Budget 2022: 5 things that will directly impact you
The Albanese government has released its first budget. Here is what you need to know.
Australians have been told to expect a "bread and butter" budget, with the treasurer saying the best defence against rising global uncertainty is a strong fiscal position.
And on budget night, we pretty much got what was to be expected.
Treasurer Jim Chalmers has spent the recent weeks building up to the budget in the media, promising to cut back on "wasteful spending".
Although major pre-election promises including childcare subsidies will still be included.
Treasurer Jim Chalmers spoke of the challenges ahead. The treasurer spoke of inflation, responsible investing, cost of living pressures and protecting the economy against a global slowdown.
"That's why this budget pays for what's important, strengthens our buffers against adversity and begins to build a better future," Treasurer Chalmers said.
Chalmers highlighted the budget's 5-point plan to deal with the cost of living:
- A new national housing accord that is aiming at 1 million new homes and 30,000 social houses a year
- Cheaper child care
- Extending paid parental leave
- Cheaper prescriptions
- Supporting wage increases
Going beyond the 5-point plan. Here are the points that will impact you directly.
Families the big winners
After running an election on a better deal for families, the Albanese government has announced 2 major wins for parents.
In his speech tonight, Chalmers pointed out that the paid parental leave scheme – which was until tonight 18 weeks at the same rate as the minimum wage – has been extended to 26 weeks by 2026.
Parents will also get access to cheaper childcare.
Although this one isn't exactly a surprise.
Legislation has already been introduced to the parliament that will lift the maximum subsidy rate to 90% for childcare for families that earn less than $530,000 in household income.
Chalmers says the plan will cost around $5.4 billion after implementing it in July 2023.
It is also giving $10.8 million to the Australian Competition and Consumer Commission (ACCC) to investigate why childcare costs are spiralling.
Welfare payments rise
With the soaring cost of inflation, pensioners and jobseekers are set to get a boost in payments.
This is because, twice a year (March and September), welfare recipients get an increase in payment in line with inflation (indexation).
At a cost of $33 billion towards the budget, Chalmers pointed out that the skyrocketing cost of living means payment costs have increased.
Changes to taxes were not announced
The treasurer did not speak about any changes to stage 3 tax cuts, which as it currently stands is expected to remain.
While economists were calling for the tax breaks – which for the most part benefit those who make more than $200,000 a year – to be undone, the Albanese government has left them alone.
He also did not announce extending the low- and middle-income tax offset (or LMITO), which would reduce the returns for millions.
As such, starting from July 2024, the tax brackets will flatten.
Under the plan brought in by the Morrison government, the 37% marginal tax bracket is abolished and lowers the 32.5% marginal tax rate to 30%.
It also raises the threshold for the 45% tax rate.
If you make between $45,000 and $200,000, you will now pay 30%.
Under stage 3, the tax brackets would look like this:
- $18,200 – no tax
- $18,201 to $45,000 – pay a 19% tax rate
- $45,001 to $200,000 – pay a 30% tax rate
- $200,001 plus – pay a 45% tax rate
While some argue paying less tax is a good thing, it is set to cost the budget an estimated $254 billion over the next decade.
Education sector gets a big boost
This is another election promise that has been funded by the government.
If you're a person looking to go to TAFE or university, you're in luck.
To help with a number of skilled worker shortages, the government is looking to train Australians.
Under the funding scheme, 180,000 TAFE spots are now free.
The plan is in 2 parts.
60,000 new places have been made. At the same time, fees have been dropped for 120,000 existing paid TAFE spots.
The total cost of this plan is $1.1 billion and is the start of a pre-election promise of getting 465,000 Aussies into free TAFE courses.
The Albanese government will also add an additional 20,000 university places to help represent students in areas of skill shortages over the next 2 years.
Labor has said the policy will cost up to $485.5 million in total.
But motorists miss out
Unfortunately for motorists, Chalmers says he won't extend the fuel excise that was introduced as an election sweetener by the previous Morrison government.
While it has saved motorists around $30 billion in the 6 months since introduction, Chalmers says the government cannot afford to continue not collecting revenue on fuel.
The 22.1c a litre discount, which ended on 28 September, will not be reinstated, despite some calls to add it back in due to rising inflation costs.
Bonus - Stability on renewable energy
The treasurer also spoke about renewable energy.
He says the government will act on climate change through a plan to provide stability to the energy grid, including projects in renewable energy and plans to make electric cars more affordable.
"No more sleepwalking while other advanced economies seize new opportunities. No more surrendering industries and jobs overseas," he said.
"So that we can add more value to the things that we sell to the world. And so that every part of the country can have a stake in our Australian-made future," Chalmers said.