Yahoo Finance Budget 2022: The biggest winners and biggest losers
Seven months after the Morrison government handed down its pre-election budget packed with cash splashes, Labor has taken the highly unusual step of handing down a second budget in the same year.
Not only does Labor want to reset the narrative, it is also setting the scene for future reforms while shifting the focus to the broader well-being of Australians, not just the nation’s bottom line.
But first, it wants to highlight some tough realities. The global and domestic economies are in a very different place than they were at the start of the year amid runaway inflation and rising interest rates.
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The Albanese Government is also making good on some key election promises and launching big policies in child care, paid parental leave and an aspirational platform for better housing affordability for both buyers and renters.
Here’s how the new Government’s 2022/23 Budget will impact you.
WINNERS
Young parents - higher childcare subsidy
Young families are arguably the biggest winner of the Budget. The Albanese Government is investing $4.6 billion to increase the childcare subsidy,which it says will make it more affordable for 1.2 million families.
From July next year, the rate will lift from 85 per cent to 90 per cent for families earning less than $80,000. The subsidy rates will then taper down one percentage point for each additional $5,000 in income until it reaches 0 per cent for families earning $530,000.
So, take for example a couple with a household income of $120,000 and a child in day care three days a week, costing $4,700 a year in out-of-pocket fees. Their subsidy rate will jump from 71 per cent under the current system to 82 per cent, saving them $1,780 a year.
According to the Budget papers, around 96 per cent of families with children in child care will benefit and none will be worse off.
Families will continue to receive existing higher subsidy rates for their second and subsequent children aged five and under in day care.
Young parents - more paid parental leave
The Government has also pledged to gradually raise paid parental leave from 20 to 26 weeks.
Currently, the scheme provides 18 weeks for the primary care giver at minimum wage and an additional two weeks for their partner. Starting in July next year, the Government will add an extra two weeks for three straight years, amounting to six months' (26 weeks) leave.
It will also become more flexible, so it can be shared more equally between both parents.
It is the biggest expansion of the PPL scheme since its introduction in 2011. At a cost of $531 million over four years, the Government estimates it will benefit 180,000 families each year.
“This is about greater equality and greater security for Australian women – and more dads doing their bit,” Chalmers said.
High-income earners (for now)
The much talked about stage three tax cuts for high-income earners under the previous Coalition government - despite ongoing questions around their viability - remain in the Federal Budget.
Currently, these tax cuts – which will flatten the tax rate for people earning between $45,000 and $200,000 to 30 per cent – are set to occur in July 2024. So there is still time for the Government to tinker with them, which some economists are predicting could happen in the May 2023 Budget.
If they don’t, those earning $200,000 can soon look forward to a $9,000 bonus at tax time.
Aspiring home buyers
One of the central pillars of Labor’s Budget is a promise to get more affordable housing onto the market.
Joining with state and territory governments, the construction industry and the $3.3 trillion superannuation sector (and loosening investment rules), the Government has set the ambitious goal of helping build 1 million affordable homes in the five years from 2024.
“Most of this supply needs to come from the market, not the Government,” Chalmers said in his Budget speech.
“But there’s a role for government, and we intend to play a leading role, by coordinating and kick-starting the investment we know needs to happen.”
The new “Housing Accord” is largely aspirational at the moment, but the Albanese Government will get the ball rolling with $350 million over five years to deliver 10,000 affordable homes.
That’s on top of 30,000 new social and affordable houses expected to be delivered through the $10 billion Housing Australia Future Fund – an election promise that will be used to provide sustainable funding for housing projects.
“We need people to be able to live where the jobs and opportunities are,” Chalmers said.
For that, there needs to be more affordable rental properties, he added.
The current ‘Help to Buy’ shared-equity scheme and the Regional First Home Buyer Guarantee will continue to receive government support.
The Government is also spending $15 million to establish a National Housing Supply and Affordability Council to independently advise it on housing policy.
People on Centrelink benefits
An additional $33 billion will be put aside for pensions and other welfare payments, with the Government having to come up with the cash because these payments are pegged to inflation. About a third of the additional $33 billion would go to the aged pension and another third to JobSeeker payments.
Those who use prescription medicines
From January next year, medicines will be cheaper. The maximum co-payment under the Pharmaceutical Benefits Scheme (PBS) will decrease from $42.50 to $30 per script.
This will cost the Budget - or to put it another way - save Australians $190 million each year, impacting 3.6 million Aussies.
Sick people
The Government is also allocating $1.4 billion to include more life-saving essential medicines on the PBS, including treatments for various types of cancer and growth hormone deficiency in children.
TAFE and university students
Along with the states, the Albanese Government has committed to develop a $1 billion National Skills Agreement. Commencing on January 1, 2023, it will deliver 180,000 fee-free TAFE and community-based vocational education places over 12 months.
