What to expect from next week's Federal Budget
At 7:30pm next Tuesday night Federal Treasurer Jim Chalmers will hand down the first Budget of the new Labor government.
Just six months has passed since the last Budget was delivered by the former government, but plenty has changed over that period, with rising inflation and deteriorating global economic conditions likely to constrain government spending.
In a press conference last week the Treasurer made clear that the three core priorities of the budget would be cost-of-living relief which is able to provide an economic dividend, cutting back on wasteful spending and shoring up the economy by addressing labour shortages and supply chain issues.
"It won't be fancy, it won't be flashy, it will be responsible, it will be solid, it will put a premium on what's responsible and affordable and sustainable. And it will be targeted to the economic conditions that we confront together in the here and now and also into the future."
So what are we likely to see in next Tuesday's Budget? While there are plenty of unknowns, here are some of the details that we have so far.
Australian parents are set to benefit from an increase to paid parental leave outlined by the government last week.
Parents can currently access up to a total of 20 weeks of Parental Leave Pay from the government, but Labor says it will increase this by a fortnight each year starting from July 2024 until it reaches a new maximum of 26 weeks in July 2026.
"This will benefit mums, it will benefit dads, it's good for children, and it will be a huge boost to the economy," says Minister for Social Services, Amanda Rishworth.
"We know that treating parenting as an equal partnership helps to improve gender equality. It is important that we have a Paid Parental Leave scheme that supports modern Australian families and that complements other parental leave schemes offered by a growing number of employers."
The government says that more detail about the changes will be outlined in the Budget.
Most of the tax discussion in the lead-up to the Budget has been focused on the viability of the stage three tax cuts, though any changes to the controversial cuts, which aren't set to come into effect until July 2024, have all been ruled out by the government for now.
Still on the individual tax front, director of tax communications at H&R Block, Mark Chapman, says he wouldn't be surprised if the government was to include something in the Budget for those earning less than $126,000 a year to make up for the end of the low and middle income tax offset (LMITO).
"The last year of the tax offset - which gives low-and middle-income earners up to $1500 in tax back - was 2022 meaning that when you do your tax return for 2023, the absence of the offset effectively means that you will be paying more tax. In the midst of a spike in the cost of living, that isn't a good look for the government," he says.
"So, expect something to take its place - maybe not the tax offset, but some measure to take the sting out of the hit that low- and middle-income earners are otherwise going to face."
Whether any measure for low and middle earners is included will have to be seen, but what we are likely to see is more detail on the government's multinational tax policy which it took to the election with a promise that cracking down on avoidance could help recoup $1.9 billion in revenue.
Reducing the cost of childcare was another of Labor's major pledges going into the election, and the government has already got the ball rolling with legislation that would subsidise childcare costs by 90% for families earning up to $80,000 a year before tapering off by 1% for each additional $5,000 of income.
Labor says the new reforms, which could begin in July 2023 and come at a reported cost of $4.5 billion, will not only cut childcare costs for roughly 1.26 million families, but also help to add the equivalent of up to 37,000 extra full-time workers back into the economy in 2023-24.
The government has also announced that $10.8 million will be allocated in the Budget to setting up a 12-month inquiry into the rising cost of childcare which will be conducted by the Australian Competition and Consumer Commission (ACCC).
The cost of childcare has reportedly risen by over 40% in the last eight years, with the ACCC set to look into the reasons behind the increase and provide any recommendations for further reform.
"Our investment in cheaper childcare is a cost-of-living measure with an economic dividend," says Chalmers.
"For many families, the cost of childcare is an incredible burden. This inquiry is an important part of our plan to help families cope with rising cost-of-living pressures."
Another policy already outlined by the government which is set to be costed in next week's Budget is a change to the cost of general scripts under the Pharmaceutical Benefits Scheme (PBS).
Like its childcare reforms, Labor has already introduced legislation to the parliament which, if passed, would see the maximum co-payment for general scripts under the PBS reduced by 30% from $42.50 to $30 starting from January 1 next year.
Elsewhere on the healthcare front, the government has announced that $47.7 million will be included in the Budget to reinstate access to bulk-billed video telehealth psychiatry consultations for Australians in regional areas.
People living in rural and regional areas had been able to access the service until it was cut by the former government last year, but it is set to kickstart again on November 1.
"Our rural and regional communities have endured drought, bushfires, floods and the impacts of COVID-19 in recent years - a perfect storm of factors that have taken a significant toll on people's mental health," says Minister for Health and Aged Care, Mark Butler.
"The Albanese Government is restoring these vital mental health services, making them affordable and accessible to people wherever they live."
Transport and infrastructure
One of the larger spending commitments which the government has already indicated will be in next Tuesday's Budget is $9.6 billion worth of infrastructure funding for projects around the country. Of that total figure:
- $2.2 billion will be earmarked for the Suburban Rail Loop in Melbourne
- $1.5 billion will fund regional road and highway upgrades in the Northern Territory, South Australia and Western Australia
- $586.4 million will go towards an upgrade of the Bruce Highway in Brisbane
- $540 million will be allocated for upgrades to roads and highways in Tasmania
- $500 million will help establish a High Speed Rail Authority for a network between Sydney and Newcastle
Not everyone is happy with the proposed infrastructure spending in the budget though, with New South Wales Treasurer, Matt Kean, critical of the amount that his state is set to receive.
"It's no coincidence that Queensland and Victoria - both Labor states - are getting so much more funding than the only mainland Liberal state," he said at a press conference last weekend.
"It was NSW that carried the nation during COVID, it was NSW that took the lion's share of overseas arrivals, and yet again we're getting dudded by the Commonwealth just like we do with GST revenue."
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