On 9th May 2023, the second budget was presented by Treasurer Dr. Jim Chalmers. It consisted of several measures related to tax and superannuation, with an emphasis on aiding SMBs, promoting investment in sustainable housing and buildings, modifying the Petroleum Resource Rent Tax, and executing Pillar Two of the Organisation of Economic Cooperation and Development / G20 Two-Pillar Solution to tackle digital transformation of the economy.
What are the implications of the budget on the economy?
The 2023-24 Federal Budget outlines a surplus of $4.2 billion for the ongoing financial year. However, a projected deficit of $13.9 billion is anticipated for the year 2023-24. Here is commentary from industry professionals about key points and how they affect the economy.
Milan Cooper, CEO of First AML
We note the Federal Government’s budget allocation for Tranche 2 reform and better AML practices, but we are disappointed that it falls short of what is needed to effectively combat the increasing problem of money laundering and financial crimes in Australia.
Recent high-profile cases have shown the urgent need for strong and comprehensive measures to be implemented. While we appreciate the govt’s efforts to address the issue, the budget allocation is unsatisfactory and may not be enough to make a significant impact.
It’s concerning that Australia ranks 98th in the world for money laundering risk, and that the country is viewed internationally as a hub for such criminal activity. The Federal Government’s failure to address this issue adequately in the past has put Australia at risk of being greylisted by FATF, which could have serious consequences for the country’s economy.
We urge the government to take more proactive steps towards preventing money laundering and financial crimes. While we welcome the upcoming consultation process, it’s critical that the govt commits to simplifying and modernising the way Australia addresses this issue.
As an industry leader in AML and know-your-customer processes, we stand ready to support the government’s efforts to combat financial crime. We believe that a stronger commitment is needed to address this pressing issue and safeguard Australia’s financial system.
Jay Weatherill, Director at Thrive by Five
Minderoo Foundation’s Thrive by Five welcomes progress towards universal early learning but is disappointed the govt has missed opportunities to provide equal access for all families including First Nations Australians. The govt’s significant investment in increasing child care subsidies over the next four years will put billions back in the pockets of parents with kids, bring greater choice for parents returning to work and help give kids a good start in life.
The success of the childcare subsidy increase will rest on addressing the current workforce crisis in the early childhood education sector, with greater respect for educators matched with immediate pay rises to ensure we have the best possible workforce to deliver early childhood education for Australia’s children. Thrive by Five welcomes the $72.4m investment in skills development and training for Australia’s early childhood education workforce in this budget.
But children, families and communities will only realise the full benefits of early learning if these budget announcements are followed up with a wider package of reforms to deliver a universally accessible and affordable, high-quality early childhood education and care system.
Thrive by Five will continue calling for the urgent abolition of the Child Care Subsidy activity test and for the restoration of funding for First Nations-led and operated childcare centres.
SoHyun Kang, Interim Regional MD for APAC at PMI
The Federal Government’s announcement of $3.7 billion budget allocation for a revamped five-year national skills agreement comes at a critical time for many Australian businesses looking to boost skill development for graduates and their existing workforce.
We must stress the growing importance of project management training skills to ensure we have the pertinent people to lead the projects that will help the country reach its full potential.
Different government bodies and agencies, large enterprises, small businesses, schools, universities and TAFEs must collaborate to accurately identify gaps in the talent market and effectively equip our workforce with the right skills to prepare for the future of work.
Patricia Sparrow, CEO of the Council on the Ageing (COTA)
The Federal Government’s 2023 Budget provides relief on the pressures many older Aussies are experiencing. The introduction of budget measures designed to ease the cost-of-living pressures on Aussies are vital, particularly for older Australians struggling to make ends meet.
There are many direct benefits that older Aussies will receive out of the budget including energy relief of up to $500 per year, cheaper medicines, more GPs bulk billing pensioners and healthcare card holders without a co-payment, $15 a week more rent assistance, $20 a week more in JobSeeker payments, and an additional $40 more a week in JobSeeker if you’re 55 years old or older battling ageism when looking for a job for more than 9 months.
