Federal Budget 2023 budget wrap: Relief for Australians on low-incomes, welfare, for health and medicines

Welfare recipients and low-income households will get some relief from cost-of-living pressures under a Federal Budget which seeks to upskill Australians ahead of the clean energy transformation. The Budget has targeted relief at the most acute pressure points: doctor’s bills, the cost of medicines, rent and power prices. But Treasurer Jim Chalmers has been constrained by the need to moderate high inflation and anticipated slower growth over the next year. Inflation has peaked and is tipped to return to the Reserve Bank’s target range of 2-3 per cent in 2024-25, but the Budget papers acknowledge it is “still uncomfortably high”. “Inflation remains our primary economic challenge. It drives rate rises, it erodes real wages,” Dr Chalmers said. “Which is why this Budget is carefully calibrated to alleviate inflationary pressures, not add to them.” There is predicted to be a surplus of $4.2 billion in the current financial year then a deficit of $13.9 billion for 2023-24. Across the four years of forward estimates to 2026-27 the deficits total $109.9 billion — smaller in dollar terms and as a percentage of GDP every year compared with October’s forecasts. The deficits are still projected to continue over the next decade, but by 2033-34 they will be about one-tenth of the size anticipated last year. Dr Chalmers said the government had made “a heap of progress” on the financial sustainability of the Budget, through a combination of spending restraint, banking most of the massive revenue gain and “modest but meaningful” changes to taxation. The move to return 87 per cent of upgraded tax receipts to savings means the Government’s interest bill is cut by $83 billion over the next 12 years. But that bill is still nearly $102 billion over the next four years. It’s also reduced the size of the gross debt, with the $1 trillion mark now not reached until 2025-26, two years later than previously expected. The Budget papers show gross debt is now on a slight downward trajectory over the next decade. “Is there more work that we need to do on the structural position? Of course there is. But we have made really quite remarkable progress in two budgets.” The average growth in real spending has been limited to 0.6 per cent over five years — less than a quarter of what it was between the global financial crisis and the pandemic. Cooperative States are key to the Government’s plans for health, reining in the NDIS and dealing with the growth of cities through better planning of infrastructure and housing. The Budget’s centrepieces are $11.3 billion to fund the increase to aged care workers, a $5.7 billion Medicare package including $3.5 billion to treble incentives for doctors to bulk bill children and concession card holders, measures to halve the cost of hundreds of commonly prescribed medicines, help for low-income households with power bills and loans for others to make their homes more energy efficient and so bring down bills. Half a million pensioners, veterans, seniors and other concession card holders in WA as well as some welfare recipients will have a $350 energy rebate applied to the power bill after July 1. The same types of households in NSW, Victoria, Tasmania, Queensland and South Australia will receive $500 rebates. Small businesses will be able to get a $650 power rebate. The Government is also boosting JobSeeker and Youth Allowance by $40 a week, expanding the single parenting payments to an additional 57,000 people whose youngest child is between 8 and 14, and increasing the rent assistance available to welfare recipients by an average of $24 a fortnight. In a bid to address the skills shortage, there is funding to help childcare educators improve their qualifications, to recruit and retain more school teachers, for employment services to help young people wanting to work in the care sector, and new guarantees that government-funded projects must employ apprentices and trainees including women. The Government has also set aside $3.7 billion in anticipation of striking a new five-year national skills agreement with the States. It is now promising 300,000 fee-free TAFE places around the country. Half of the $4 billion of new investment in clean energy goes into a “hydrogen headstart” fund aimed at kickstarting the industry in Australia, whether through domestic companies or attracting international players. The Government hasn’t made any changes to the Stage 3 tax cuts, which now cost $69 billion over four years. But when asked if the significant jump in the size of the deficits from 2024-25, when the tax cuts kick in, showed the Government was having to borrow to fund them, Dr Chalmers said: “When you’re running a deficit and you’ve got to accommodate these tax cuts, at least in the current forecasts, it would be the situation you describe.” He was generally encouraged by the willingness of Australians “engage in a big conversation about how do we get the Budget in much better nick” so the Government could do the things it wanted to for the country and its people. Across the next four years, the government’s policy decisions cost taxpayers a total of $20.6 billion. Payments are lower than anticipated receipts in 2026-27 by about half a billion dollars, and spending will be kept under 26.8 per cent of GDP over the coming years. There is $13.7 billion extra in taxation measures, including the changes to concessions for big superannuation accounts and the cap on rebates claimed under the petroleum resources rent tax. The PRRT is now expected to raise $10.8 billion over the next four years, with the revenue staying relatively even rather than dropping away as anticipated previously.