The Government will also deliver up to 20,000 additional university places across 2023 and 2024 to tackle the skills shortages in areas such as nursing, teaching, engineering and technology.
Aged care residents
Sticking to one of its most memorable election promises, the Government will commit $2.5 billion to fund more carers. From July 2023, aged care facilities will be required to have a registered, qualified nurse on site 24 hours a day, seven days a week. The policy will see average care minutes increase to 215 per resident, per day, from October 2024, according to the Budget papers.
Schools
The Government is allocating $474.5 million to help schools in the wake of the pandemic. Roughly half of it will be used for a “well-being boost” to be spent on things like improving mental health supports, excursions and sporting and social activities. The other half will be spent on upgrading ventilation and air quality, as well as larger refurbishments to public schools.
Women's safety
The Budget includes a record investment of $1.7 billion over six years to end violence against women and children.
People who want to buy electric vehicles
At a cost of about $54 million, the Government is set to remove fringe benefits tax and import tariffs from eligible electric vehicles, to lower the cost of EVs and encourage their take-up.
The environment
To help stop environmental decline, $1.1 billion is set aside for the next phase of the Natural Heritage Trust, which aims to provide support for species and landscapes, Indigenous Protected Areas and conservation activities for heritage and wetlands areas, as well as boost sustainable resource management.
An extra $204 million will also be put to work to protect and restore the Great Barrier Reef.
The Pacific
Labor is upping financial support to our Pacific island neighbours in a bid to stave off the growing influence of China in the region.
That involves an increase to foreign aid, with a $900 million boost to official development assistance for the Pacific and a $470 million increase to aid for South-East Asia.
“And after nearly a decade of neglect and disrespect, we are restoring our role as a diligent and dependable partner and friend to our Pacific neighbours,” Chalmers said in his Budget speech.
The Government will also boost permanent migration from Pacific countries by creating a new type of visa. From July 2023, up to 3,000 visas will be made available.
OTHER WINNERS
Farmers
The Budget includes $1.2 billion to support the dual goals of increasing agricultural output among Aussie farmers while also enhancing its sustainability.
Rural internet users
Labor has committed $2.4 billion for NBN upgrades for 1.5 million homes, including full-fibre access to 660,000 regional properties.
It will also spend $1.2 billion as part of the Better Connectivity for Regional and Rural Australia Plan.
Regional health care
The Government will restore bulk-billed video telehealth psychiatry consultations in a $47.7 million spend.
The Rural Doctors Association will also see a $146 million workforce spend, honouring a Coalition election promise that would give country generalists a pay rise.
LOSERS
Low- and middle-income earners
Like we expected, the Government has not extended the low to middle income tax offset seen in previous years. So, workers earning less than $126,000 will not get a tax break, worth up to $1,500, beyond 2022.
Known as ‘the Lamington’, it was a temporary measure introduced in 2018. The previous government extended it during the pandemic and ahead of the election.
Tax dodgers
The Government is expecting to recoup $3.7 billion from extending the ATO’s Tax Avoidance Taskforce, Shadow Economy, and Personal Income Taxation Compliance programs and improving the integrity of the tax system.
Multinational tax dodgers
Labor is also aiming to bank almost $2 billion in improvements to the bottom line over four years by closing loopholes and ensuring multinational companies pay their fair share of tax.
Corrupt politicians
The Budget commits $262.6 million for the establishment and ongoing operation of a National Anti-Corruption Commission. It was a major promise from Labor and one of the biggest points of difference at the May election.
Spruiking the Budget on the floor of Parliament, Chalmers called the anti-corruption commission for federal politicians “long overdue”.
Fraudsters
The Government will also provide $12.6 million to combat scams and online fraud to protect Australians from financial harm.
China (and therefore us?)
The Budget papers also warn that China’s growth and economic outlook has worsened. So, the forces that helped insulate Australia from the Global Financial Crisis in 2008 perhaps can’t be counted on again, with expected demand for our resources to be lower in the coming years.
Barnaby Joyce
In the last Budget, the Morrison government gave a haul to regional areas held by the Nationals in a secret deal for then-Nationals leader Barnaby Joyce for getting the party to support a policy of net-zero emissions by 2050.
Well (like a lot of things in these budgets) some of that won’t materialise.
While the Government is spending $7.4 billion “to support regional development across Australia”, it has found $21 billion in savings by scrapping and pushing back discretionary grants programs and certain infrastructure builds.
Dubbed "Barnaby and Bridget (McKenzie) money", $4.6 billion will be saved over 12 years by not going ahead with Hells Gate Dam, deferring the Dungowan and Emu Swamp projects, the Hughenden irrigation scheme and Wyangala Dam wall raising projects, and returning national water grid funding.
The budget also saves some $1.3 billion over four years by scrapping and reprioritising the former government's energy and climate programs as well as Coalition industry and manufacturing programs.
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