Yahoo Finance Budget 2022: The biggest winners and biggest losers
After massive stimulus during the COVID pandemic, the Federal Government is moving to the next stage of its fiscal strategy as it aims to reduce the size of government debt as a percentage of overall economic activity.
However, with an election in the offing, Treasurer Josh Frydenberg is walking a tight rope of handing out cash splashes to ease cost-of-living pressures while trying to avoid increasing inflation. Temporary and targeted are his favourite words.
With the so-called lamington tax offset being topped up by $420 this year, Australians, it seems, are having their cake and eating it too.
Also read: Budget 2022: 10 million Aussies to get extra $420 cash bonus
Also read: Budget 2022: Three shocking charts show cost-of-living pain
Also read: OPINION: Why cutting the petrol excise is a stupid idea
BIGGEST WINNERS
Low and middle income earners
A temporary tax relief for low- and middle-income earners brought in at the start of the pandemic will get a one-off top up, with the Government handing back an extra $420 to all those earning less than $126,000.
So that free money payment you’ve been hearing about? It’ll be delivered by the tax man.
More than 10 million Aussies are eligible and it will provide - on a somewhat sliding scale - a minimum benefit of $675 and a maximum benefit of $1,500 for a single-income household, or up to $3,000 for a dual-income household.
Last year, the maximum benefit through the Low and Middle Income Tax Offset (LMITO, or lamington) for a single earner was $1,080 (plus the $420 now takes it to $1,500).
But it won’t be happening again.
Pensioners
The more than 3 million elderly Australians who receive a pension will get a one-off payment of $250.
The payment will be automatically supplied through Services Australia. Did we mention this is an election budget?
Others on welfare
Those who receive a welfare payment will also get the $250 cash injection. As will veterans and Australians with a concession card. In total, more than 6 million Australians will get the $250 payment.
Motorists
A six-month halving of the fuel excise tax will be enacted immediately. While economists have largely criticised the move, Treasury estimates it will deliver an average benefit of around $300 “to households with at least one vehicle”. It is expected to cost the Budget more than $3 billion in foregone revenue.
“The competition watchdog will monitor retailers to make sure these savings are passed on in full,” Frydenberg said while handing down the Budget.
Those receiving Centrelink payments
Pension and welfare payments rose on March 20, benefiting 4.9 million people and costing the Budget $2.2 billion extra over the year.
Singles received $20.10 more per fortnight, while couples got a $30.20 boost per fortnight.
Small businesses
Small businesses, with aggregated annual turnover less than $50 million, will be able to deduct a bonus 20 per cent of the cost of business expenses and depreciating assets that support digital uptake.
It is capped at $100,000 of expenditure per year and is designed to drive improvements in areas such as cloud computing, cyber security, accounting and e-invoicing software and web page design. It will come at a cost of about $1 billion to the Budget.
Employers and employees looking to upskill
Small businesses, which employ around 7.8 million employees, will also have access to a bonus 20 per cent deduction for the cost of external training courses delivered to their employees by providers registered in Australia.
The so-called Skills and Training Boost is estimated to provide $550 million in tax relief for small businesses.
The regions
The regions are big winners in the latest Budget. The Government is allocating $7.1 billion for “transformative infrastructure projects” in the Northern Territory, north and central Queensland, the Pilbara and the Hunter region in NSW. These four rural areas are considered “primed for growth”.
It is also establishing a $2 billion Regional Accelerator Program to drive growth and productivity in regional areas.
When questioned on the spending for regional areas, Frydenberg would not say whether it was promised to secure the Nationals' commitment for supporting net-zero emissions by 2050.
Young parents
Single parents will now be able to access the full 20 weeks of paid parental leave under changes to the Paid Parental Leave scheme. The scheme will be changed by rolling the Dad and Partner Pay into Parental Leave Pay to create a single scheme.
The enhanced paid parental leave will provide up to 20 weeks of flexible leave for eligible working families and would mean eligible single parents would be able to access an additional two weeks of paid parental leave. The government has allocated $346 million over five years to improve the scheme.
First home buyers
Flagged ahead of budget night, the Government is bumping up the number of spots available in its First Home Loan Deposit Scheme (now called First Home Guarantee) to 35,000 a year, up from 10,000.
The scheme allows chosen applicants to buy a house with a 5 per cent deposit and avoid pricey lenders mortgage insurance because the taxpayer goes guarantor for the rest of the deposit.
Regional home buyers
The Government has also announced a new and separate, albeit the exact same, scheme for 10,000 first home buyers per year looking to purchase a home in regional Australia. It is also open to people who have not owned property in the past five years, as well as permanent residents.
Additionally, 5,000 places per year will aim to support homeownership for more single parents with dependants.
Home sellers
The flip side to the notable expansion of the scheme is that it will likely push up house prices, according to analysis by the Grattan Institute. So it could be argued the real winners are people looking to sell their home.
