Federal Budget - October 2022/23
Credit: The Guardian/Mike Bowers
Our Well-Being Budget
The new Labor government presented the 2022/23 Budget on the 25 October, acknowledging that the current global economic situation presents some absolute financial challenges - inflation, energy and supply chain problems, and a continuing war in Europe - in focussing on a well-being budget, to shape our lives for the better.
The government is committing to serious budget repair (and there’s only one way to fix the structural deficits in the budget and that’s by raising taxes and cutting spending)
As a positive, the deficit is projected to be just $36.9 billion, as opposed to the $78 billion predicted in March, and Labor is proposing to significantly limit some of the Coalition's March 2022 Budget spend, which is contributing to this turnaround.
Most proposals focussed on investing into key sectors and infrastructure, and providing affordable housing (through a new national Housing Accord).
And a reminder that the budget is a set of proposals only and many of these announcements are yet to be legislated.
Superannuation
There are no changes to superannuation - announcements were mainly recommitments from earlier budgets.
Proposals
Downsizer contribution eligibility - contributing (part) proceeds of the sale of your home to super:
Currently available from age 60+
Proposed to reduce the age of eligibility to age 55+
Tax
There are no changes to:
Proposed and legislated stage 3 tax cuts to take effect from 1 July 2024, see below.
2024/25 income year
Delivering on Climate Change commitments
Proposed Fringe Benefits Tax (FBT) exemption on electric vehicles
Some eligible electric vehicles to be FBT exempt i.e. battery electric vehicles, hydrogen fuel cell electric vehicles and plug-in hybrid electric vehicles
Climate Risk
Apart from the FBT exemption, what else does the Budget propose?
$25b clean energy spend to:
reduce emissions by 43% by 2030;
have renewable energy for 82% of the electricity network by 2030;
Encourage communities & industries to switch to cleaner energy ($1.9b - Powering the Regions Fund)
Redirecting nearly $750m in the Coalition government’s commitments, including some spending on gas, carbon capture and storage.
For an opinion on whether the budget has sufficiently address climate risk, you can read Timothy Neal’s piece here.
Social Security
Pensioners selling their home
Extension of time allowed to count the sale proceeds as income.
Proposing a longer time for the proceeds of the sale of your home to be counted, aiming to reduce the financial impact on pension recipients wishing to downsize their homes.
Extended time for counting the proceeds of selling your home - this will be 24 months (and is currently 12 months);
Income test also amended to apply the lower deeming rate (0.25%) to sale proceeds for 24 months.
Age Pension - changes to work bonus
The amount pensioners can earn in 2022–23 is up by $4000 (from $7,800 to $11,800) before their pension is reduced.
Commonwealth Seniors Health Card (CSHC) - income thresholds increase (effective 4 Nov 2022)
Lifting the income threshold will allow more older Australians to qualify. Increase in the Income threshold for CSHC to:
$ 90,000 (for singles);
$ 144,000 (combined - for couples)
Deeming rates - for account based pensions that have deemed income under the income test, maintaining the current rates will allow more people to be eligible for the CSHC.
Social security deeming rates to stay at current levels until 30 June 2024.
Cost of Living & Social Security
Changes to Child Care Subsidy (CCS)
To reduce out-of-pocket expenses for about 98% of families who use formal early child care services.
Changes to Paid Parental Leave (PPL)
From 1 July 2023, PPL will be expanded from 18 weeks to 20 weeks to eligible parents and singles;
From 1 July 2024, PPL will be expanded by two extra weeks per year to 26 weeks, to 1 July 2026.
Other
Affordable and more Housing
There are various housing support measures:
Setting up a new Housing Accord to build 1 million new homes over 5 years;
Help to Buy equity scheme for 10,000 first home buyers;
Super concessions for downsizers over 55 (see above);
Establishing a National Housing Supply and Affordability Council;
$350m government funds as incentives for institutions (including super funds) to invest in delivering an extra 10,000 affordable homes.
From an Economists point of view
For an overview of the Key Budget measures from an economist's point of view here’s Shane Oliver and Diana Mousina’s analysis and assessment here.
Sources
First Tech Budget briefing, BT Budget overview (26 Oct 2022), Australian Financial Review Budget 22 , Netwealth Budget briefing, ABC Radio National
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