We know that older women are disproportionately impacted by unemployment and are unfortunately the fastest growing group at risk of homelessness, so budget measures that address those issues are not just welcomed, they’re crucial. 55% of older Australian JobSeekers and those receiving Rent Assistance are women. They’re 6% less likely to have a superannuation account and if they do, their balances are about a quarter lower than men’s.
Reforming Medicare to ensure that every Australian, no matter their age or where they live, can get access to the support they need is an important step. It’s particularly pleasing to see Government act to improve access to bulk billing by tripling the incentive payment to GPs. Older people have told us that they can’t afford to see their doctor because bulk billing is now only available through limited services, so this commitment is timely and very welcome.
The govt’s commitment to aged care reforms continue with an overall aged care spend increasing to $36B in 2023/24. We’ve seen substantial action taken in the aged care space in the form of a long overdue increased pay for aged care workers and reforms which include 24/7 nursing in facilities and a guaranteed 215 care minutes. We know from older people that having enough well-trained staff makes a huge difference in the quality of care provided.
There’s no question that there is still a need for far greater reform in aged care, so it’s disappointing that the creation of the new Support at Home Program has been delayed yet again in the 2023-24 Federal Budget. Older people want to remain living in their own homes and often have to wait for months before they can get the support they need.
However, it is good to see an increase of 9000 home care packages and the foundations for a new home care program being laid with work continuing on a single assessment system. We look forward to the new Aged Care Taskforce taking action to deliver on the next set of fundamental reforms, particularly ensuring a rights based system, self-management, improved support at home, sustainability and increased transparency in the sector.
We encourage the independent interim Inspector-General to take a broad ranging view in his role to ensure that the contemporary needs of older people are at the heart of these reforms and that the reshaped system delivers the quality care older Australians are waiting for.
The Federal Government has extended public dental services which is important. Older Australians wait for long periods of time on public dental waiting lists and can ill afford to seek dental treatment through private practice. We will be looking for how the Federal Government will deliver more accessible dental care for older Australians in future budgets.
The Federal Budget includes measures that strengthen digital protections and education which older Australians will benefit from. Consideration is being given to acceptance of digital ID which will hopefully assist the 2.1 million older people without a driver’s license who currently struggle to prove who they are just because they have a proof of age card instead.
Requiring superannuation in order to be paid on pay day is a simple measure that will benefit workers and improve retirement savings for older Australians. Everyone deserves to live comfortably in retirement and while of course this won’t solve all the problems people face when it comes to retirement income, it’s certainly a very sensible step forward.
Funding to ensure the ATO has the teeth to be able to ensure compliance around the new superannuation requirements is crucial and it’s good to see that included in budget.
Mark Chapman, Director of Tax Communications at H&R Block
The 2023-24 Federal Budget is one which was relatively light on tax measures, with most of the heavy lifting being done on the spending side with a variety of cost-of-living measures designed to boost incomes for the lowest paid and most vulnerable Australians.
Yes, increases in Jobseeker for all claimants, a package of rent assistance for those on low incomes, energy bill relief and a huge boost to Medicare will all be welcome by many.
But there was no news about the Morrison government’s Stage 3 tax cuts – which remain legislated to come into effect on 1 July 2024 and which will largely benefit the most wealthy. There was no reprieve also for the Low- and Middle-Income Tax Offset, which expired last year – and leaves millions facing an effective tax increase in the current year of up to $1,500.
Highlights were focused on the SMB sector, which sees a return of the old $20,000 instant asset write-off (an immediate tax deduction for all eligible capital assets costing less than $20,000) but at the expense of the existing temporary full expensing regime (an immediate write-off of all eligible capital assets, regardless of amount) which ends on 30 June 2023.