Apprentices
The Government is looking to simplify and streamline trade apprenticeships. It has allocated a further $2.8 billion over five years and plans to introduce an “incentive system” that backs and develops apprentices in priority trades.
BIGGEST LOSERS
Invariably, there are certain groups of people who are left out when the Government decides to put the nation’s chequebook away. Here’s who might be left wanting.
Beer drinkers
Despite the Government floating the idea of cutting the beer excise to make a schooner at the pub cheaper, it has not followed through with the idea. Sorry, guys.
The ABC and SBS
The amount of money spent on public broadcasting is slated to decrease by 1.7 per cent in real terms (taking inflation into account) from this financial year to next.
It is then projected to decrease by 4.9 per cent through to 2025-26.
The arts sector
Federal expenditure on the arts is projected to fall by 13.1 per cent in real terms over the next four years. This is largely due to temporary measures brought in during the pandemic being removed, the Government says.
The planet
Those who want to see Australia do more to tackle climate change will be disappointed.
Spending in the Budget linked to climate change includes $1 billion for the Great Barrier Reef to fund things like “climate adaptation technology” as well as $200 million to protect koala habitats, $192 million for biodiversity and $60 million for recycling programs.
There is also plenty of money to support new mining and gas projects.
China and Australia’s adversaries
Defence funding has risen to above 2 per cent in 2021-22. That’s up from about 1.6 per cent of GDP in 2012-13 when the Coalition Government came to power.
Much of the increase is aimed at China, with money for things including a new naval base on the east coast.
The Government is also ramping up its spending on scientific research in Antarctica, in a bid to counter China’s growing presence on our southern doorstep.
In total, the Defence workforce is projected to increase by 18,500 personnel by 2040, at a cost of at least $38 billion.
Cyber criminals
Additionally, the Budget provides $9.9 billion over 10 years to improve the offensive and defensive cyber and intelligence capabilities of the nation’s spooks at the Australian Signals Directorate.
“This is the biggest-ever investment in Australia’s cyber preparedness,” Frydenberg said during his Budget speech.
People with big mortgages
While the RBA has been resistant to raise interest rates despite rising inflation, some economists believe the cash payments to help with cost-of-living pressure will add fuel to rising prices. If they do, the RBA’s hand will no doubt be forced.
Ahead of budget night, economist and Yahoo Finance columnist Stephen Koukoulas said the foreshadowed cash splashes “looks like blowing inflation to a 30-year high.” That will likely force an interest rate rise as early as May.
“RBA cannot sit tight much longer, so you might save a few bucks on your petrol tank, but your mortgage will be rising by many hundreds a month,” Koukoulas said.
OTHER WINNERS
Tourism operators
Announced ahead of the Budget, there is $60 million allocated for marketing to attract international tourists.
The Government is also committing $75.5 million for a third round of the Consumer Travel Support Program for travel agents and tour-arrangement service providers.
Farmers and the primary industries
Farmers will get continued support from the Federal Government which has allocated $600 million to enhance innovation, productivity and resilience in the agricultural, fisheries and forestry sectors.
Miners
The mining industry will get $200 million over five years to support the pursuit of strategically significant critical mineral projects.
That’s on top of the Government’s $2 billion Critical Minerals Facility, established in 2021.
Infrastructure lovers (especially in marginal seats)
Ahead of budget night, Morrison flagged an extra $17.9 billion of spending on roads and rail upgrades.
However, analysis has shown a majority of the money is tilted towards Coalition-held seats and marginal electorates that could swing the election in South Australia, NSW and Tasmania, with just 15 per cent of the projects announced having been endorsed as priorities by Infrastructure Australia.
Those who need medicine
The Budget allocates $2.4 billion over five years for essential medicines on the Pharmaceutical Benefits Scheme. The Government says 2.4 million Australians will be able to access cheaper medicines with fewer scripts.
Young people facing mental health challenges
Prior to budget night, the PM flagged $260 million to help young people’s mental health.
The money will go towards expanding the Early Psychosis Youth Services program and the Youth Enhanced Services Program, which helps young people struggling with severe and complex mental health illnesses.
Women with endometriosis
The Government has allocated $58 million under the National Action Plan for Endometriosis to improve endometriosis diagnosis and help women find appropriate care.
One in nine Australian women suffer from endometriosis.
Rural NBN users
After the Coalition Government expanded the satellite and fixed-wireless footprints of the NBN network - at the expense of much better fixed-line connections - for rural Australians, it is now working to boost the broadband experience of people outside the major metros.
Ahead of the Budget’s release, it announced $480 million to improve the fixed-wireless and satellite connections to boost speeds and increase data caps.
Female tradies
To boost the number of women in trades, the Government is investing $38.6 million over four years to support women taking up priority trades.
Women in STEM
Meanwhile, $147 million is allocated to support gender equity in STEM (science, technology, engineering and maths).
The new funding is being provided to encourage women to consider taking up careers in manufacturing and the technology workforce.
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