How the Federal Budget could impact your business
Measures to ease cost-of-living pressures and increase economic confidence were centrepieces of an $8.6 billion spending program in the recent Federal Budget, handed down on the eve of the election campaign by Treasurer Josh Frydenberg.
The big headline-grabbers were a 22.1c cut in fuel excise until September 28, billions of dollars in promised infrastructure and defence projects, and a cost of living bonus of $250 to pensioners and welfare recipients.
Small businesses were also front and centre. Mr Frydenberg promised to lower tax instalments for 2.3 million small businesses in the next financial year – and move costing $1.85 billion.
Tax rebates of 120% will become available to small businesses that invest in training and technology if the government is reelected. Subsidies of up to $15,000 are promised to firms that take on new apprentices.
Other benefits included:
- Rises in pensioner and welfare benefits costing $2.2 billion and benefit 4.9 million Australians
- Australians earning less than $126,000 get a one-off $420 in their tax returns and additional, potential tax reductions of up to $1,500.
- Child care subsidies of $224 million are being brought forward from July 1.
- The 20-week paid parental leave will no longer have to be shared by parents. The mother or father can benefit.
Spending to help households cope with higher prices totalled $8.6 billion, and more billions of dollars are promised for regional infrastructure improvements.
Mr Frydenberg said: “The last two years have been tough, and Australia remains strong. It has overcome the biggest economic shock since the Great Depression. There are 2 million more in work than when we came to power.”
Later on ABC TV, he justified the focus on the cost of living expenses, saying they are the “number one topic around the kitchen table”.
Shadow Treasurer Jim Chalmers responded, saying the budget was a “desperate ploy” that pushed the “economic challenge to the other side of the election”.
The Treasurer also focused on housing affordability, a major issue in the forthcoming election campaign.
He outlined programs to help first-home buyers and single parents. A third scheme is designed to boost the construction of homes in regional areas and encourage migrants to settle outside the capital cities.
The Government maintained its determination to keep the tax-to-GDP ratio at 23.9%. However, total spending in the budget was 27.2% of GDP.
Mr Frydenberg said Australia is enjoying the “largest and fastest improvements to the budget bottom line in 70 years”.
A Deloitte analysis showed a $78 billion underlying cash deficit forecast for 2022-23, $20.9 billion better than the December 2021 Mid-Year Economic Fiscal Outlook. It shows:
- Australia’s underlying cash balance has improved by $38.1bn in 2022-23 and by $114.6bn over the four years to 2025-26.
- The cost of policy decisions in this budget is $17.2bn next year and $30.4bn over the four years to 2025-26.
- Gross debt will move above a trillion dollars in 2023-24, growing to $1.17tn by 2025-26, equivalent to 44.7% of GDP.
Mr Frydenberg highlighted the rolling $120 billion infrastructure plan with a long list of major projects totalling $17.9 billion. These include:
- Melbourne Intermodel Terminal: $3.1bn
- Brisbane-to-Sunshine Coast faster rail extension: $1.6bn
- Sydney to Newcastle faster rail upgrade: $1bn
- Water and irrigation projects: $7.4bn
- Improved regional mobile coverage: $3bn