022 Budget announcement.
  • The Deposit Guarantee Scheme will more than double to 50,000 places per year. The scheme cuts the deposit required to buy a home to 5%, with the Federal Government guaranteeing the other 15%. There will be places set aside for single parents – either buying their first properties or trying to re-enter the housing market. Eligible single parents can receive a guarantee with a deposit of just 2%. 
  • The First Home Super Saver Scheme (FHSSS) will be tweaked. It’ll allow first home buyers to withdraw $50,000 from their super, up from $30,000. This scheme allows first home buyers to save a deposit by contributing to super while paying less tax. 

For Businesses and Institutions 

  • A range of measures have been introduced to streamline business interactions with the Government. The aim is to develop technology to automate reporting requirements, reduce costs and processing times and improve cash flows.
  • The existing instant asset write off rules for businesses with turnover or income of less than $5bn have been extended to 30 June 2023.
  • To help kick start the tourism sector, there’s a $60m Tourism Marketing Recovery Plan to attract international tourists following the reopening of Australia's border.
  • A $2m employment and skills online platform will be established to match job seekers with tourism employers while also training and upskilling staff in tourism.

Key focus areas

  • Health

    • An additional $6bn will support Australia’s COVID-19 health response, including preparation for winter. 
    • Medicare will cover new services such as Telehealth. The Pharmaceutical Benefits Scheme threshold will reduce so people reach the safety net sooner. Mental health services receive an extra $547m. The National Disability Insurance Scheme (NDIS) will provide $33.9bn to over 500,000 Australians in 2022-23, growing to $44.6bn in four years.
  • Education

    • An extra $3.7bn will boost skills training in priority areas. Support for apprenticeships will grow by $2.8bn over five years.
    • There’s $2.2bn to support university and industry partnerships and $52.8m to help build life and employment skills in disadvantaged young Australians.
  • ESG and Sustainability 

    • $1bn has been allocated to protect the Great Barrier Reef and $170m is earmarked for threatened species, habitat restoration and tree planting.
    • $26.8m will improve conservation and management of Australia’s national parks and $839.9m will support research and environmental management of Antarctica.
    • $192m will improve environmental regulation and $83.1m will build waste and recycling capabilities.  
  • Women

    • $1.3bn will be spent on ending domestic violence against women and children and $330.6m has been set aside for female health
    • There’s $482m to help women advance their careers, of that $56.2m will assist women transition to jobs in technology and manufacturing. $40.4m will support more women into senior roles and leadership positions.
    • $18.5m will progress gender equality in the workplace and reduce the gender pay gap.  
  • Manufacturing

    • There’s an additional $1bn in investment towards the Modern Manufacturing Strategy. Around half of this additional funding will support manufacturing activity in regional Australia. 
    • The government will establish a mRNA vaccine manufacturing capability in Victoria, providing priority access to mRNA vaccines, supporting research and preparing Australia for possible future pandemics. 
  • Rural

    • $1.3bn will improve regional telecommunications, $150.3m will support medical training in regional and rural Australia, $55m will boost aeromedical outreach services to reach isolated locations and $7.4bn will increase water security
    • The government will establish up to 20 new childcare services in regional and rural areas.  
  • Defence

    • Defence personnel will grow by 18,500 by 2040. More than $10bn has been allocated to future naval infrastructure and $3.5bn for up to 75 new tanks and armoured vehicles
    • The Budget earmarked an investment of $9.9bn in Australia’s intelligence and cyber capabilities. An extra $257.1m has been set aside for anti-terrorism and serious and organised crime prevention.   
  • Aged Care

    • Spending on aged care will grow to $29.8bn in 2022-23. There’s more home care packages, extra care time per day for older Australians in residential care and new training places for aged care workers.  
  • Infrastructure

    • The Budget has committed an extra $17.9bn to infrastructure for roads, rail and renewable energy technology. 
    • $6bn in disaster relief and recovery as a result of the floods in Queensland and New South Wales. In addition $1.2bn will be spent to develop Australian made satellites and enhance our space capability.

     

The Economists’ view

CommBank economists say the Federal Budget reflects the robust state of the Australian economy and its rapid bounce back from COVID-19 restrictions. Falling unemployment and a surge in commodity prices have helped fund a range of initiatives.

Stephen Halmarick and Belinda Allen discuss the latest economic insights

CBA's chief economist says:

"In delivering his third pandemic Budget, Mr Frydenberg said despite the many challenges the country had faced in recent years – including a once-in-a-generation health pandemic as well as catastrophic drought, fires and floods – Australia’s economic recovery is “leading the world”.

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