The Government has implemented its election policies and expects lower budget deficits this year and next thanks to another revenue windfall and various savings. Future years show a significant deterioration though as structural spending pressures, higher interest rates and lower productivity growth impact. As the Treasurer foreshadowed, this is largely a “bread and butter” budget though with significant reform left for next year’s budget.
Key budget measures
Key measures in the Budget mainly reflect election promises:
Increasing the childcare subsidy rate and expanding eligibility.
Extending paid parental leave to 6 months with widened eligibility.
More for Medicare, aged care, health, the NDIS and defence.
Cheaper PBS drugs by cutting the co-payment to $30 from $42.50.
Tax incentives for electric cars.
Reinvigorating workplace bargaining to lift wages in low-income jobs
Increased spending on TAFE and more university places.
Increased infrastructure spending although this had already largely been budgeted with some funds “re-profiled”.
Increased aid for the Pacific and South-East Asian countries.
Various housing support measures – setting up a new Housing Accord to build 1 million new homes over 5 years, a Help to Buy equity scheme for 10,000 first home buyers, super concessions for downsizers over 55, the establishment of a National Housing Supply and Affordability Council, $350m in Federal Funding to help incentivise institutional (including super fund) investment in delivering an extra 10,000 affordable homes.
The start-up of various “off budget funds” – a $10bn fund to build 30,000 affordable homes, a $20bn fund to boost renewable electricity infrastructure and a $15bn National Reconstruction Fund.
Budget savings include the following:
A cut in public sector spending on consultants, travel & labour hire.
Cuts to regional infrastructure funds & community grants.
A crackdown on tax avoidance.
Increased tax on multinationals.
The Government has deferred any decision on the Stage 3 2024 tax cuts.