Federal Budget October 2022 - Summary
The Federal budget announcement on 25 October shows a cautious response to a turbulent global economy – there are clear indicators of slowing global economic growth, continued high inflationary conditions fuelled by an escalating global energy supply crisis, ongoing supply chain challenges with China due to COVID-19 policies and restrictions. While these macro issues play out, local issues such as surging cost of living, labour market shortages, rising interest rates, declining house prices, and a weaker Australian dollar which affects nearly all imported consumer goods pricing, continue to affect everyday Australians.
This budget focusses on relief for parents, homebuyers and social security recipients, maintaining pre-election commitments, and introducing new measures to address housing affordability. The announcements were mainly recommitments from earlier budgets – instead of changes for super or tax, most proposals focused on housing, infrastructure and sector-specific investments. We are likely to see more work towards NDIS sustainability, energy pricing and structural budget repair in future budget announcements.
Major Budget Initiatives: These are still to be legislated, and commencement dates may change.
Proposals for Superannuation:
- Eligibility for downsizer contributions to superannuation was expanded by reducing the minimum age from 60 to 55 years of age. This allows individuals to make a one-off post-tax contribution from proceeds of the sale of your main residence to superannuation of up to $300,000 per person.
- Delay to relaxing of residency requirements for SMSFs from 1 July 2022
Proposals for Social Security:
- Work Bonus: Pensioners who want to work more hours can do so without having their payments cut – this is a one-off credit of $4000 per annum from $7,800 to $11,800.
- Increased income threshold for Commonwealth Seniors Health Card from $61,284 to $90,000 for singles; and from $98,054 to $144,000 for couples.
- Pensioner assets test exemption, when the proceeds from selling a home is used for purchasing or building another home, will be extended to a maximum of 24 months
Proposed support for families:
- Government has allocated additional $4.7b over four years to deliver childcare relief to families and encourage increased workforce participation, increasing the income threshold for childcare subsidies up to $530k per household, per annum
- The maximum childcare subsidy will increase from 85% to 90% for eligible recipients
- Expansion of paid parental initiative to the tune of $531m over the next four years: eligibility for the scheme will be expanded to include couples on a combined income of up to $350k; From 1 July 2024 the initiative will increase by two weeks per year until it reaches 26 weeks in 2025
Legislated tax cuts:
- Stage 3 tax cuts, which were legislated to come into effect from 2024-2025 income year, will not be changed by the budget announced last night, although there are likely two further budgets prior to the commencement of these tax cuts.
Proposals to address Housing affordability:
- Announcement of the National Housing Accord, with the aim of building one million new, well-located homes, over five years from 2024, to address the supply and affordability of housing. The aim of the accord is to align all levels of government and the construction and investment sectors to address rising supply and affordability challenges.
Proposals for Aged Care:
- A significant election commitment was honored with the announcement of increased support for Aged Care residents and workers under Labour’s response to the Royal Commission into Aged Care quality and Safety, with most of the funding increase of $2.5b over the coming four years allocated towards paying additional staff and increase daily minutes of care per resident from October 2024.
Proposals for Renewables and Climate Change:
- $2.4b of funding was announced in yesterday’s announcement across energy, emission reduction, renewable energy resilience, and infrastructure expenditure to secure the energy supply for both households and businesses.
Proposals for Health:
- Maximum co-payments for medicines on the PBS will be reduced, contributing to medication for about 3 million people per year
- Increase in Medicare funding for bulk-billed telehealth for psychiatry services
- Free education for 180,000 TAFE and university places from 2023 in areas of skills shortages (including teaching and aged care) as a response to the national skills shortage.
- A post-pandemic “student wellbeing boost” has been announced to enable schools to deliver mental health support, excursions, sporting and social activities
- $271m was allocated to public school refurbishments, including improvements to ventilation and air quality
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