In addition, SME’s will get access to a new program to incentivise them to buy energy-efficient fridges, electric cooling systems, batteries and other assets that support electrification and more efficient energy use, in the form of a 20% additional deduction for qualifying assets. Slim pickings compared to Temporary Full Expensing!
Kate Pounder, CEO of the Tech Council of Australia
The Tech Council of Australia (TCA) welcomes the investments outlined in tonight’s Federal Budget that will improve the skilled migration system, support the next generation of Australia’s tech industry, and strengthen our cyber security preparedness and resilience.
This Budget will help take our tech smarts and turn them into high-paid jobs and globally successful businesses. It takes vital steps to address the big challenges facing our country, including skills shortages, growing new industries and jobs, and strengthening cyber security.
Industry commercialisation and innovation is a strong feature of the Budget, with additional investment to stand-up the National Reconstruction Fund, targeted measures to underpin the National Quantum Strategy and the creation of a $392 million Industry Growth Program.
Australia has global strengths in critical technology areas like quantum, artificial intelligence (AI) and robotics, and the measures announced in the Budget will support our tech companies to commercialise and scale globally. We acknowledge the great work of Minister for Industry and Science, Ed Husic in championing these critical measures for our sector.
The recent passage of the National Reconstruction Fund is a landmark reform to build new high-value industries and we are pleased to see the Government is wasting no time in standing up the new corporation. The creation of the new Industry Growth Program will help spark early-stage commercialisation in strategic industries and grow Australian start-ups.
We welcome the adoption of an end-to-end approach that connects the pipeline of projects from this program to the National Reconstruction Fund. The govt’s investments in quantum and AI, including the new national challenge program for quantum computing and the $3.4bn Advanced Strategic Capabilities Accelerator in the defence portfolio, are important initial steps towards achieving the vision set out in the recently released National Quantum Strategy.
The Budget also contains investments in visa processing which will be essential to reach 1.2 million tech workers by 2030. Businesses from all parts of the economy continue to struggle with finding experienced tech workers in roles like software engineering and cyber security.
That is why we strongly support the plan for migration reform laid out by Minister for Home Affairs Clare O’Neil last month. The Tech Council has advocated for improved pathways to permanent residency and it’s encouraging to see the Government’s strong response.
While domestic training and reskilling remain the most vital pathways for workers to enter the tech sector, migration is critical to fill gaps in technical roles and to train Aussie talent. We look forward to continuing to work with the govt on the delivery of the broader migration reform program. Finally, the Budget contains a suite of measures aimed at bolstering our cyber security, cracking down on scams and supporting improved privacy practices.
We back the govt’s goal to make Australia the most cyber secure nation in the world. We strongly support the investment in expanding the digital identity system across the economy, which is one of the most important actions the govt can take to protect Australians’ data.
The establishment of the new Coordinator and National Office for Cyber Security is an important reform which has the potential to significantly improve the way we respond to major cyber incidents and review lessons learned. We welcome the additional investments in tackling SMS scams and bolstering the resources of the Office of the Australian Information Commissioner to improve compliance with privacy laws across the economy.
This is not just a priority for the tech sector but for all Aussies to keep their data and privacy safe and secure in an increasingly digital world. The measures announced by the govt tonight will play a crucial role in continuing to drive us towards our shared goal of 1.2 million tech jobs by 2030 and are well aligned with the priorities outlined in our pre-budget submission.
Troy Williams, Chief Executive of ITECA
This year’s Federal Budget’s investment in vocational training is a welcome step towards addressing the nation’s critical skills shortage. However, to make the taxpayer’s investment more effective, the Australian Government needed to put students at the centre of the system. It’s through the decisions of students to study with independent Registered Training Organisations (RTOs) that the nation will be able to address its skills shortages.
Framed amidst a challenging business environment, this budget needed to put students at the centre of skills funding decisions. In failing to do so, an opportunity was missed. The Federal Budget’s funding commitments that preference public providers are limiting, as they do not offer students the full range of courses needed to address the skills shortage.
