The Federal Government has delivered a budget that places a strong emphasis on easing the cost of living pressures for everyday Australians. The 2023-24 Budget is primarily designed to demonstrate the Government’s commitment to helping those feeling the pressures of high inflation and sticks to a relatively safe formula of boosts to current spending. In our long-held tradition of summarising what this all means to you, here are the main changes likely to impact you and your family.
Overview
With inflation still an issue, the budget – while politically palatable – does not address some fundamental flaws in the way the economy is currently functioning. Tax cuts are still on the agenda for next year, and there’s little to balance out the cost of living help with further inflationary pressures we expect to see over the next 12 months. While not discussed during Dr Chalmers’ delivery, the tax cuts due to arrive in 2024 (legislated by the previous government well in advance) will deliver a forecast $69 billion in tax relief for those earning $45,000 with those earning over $200,000 getting the most tax relief. This is substantially higher than the $14 billion cost of living relief announced.
Many Australians will be pleased to see measures that aim to alleviate cost of living pressures, such as increased funding for public healthcare, more bulk billing and jumps in welfare payments. Given the financial pressures that are being felt by welfare recipients, it’s not likely that cost of living help is going have a material impact on inflation.
In positive news, the Federal Budget was in the black for the first time in a while with a $4 billion surplus. It’s expected to slip back into the red to the tune of $13.9 billion, however some feel that the forecast has reason for optimism depending on commodity prices.
Cost-of-living relief
The budget provides a 15% increase to the maximum rate of Commonwealth Rent Assistance (CRA) payments from 20 September 2023. This increase will benefit approximately 1.1 million low-income Australians who are eligible for CRA. Single CRA recipients with no dependents and receiving the maximum amount of assistance would see their payment increase from $157.20 to $180.80 per fortnight.
Government payments increasing
Base rates of support payments such as JobSeeker, Youth Allowance, Partnered Parenting Payment, and Austudy will increase by $40 per fortnight from 20 September 2023. The eligibility for the higher single JobSeeker payment will be extended to those aged over 55 who have been on the payment for more than nine months.
To assist households with rising energy costs, the government will spend $3 billion on direct bill relief, co-funded with state governments. This will go out to all eligible households, including pensioners, seniors health card holders, and Family Tax Benefit recipients. More than 5 million households are expected to benefit from up to $500 deducted from their power bills next financial year.
Additionally, single parents will be able to claim the Single Parenting Payment until their youngest child turns 14, up from eight, providing 57,000 families with an extra $176.90 per fortnight.
Superannuation
The much discussed increase in superannuation taxes were cemented in the 2023 Federal Budget. Approximately 70,000 superannuation fund accounts will be hit with an additional 15% tax on their superannuation bringing the tax rate up to 30%. Importantly, the $3m threshold is not indexed meaning more Australians will be impacted by this over time.
Starting from 2026, employers will be required to pay superannuation at the same time as wages. The Budget has allocated $40 million to fund an ATO compliance program targeting unpaid super, and a crackdown on unpaid tax and super by medium and large businesses, which is forecast to generate $440 million over four years. Non-compliance with super obligations has been a constant issue, and with a potential economic slowdown steps are required to ensure that businesses don’t see employee superannuation as optional.
Healthcare changes
The government will spend $3.5 billion to triple the bulk-billing incentive for GPs, allowing doctors to bulk-bill more common consultation types. Additionally, eight new Medicare urgent care clinics will open for longer hours, with no out-of-pocket costs, bringing the total number of clinics across Australia to 58.
To better coordinate healthcare, the government will invest hundreds of millions of dollars into telehealth, the digitization of records, and increasing Medicare rebates for consultations lasting over 60 minutes.
Aged care workers will finally receive a 15% pay increase, a key finding from a recent review into the aged care system that showed chronic underpayment in this sector.
Disappointingly, last year’s paring back of mental health funding has not been reversed with no new initiatives to relieve a rapidly growing health problem. Medicare-funded psychology sessions remain at 10 only, down from 20 in prior years.
Homeowners renovating
Low-interest loans will be made available for around 100,000 homeowners who are looking to make positive climate changes to their homes. The loans will be made available to those wanting to upgrade to more energy efficient appliances and building materials such as double-glazed windows and solar panels.
Climate
There will be a boost to the Green Hydrogen industry of $2 billion through a green credit system to incentivise the production of green energy.
Education and Childcare
Approximately 1.2 million families are expected to benefit from subsidy rate increases from July 1, at a cost of $55.3 billion. A further $72.4 million over five years will support the skills and training of workers in the early childhood education and care sector. The budget also includes $2.8 million over four years to streamline the delivery of the Additional Child Care Subsidy.
The Budget brings a boost of $4.9 billion to support those who are studying, doing apprenticeships, or seeking employment. This funding is intended to help around 1.1 million Australians access education and training opportunities, with a focus on boosting employment prospects.
$32 million in grants will be provided to upgrade infrastructure and equipment at 1,300 schools, and $18.7 million over four years to expand existing higher education student support programs.
Rebecca is passionate about promoting the positive impact of quality financial advice on personal wellbeing. Read her full bio here.
