Australian Federal Budget Update
With the cost of living rising across the world, individuals and businesses are looking to their governments for help in easing current pressures. October saw Australian Prime Minister, Anthony Albanese’s Labor government deliver its first Federal Budget. It highlighted an improved fiscal position for the current year, but with mounting challenges in the period ahead.
The government has warned of “hard days to come”, meaning the likelihood of tax increases and spending cuts in the period ahead, with debt and deficit forecasts over the next decade now expected to be worse than thought just six months ago, due to the out-of-control National Disability Insurance Scheme, rising debt payments, and weaker productivity.
Some have questioned whether they can afford to deliver such a generous budget against this backdrop. Many will be watching closely for news on the proposed stage three tax- cuts that will see most Australians, particularly higher earners, pay less income tax from 2024-25.
As always, the budget covers a broad range of areas, we’ve highlighted some of the winners and losers below:
Families – progress on $4.7 billion plan to reduce the cost of childcare for families from July 2023
Patients – $2.9 billion package to strengthen primary care
Aged care residents – $2.5 billion to mandate a minimum number of care minutes for nursing home residents and employing a registered nurse onsite 24/7 in homes.
Students – $852 million to provide 480,000 fee-free TAFE places
Medicine users – Max co-payment on prescription drugs drops to $30 a script from January at a cost of $787 million
New parents – $530 million for paid parental leave payments up to 26 weeks by 2026
Self-funded retirees – income thresholds increased to $90,000 for singles and $144,000 for couples so more people qualify for the senior’s health card.
Energy users – electricity costs to rise by 20% this year and another 30% next year, whilst gas costs are to rise 20% this year and another 20% next year
Consumers – weather related events on east coast to add to food inflation over the next few quarters
Investors – closing tax loophole for big companies and investors in off-market share buy-backs, raising $550 million
Foreign investors – fees doubled for applications in July and penalties for residential land breaches from January, expected to take in $457 million over 4 years.
If you’re wondering how the budget might impact your long-term financial plans, don’t hesitate get in touch and we will be glad to assist you.