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.

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