The taxpayer’s investment in skills training should allow students to choose the training firm that is best able to help them achieve their life and career goals. The Federal Budget didn’t deliver this ambition. The Independent Tertiary Education Council Australia (ITECA) is working with the Australian, state and territory govts to create a student centric skills funding plan.
Students want govt to back their decision to study with the provider of their choice. ITECA believes that this is necessary to maximise the impact of the budget’s investment in skills and support the growth of Australia’s workforce. Independent RTOs support over 87% of the 4.3 million students in skills training, including more than half of apprentices and trainees.
Dr Diane Kraal, Adjunct Senior Research Fellow, Monash University
The Treasurer’s pre-Budget media release about offshore liquefied natural gas (LNG) projects and the introduction of a 90% cap on the use of deductions from 1 July 2023 is welcome, but it doesn’t go far enough. The anticipated $2.4bn of extra PRRT revenue is insufficient and the budget’s proposed change to the PRRT will hardly make any difference to tax collections.
The Treasurer’s proposed PRRT changes will make the PRRT more complex, for little extra tax revenue. The PRRT should be repealed and a royalty system should be re-introduced, as is the case in Queensland. The gas industry needs to pay its fair share of PRRT to fix its carbon emissions. Currently 9.8% of carbon emissions in Australia are mainly from gas production.
According to the Treasurer, the proposed changes will limit the proportion of PRRT assessable income that can be offset by deductions and ‘increase tax receipts by $2.4 billion over the forward estimates’. The Treasurer’s anticipated extra revenue from the PRRT changes will not even come close to covering the build-up of deductions. For instance, the ATO statistics for 2019-20 reveal ‘carried forward deductions’ for the PRRT are already at $282 billion.
Other ATO statistics for 2020-21 show that, apart from the producers of gas from Bass Strait in Victoria, no other large offshore producer of gas is paying any significant PRRT, if at all. The govt’s PRRT collection in 2021-22 was a poor $1.6bn. The LNG producers in Australia received a record $91bn in revenues in 2022. These revenues will be greater in 2023.
Simon Clark, General Manager for Sustainable Homes Melbourne
The Budget outcome to offer low-cost loans to address energy inefficiencies in our homes is a good start but more is needed. As we head intowinter, Australia needs more energy-efficient homes to counter the wasteful use of gas and the lack of insulation that is deeply felt in the double-brick walls of Edwardian and Victorian-era housing stock around the country.
The new Net Zero Authority should recognise that more energy-efficient homes will have Australia plain sailing towards our global carbon emissions commitments.
Several studies conclude that increasing energy efficiency ratings in residential homes would contribute to households saving more money, as well as being able to pay off their mortgages in a shorter amount of time as a result of reduced greenhouse gas emissions.
Recent research carried out by Sustainability Victoria’s Healthy Homes Program reveals that energy efficiency upgrades save on healthcare costs among the elderly by improving mental health and overall quality of life. Reduced energy bills, increased savings and lower carbon emissions equal a cleaner, happier and healthier Australia — a win-win-win.
Tegan Carrison, ED of the Australian Association of Psychologists
This Budget is being coined a healthcare budget. But the government must remember that mental health is part of health. Australians of all ages face distressing and desperate waits for affordable mental health support. The $91.3m announced in tonight’s Federal Budget to increase the future psychology workforce will slowly increase the number of psychologists.
However, while this investment shows that the government recognises that Australia has a dire accessibility issue for psychologists, it does not go far enough to solve the problem.
Australia has a psychology workforce that is smaller than demand, and areas of psychology face extinction. Increasing university places are only part of the solution – and will take years for any impact to be realised. What is happening in the meantime?
There is a lever that the government can use to very quickly increase the accessibility of psychologists for Australians, and that is to increase the rebate across all psychologists.
