All the Highlights From Labor’s First Australian Federal Budget

federal budget 2022 2023 explained summary

Labor has detailed the first budget of their administration after nearly a decade of Coalition rule.

The historical impact of this one, however, has been lessened by the swirling currents of global affairs. Treasurer Jim Chalmers has spent the last few months throwing cold water on the expectations that this will be an all-singing, all-dancing Labor budget of old.

Instead, he’s geared this one towards restraint, even cutting back on some of the spending promised under the last government.

“This is a responsible Budget that is right for the times and readies us for the future,” Chalmers said.

The three “primary objectives” of the economic policy that Labor has laid out are: “responsible cost of living relief, strengthening the economy, and beginning the hard yards of budget repair,” according to Chalmers.

He’s clearly playing this one with the expectation of successive years in government, saying that it will “lay the foundations of a stronger, more resilient economy” and that it will “do more than batten the hatches against global uncertainty”.

Prime Minister Albanese has also said that the budget can only do so much and that it’s impossible to “change nine years of chaos” in one go.

However, that doesn’t mean that it’s white bread and not worth paying attention to. There are some meaty morsels in there too that will appeal to voters. Here are the juiciest.

Tax and (Don’t) Spend

The big fight throughout the past few months has been over the stage three tax cuts set to come in in 2024. The cuts, which are expected to cost $254 billion over 10 years, have been legislated since 2018, with the Labor party making it an election promise to see them through.

Despite costs blowing out, economic conditions changing, and politicians on all sides of the house calling for their removal, Labor has been steadfast in its commitment to them.

The 2022-2023 budget makes no mention of the cuts, meaning they are locked in unless anything changes by 2024.

However, Labor has cut back on spending in order to shape up the national balance sheet in other ways. The first phase of their “line by line”, “rorts and waste” audit will cut $10 billion in expenses, mainly by stopping spending on their own advertising and projects announced under the Morrison government, many of which have been critiqued as cynical vote-buyers.

They have also announced plans to ensure that large multi-national companies pay their fair share of tax, changes that they anticipate will bring in an extra $1.9 billion over four years.

The country also appears to be in better shape than previously anticipated. Coming out of the COVID pandemic, the deficit has been cut by $48 billion, currently sitting at $32 billion. However, the national debt stands at nearly $900 billion, something Chalmers has previously flagged as a concern.

Let a Million Homes Bloom

The housing shortage is one of the key reasons property prices are so high and no one can afford to live anywhere. In an attempt to address that, Labor will increase the housing supply by a million homes, starting in 2024.

“Rents are through the roof, and many families are struggling to keep up,” Chalmers said.

“Supply hasn’t kept up with demand, which means too many struggle to live close to where they work.

“Too many are stuck on waiting lists for social housing. And for too many, the great Australian dream of home ownership seems completely out of reach.

“Our country can do better than that.”

The Federal Government has announced that they will create an additional 10,000 new affordable houses, with each state and territory expected to do the same. The plan is to have all of these built over five years, with a million extra in the market by 2029.

This is in addition to different 30,000 new social and affordable homes that the government has also committed to.

Lower deposits and smaller mortgages are also being offered for 40,000 eligible Australians.

While the plan sounds impressive, it’s not actually that out of line with historical growth in the housing supply. In the past five year, a little over 985,000 homes were built.

Paid Parental Leave Increase

Some of the big headlines pieces of the budget have already been announced, and one of the biggest is the increase in paid parental leave.

“Tonight, our Labor Government delivers the biggest expansion to Paid Parental Leave since its creation,” Chalmers said.

Labor has said that they will increase paid parental leave in Australia by six weeks, taking it up to 26 weeks. The scheme won’t be fully implemented by 2026, though, with an additional two weeks being added each year until then.

The policy is aimed at tackling the gender pay gap and the unpaid labour gap carried out by women in this country. The leave can be shared equally between partners and is paid at the minimum wage.

Climate Change to Actually Be Measured

Chalmers has said that he will reinstate the modelling of the impact of climate change on the economy, something that was scrapped by Tony Abbott.

“After nearly 10 frustrating years, and more than 20 failed energy policies, Australia now has a government that understands the generational and economic imperative of acting on climate change,” Chalmers said.

New Childcare Subsidies

Labor campaigned on making childcare cheaper for Aussies and now they’ve committed to doing just that. This is another policy that has been announced prior to the budget.

“Cheaper child care is a game-changing investment in families, our workforce, and our economy,” Chalmers said.

The new policy will cover 90% of the cost of childcare for families earning up to $80,000 a year.

For every $5,000 earned above this, the coverage will drop by 1%, up to a combined income of $530,000.

The policy is set to take effect from July next year and will cost an estimated $5.1 billion. However, Labor have previously said that the policy will benefit 96% of working families and will help an estimated 37,000 full-time workers return to work after having a baby.

Electric Vehicle Subsidies

Labor has ruled out a return of the tax cut on fuel prices, introduced as a temporary measure under the Coalition. Instead, they’ve decided to focus on electric vehicles.

Again, this is an early-release single off the new album, with a bill to make EVs cheaper introduced in July. The policy will cut fringe benefits tax on EVs, meaning employers buying them for their workforce could save $9,000 a year while individuals could save $4,700 per year.

The policy has caused a bit of a stir, though, after the Greens and Independent candidates raised the issue that it includes hybrid vehicles, which still rely somewhat on fossil fuels. They have threatened to block the legislation in the Senate if it isn’t changed.

Spending on the National Broadband Network

Yet another election promise, also announced before the budget, is the $2.4 billion that Labor has pledged to spend on upgrading the National Broadband Network (NBN).

1.5 million homes and businesses will be connected to the information super highway with fibre cables, replacing the old copper cables that former PM Tony Abbott deemed good-enough to connect to fibre street boxes.

$9.6 Billion for Infrastructure

Once again trying to fulfil election promises, Labor has introduced a $9.6 billion boost to infrastructure spending across the country.

This includes a package for roads in western Sydney, the suburban rail link in Victoria, and upgrades to the Bruce Highway and roads through central Australia.

We’re Finally Teaching Consent

So long, milkshakes. The government is committing $65.3 million over four years to invest in “respectful relationships education”.

This will be “age-appropriate and evidence-based consent education” taught to primary and secondary school pupils, with investment going to teacher training and external education partners.

A new National Respectful Relationships Education Expert Group will be established to perform a “rapid review” of current consent-based sexual education to identify key areas of need and develop a framework for accrediting external providers of educational

We presume Chanel Contos will be high on the list of candidates for this expert group.

Click here for our full coverage of what Labor’s budget means for mental health, climate change, parenting, and the cost of living.

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