Federal Treasurer Josh Frydenberg has handed down the 2022-23 Federal Budget, the Government’s last before the Federal Election. This article outlines the key measures contained in the Budget including the cost of living relief, infrastructure spending, and tax deductions for business.
The Federal Government has delivered a big-spending pre-election budget, taking immediate steps to reduce cost of living pressures for working Australians while implementing a range of massive infrastructure and defence spending measures.
While a number of these initiatives will need to pass through an opposition-controlled Senate, the fuel excise which the Liberal Coalition re-introduced in 2014, will be halved for the next 6 months, effective immediately. Also promised is a one-off ‘cost of living’ hand out of $250 to eligible social security recipients, and a $450 additional tax offset for low- and middle-income earners, in what is a ballot-box friendly budget.
A bounding economy
The Australian economy has come roaring out of two years of pandemic-induced lockdowns, to post strong growth across the nation, spurred on by higher prices for coal, iron ore, and wheat. In the face of an election, concerns about the growing budget deficit, which has now reached $78 billion, have been largely put on the back burner.
Gross domestic product is expected to expand by 4.2% this year while wages are expected to grow by 2.75% and surge by 3.25 % in the following year. Unemployment is currently 4%, but this is expected to drop to 3.75 % over the next six months – its lowest level since 1974. An extra 100,000 Australians have found employment compared to when the pandemic first hit in March 2020. This in turn is expected to help slash welfare payments by $11 billion across the next four years.
A focus on increased productivity
Training and improved productivity remain a key focus. The Government announced a $365 million extension to the existing apprentice wage subsidy scheme, in an attempt to further boost apprenticeship training.
The Federal Government is continuing its focus on boosting business productivity announcing a 120% tax deduction for digital adoption technology, such as portable payment systems, cyber security measures, and subscriptions to cloud based services.
A similar tax measure has been announced for businesses providing external training courses to staff, to increase productivity throughout the economy.
This will be supported by a raft of Government driven efficiencies such as digitalising trust income reporting, improved PAYG systems, and the automatic reporting of taxable payments.
And a more efficient economy
The 2022-23 budget announcement also includes a raft of infrastructure projects designed to drive greater efficiencies and economic growth across Australia in the decade ahead. These projects include:
- $18 billion in priority road and rail infrastructure
- $7.1 billion to develop regional economies
- $6.9 billion in significant new water infrastructure
- $10 billion on the new East Coast submarine base
- $ 4.3 billion upgrade to the Henderson naval shipyard
- $ 2 billion for a Moderna mRNA vaccine plant in Victoria
In addition, the Government has announced steps to develop a circular waste economy, support low emission technologies, extend gas pipeline infrastructure, and more efficient environment approval strategies.
Source: https://budget.gov.au/ “Budget 2022-23 Australia’s plan for a stronger future: Overview” (29 March 2022)
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