It is unfathomable that 70% of psychologists in Australia are on a lower-level rebate. If that were to change, it would instantly unlock the majority of psychologists to be financially accessible to more Australians. This Budget notes that funding has been provisioned for future mental health reform priorities in response to the Better Access evaluation.
We urge the govt to make decisions that are as big as the issues mental health currently faces: by raising the currently insufficient rebates and abolishing the two-tier system. The $27.7m for 500 one-year internships for provisional psychologists, and the $5.9 million for 2,000 fully subsidised supervisor training sessions, are enthusiastically welcomed by AAPi.
Increasing the rebate for all psychologists is the fastest and most impactful change the government can make to mental health support in Australia. Supporting the inclusion of provisional psychologists into Medicare is another immediate and important solution.
We are happy to see mental health support for First Nations people, workplaces, children and young people, people with eating disorders, refugees and migrants, LGBTIQA+ community, those bereaved by a suicide loss, and communities impacted by natural disasters.
AAPi remains concerned about shocking workforce shortages and chronic underfunding of pivotal services such as Medicare, rural and remote services and school psychologists. Without raising the Medicare rebate to $150 for the clients of all psychologists, access to affordable mental health care remains out of reach for hundreds of thousands of people.
As a nation, our mental health has been collectively challenged like never before. The frustration of getting help when we really need it is wearing us thin. A recent survey of psychologists showed 78% of their clients exhibited more distress, anxiety, or depression.
This Budget did not address AAPi’s key concerns with regard to chronic underfunding of pivotal services such as Medicare, rural and remote services and school psychologists.
It also completely ignores our association’s Better Access request for a $150 client rebate for all psychologists across the board which would have dramatically increased access to those who needed mental health treatment today. For such a pivotal aspect of our community, the current rebate is nowhere near sufficient. The Australian Association of Psychologists is also concerned about the potential for reduced access to psychologists under the NDIS.
Psychologists play a vital role in supporting clients who are NDIS participants and have a lived experience of disability. We will further implore the govt to ensure that psychologists will continue to be able to work with these clients to improve their access to the community, engagement in employment, live a full and meaningful life and build the relationships.
Stavros Yallouridis, CEO, Motor Traders’ Association NSW
The Motor Traders Association of NSW (MTA NSW) is encouraged by updates made in the National Electric Vehicle Strategy, particularly the step towards adoption of EVs in Australia and proposed Development Australia’s first Fuel Efficiency Standard for new light vehicles.
But the electric vehicle targets are missing key steps that could actually see Australia go backwards. To increase EV adoption without accelerating the infrastructure, removing barriers for uptake like incentivising private fleet purchases and removing the luxury car tax, along with offering tax concessions for the small and medium sized businesses to put in place the training and infrastructure required to service these vehicles, our transition will not work.
In order to encourage a greater adoption of EVs, MTA NSW is calling for the Luxury Car Tax (LCT) to be abolished to free up the sale of EVs or at a minimum, for the Luxury Car Tax to be removed for fuel-efficient vehicles including EVs. The Luxury Car Tax is an inhibitor to the uptake of EVS as many EVs are in the higher price range that the Luxury Car Tax is applied to.
The Luxury Car Tax was introduced in 2001 to encourage Australian consumers to purchase Australian-built vehicles, however, since 2017 Australia has not manufactured motor vehicles – we are a net importer of vehicles not a manufacturer of vehicles. The LCT is a tax upon a tax. Vehicles incur the GST and then for vehicles valued over $84 916 the LCT is added.
The LCT is added to the final sale cost of the vehicle which includes additions, so the LCT is not applied to the base price but rather to the end price. If a vehicle has a base price of $84 916 and then the purchaser adds floor mats for $1000 the vehicle would incur the LCT.
The majority of the automotive industry in Australia is made up of small and medium businesses for whom the transition to EVs will be challenging. Battery electric vehicles require significant capital expenses for firms in retooling, charging infrastructure, and skills training.
