Federal Budget Overview 2022

Treasurer Josh Frydenberg presented the 2022-23 Federal Budget on Wednesday night.

The key focus of this Budget is to provide Australians with relief from cost-of-living pressures stemming from a strong rebound in the Australian economy as we reopen following COVID-19 restrictions, as well as supply chain issues caused by the Russia/Ukraine war. The Budget also aims to provide young Australians greater access to the property market, increase important infrastructure funding across all states of Australia, while working towards an employment rate below 4% to stimulate future wage growth.

Some of the key economic points of the Federal Budget include:

• The deficit for 2022-23 is now projected to be $78 billion (a $20.9 billion improvement from the previous deficit forecast, as estimated in the Mid-Year Economic and Fiscal Outlook).
• The deficit is expected to halve as a share of the economy over the forward estimates to $43.1 billion (1.6 per cent of GDP) in 2025-26 and continue to decline to 0.7 per cent of GDP by 2032-33.

SUMMARY OF KEY ANNOUNCEMENTS

Population and Borders

• Net overseas migration is forecast to be 41,000 in 2021/22, 180,000 in 2022/23 and 213,000 in 2023/24 and then rise to 235,000 in successive years, close to the 239,000 achieved in 2018/19.
• The Government’s migration program will focus on skilled migration, with a return to a pre-pandemic composition of roughly two-thirds/one-third across the Skill and Family streams. The Skill stream will increase to 109,900, more than 30,000 places above 2021/22 planning levels.

Cost of Living Relief

• One-off Cost of Living Tax Offset – From 1 July this year, more than 10 million individuals will receive a one-off $420 cost of living tax offset. As a result, eligible low- and middle-income earners will be up to $1,500 better off for a single income household, or $3,000 better off for dual income household.
• Temporary fuel excise relief – The Government will reduce fuel excise by 50 per cent for 6 months. This will see excise on petrol and diesel cut from 44.2 cents per litre to 22.1 cents.
• New one-off $250 Cost of Living Payment for pensioners, carers, veterans, job seekers, eligible self-funded retirees and concession card holders.

Housing

An expansion of the Home Guarantee Scheme to 50,000 places per year. These places will be allocated as below:

• Expansion of the Home Guarantee Scheme places to 35,000 per year commencing 1 July 2022, for first home buyers to purchase a new or existing home with a 5% deposit.
• An expansion of the Family Home Guarantee with 10,000 places from 2022-23 to support single parents with dependants to enter, or re-enter, the housing market with a deposit of as little as 2 per cent.
• A new Regional Home Guarantee that will support eligible citizens and permanent residents who have not owned a home for 5 years to purchase a new home in a regional location with a minimum 5 per cent deposit.

Superannuation

• An extension of the temporary reduction in superannuation minimum drawdown rates. This existing measure was scheduled to cease on 30 June 2022, but has been extended another year to 30 June 2023. This means that retirees will have another 12 months where they can choose to draw a reduced 50% of the normal annual superannuation pension withdrawal rate, minimising the likelihood they will need to sell assets during a time of volatile investment markets.

Infrastructure

• An additional $17.9 billion funding commitment to infrastructure projects across all states of Australia as part of the Federal Government’s 10-year infrastructure investment pipeline. This brings total funding commitments to $120 billion across the 10 year period, focusing on reducing inner city congestion, improving connection of regional areas and creating further jobs.
• An additional $2 billion commitment to the Northern Australia Infrastructure Facility, bringing total funding to $7 billion.
• The Budget also includes additional funding for existing projects and Roads of Strategic Importance corridors, including $2.3 billion for the North South Corridor – Torrens to Darlington in South Australia.

Families

• Enhancing the Paid Parental Leave scheme by rolling Dad and Partner Pay into Parental Leave Pay to create a single scheme of up to 20 weeks, fully flexible and shareable for eligible working parents as they see fit.