The Budget – You deserve answers
26 October 2022
I hope I can be forgiven for being a little late off the mark with my review of the Budget this time around. I must not be the only one feeling a little flat after the announcement last night.
Treasurer Jim Chalmers got my attention by immediately calling out the cold hard truth ‘Australians have been resolute and resilient in hard times’.
We have had no choice but to tighten our belts in response to being hit with ongoing cost of living pressures and interest hikes. To be honest, I feel it is little help being told to prepare for the possibility of another global recession.
When we learn that real wages are lower now than they were ten years ago and we have in front of us rising electricity bills, expensive fuel and groceries and waning market sentiment, we don’t need anybody to state the obvious, what we need are answers.
So, I did my best to find them.
Problem: Wages are not keeping up with inflation, so many are struggling to pay their bills.
Answer: Our new government will ensure a pay rise for 2.7 million minimum wage earners.
There will be increased Child Care Subsidies and 26 weeks of paid Parental Leave offered by 2026.
The cost of medication will decrease with the general patient co-payment on the Pharmaceutical Benefits Scheme reducing from $42.50 to $30.00 from 1 January 2023.
Problem: Our rental supply is not keeping up with demand and there is a waiting list for social housing.
Answer: The Housing Accord will be established between state and territory governments, along with the construction industry. This will deliver 1,000,000 new homes by mid-2029.
The Government will supply another 10,000 affordable dwellings, with states and territories to provide up to another 10,000.
Problem: The unemployment rate is forecast to increase to 4.5% by June 2024.
Answer: $1 billion will be invested in free TAFE courses, in addition to $770 million to be invested in schools and training for teachers. Further initiatives will be funded to ensure increased University positions are available to financially disadvantaged students.
‘Sustainable, well paid jobs’ will be created through the $15 billion National Reconstruction Fund, focusing on clean energy manufacturing, new technologies, agriculture and critical minerals.
Problem: More focus needs to be given to the energy crisis.
Answer: The Treasurer announced that a further $20 billion will be allocated to climate change initiatives, including building electric vehicle charging stations on our freeways, investing in wind farms and clean renewable energy.
This is expected to create ‘thousands of jobs’ across Australia.
Problem: Aged Care funding is complex and home care provider fees lack transparency, which can lead to care recipients paying costs they were not aware of or did not understand.
Additionally, there is a long way to go to improve the quality of care, based on the Royal Commission findings.
Answer: The government will have the power to cap administration and management fees charged by Aged Care providers. Exit fees will now be prohibited from being charged when a recipient ceases care.
There will also be further strengthening of regulation, including enforced improvements to nursing, food, and facilities, along with greater whistle-blower protections.
The National Disability Insurance Scheme (NDIS)
Problem: The National Disability Insurance Scheme has led to a backlog of submissions to the Administrative Appeals Tribunal (AAT), with disabled persons and their families often disputing funding decisions.
Answer: The Government will provide additional funding, including $18.1 million over two years to review the NDIS design, operations, and sustainability. An additional $12.4 million will be invested to provide better and earlier outcomes for NDIS participants.
Centrelink/DVA and Part Time Work
Problem: Older Australians who would like to work on a part time or casual basis have limited ability to do so without it impacting on their Centrelink Age Pension entitlements.
Answer: Age Pension or DVA recipients can currently earn up to $300 per fortnight in employment income before their benefits are reduced. The income limit will now effectively be increased to $454 per fortnight this financial year.
Centrelink and Downsizing your Home
Problem: Australians on Centrelink benefits who would like to sell their home to downsize are hesitant to do so, because holding the cash in the bank for an extended period while looking for a new property can affect their entitlements.
Answer: Proceeds from the sale of the family home will not be asset tested for two years if proceeds are to be used to buy, rebuild or renovate a new home. This is an extension on the current one-year exemption.
Now I have gone through all of that, my spirits have been lifted.
The Treasurer made no real comment on tax, so there is no expected change to the Stage 3 tax cuts due to take affect from July 2024. There was also very little discussion on superannuation, other than to confirm the previously announced downsizer contribution changes.
Annual inflation is expected to peak at 7.75% in late 2022 before slowly moderating back to RBA targets. Economic growth is forecast to slow to 1.5% in 2023/24.
Knowing this, we can be thankful that superannuation is proving to be a largely predictable investment, with no planned changes to super tax or contribution rules in sight.
We can also breathe a big sigh of relief that the new Government’s ‘solid and sensible’ measures to manage debt don’t include immediate tax hikes.
I know talking Politics is frowned upon but I do believe the assertion that Labor is a modern Government that seems to be in touch with the best interests of the next generation.
I have hope that this will serve us well as we continue to navigate these uncertain times.