SMEs have very thin margins and the cost of updating workshops and workforces can be inhibitive. We are looking for the Federal Government to assist small and medium businesses in automotive, navigate their way through these challenges with investment in the industry.
To achieve the govt’s targets for the uptake of EVs means increasing the sales of EVs. While the Federal Government has targets to increase the number of vehicles they will purchase – even including discussions with NZ as noted in the National Electric Vehicle Strategy (NEVS) – the real increase will come from private fleet purchasers (limo services, taxis etc).
Governments have a target of new car turnover of three years however incentives to have private fleets turning over their stock would have a double advantage in that it would stimulate the used EV market and increase the number of newer EVs on the road.
Jane Morrell, CEO Carer Solutions
The Treasurer spoke of breaking down the barriers of disadvantage and exclusion, and of prioritising those most in need, and creating a fairer society. It is only right that this has included measures to improve the effectiveness of the NDIS, and further investment in safeguards for the Scheme’s participants. In amongst all of the welcomed NDIS support, there remains a gaping hole that must be addressed: a shortage of skilled disability workers.
While it is promising to hear that there is a commitment to invest in a pay rise for aged care workers, there is an urgent need for investment into the disability sector as well. A workforce of sufficient size to meet demand is critical to the sustainability of the NDIS, so investing in the attraction and retention of skilled and qualified workforce is paramount to its success.
With an additional 83,000 full time staff needed by June 2024, more needs to be done to ensure improved wages and conditions for people working in the sector, as well as better support for providers developing innovative solutions to the support worker shortage.
Funding for remote and First Nations communities, where the chronic support worker shortage is more keenly felt, falls short in this Federal Budget. $7.6 million invested over two years from 2023–24 to partner with communities to pilot alternative commissioning approaches to improve access to supports in remote and First Nations communities, does not go far enough for those who cannot wait for a pilot to be completed.
We want to thank the government for the value it places on supporting the NDIS and those who benefit from it. And hope to see more done to address worker shortages so that everyone who is eligible to the NDIS can actually access it as they should.
Zoe Fehlberg, Co-Founder of Hey Zomi
We’re excited to see what is included in the proposed $10m nationwide waste education program, designed to help change consumer behaviour around household waste.
While the recycling sector is under financial pressure to adapt, innovation in the sanitary space is booming, particularly in Femtech and the reusable period products space. Further engagement with the private sector who are leading this innovation could be game-changing for turning around the big issue that is the disposal of single-use sanitary products.
What may be deemed by a section of household waste, period product waste in Australia is a big, big problem. We would hope that with about 6 million menstruators in Australia, each contributing about 200,000 tons of single-use period products to landfill, considerable attention will be given to this issue as part of the proposed waste education program.
We urge that, as part of this nationwide waste education program, the Federal Government and leaders engage with those in the private sector to support them in delivering better education and reusable products that can benefit Australian pockets; and the planet.
We would love to see the govt extending what has been started with local electorates with reusable menstrual product rebates since June 2022. These are a step forward in combating this issue, and the rapid uptake shows that Aussies are ready to make that transition, but may be struggling to convert due to financial restraints, or lack of education in new solutions.
In high schools, typically 50% of students menstruate. This leads to stress, anxiety, missing class and social events. This is the case for students from lower socio-economic families. We would love to see the Student Wellbeing Boost investment acknowledge these struggles, increase education and contribute to removing stigmas associated with menstruating.
It is also an amazing opportunity for the government to reduce the gender gap early on by providing high-performing and sustainable menstrual solutions to students in need, thus enabling them to perform at their best and access education opportunities for themselves. This will also require education and support for students to find solutions outside of pads and tampons. Also saves money and improves climate goals for the Federal government.
This could be an exciting initiative if the govt listens to key barriers for this target group. Significant advances in gender equality, by including support in the form of cost of menstrual products and having access to paid menstrual leave, could have a huge impact long-term.