25th October, 2022
The Albanese Government’s first Federal Budget has been handed down, framed as a responsible Budget for uncertain times – but what does that mean? Here’s all the key details at-a-glance.
At a time of rising inflation, commodity prices and interest rates, the new Government has been clear about its intentions to deliver a Budget that toes the line between cost-of-living relief, strengthening the economy and “repairing” the Budget.
“We now confront the prospect of a third global downturn in a decade and a half,” Treasurer Dr Jim Chalmers said in his inaugural Budget speech to Parliament.
“This time not a financial crisis or a pandemic, but a war driving high prices and higher interest rates here and around the world, and the risk of another global recession.
“This time demands a different response. One that puts a premium on what’s responsible, affordable, and sustainable.
“That’s why this Budget pays for what’s important, strengthens our buffers against adversity, and begins to build a better future.”
But what does it all mean in terms of actions and outcomes, and what can business owners expect from this Budget in the short term?
The ALP has stated its intention to limit growth in spending while inflation is high, and that’s reflected by the relatively low expenditure presented by this Budget, with new policies designed to be offset over the next two years.
“Australians do not have enough to show for a trillion dollars of debt, and gross debt as a share of GDP at its highest level in more than 70 years,” said Chalmers.
“Our responsible decisions mean gross debt to GDP will be 37.3 per cent in 2022–23, and remain lower over the forward estimates compared to the pre-election forecasts.”
Ultimately, this means the Budget has been framed as one that’s targeted, and doesn’t contain large cash or tax incentives for the business community in general.
Initially rumoured to be a wellbeing-focused Budget, this evening’s announcements aren’t short of measures that will have direct outcomes for healthcare sectors, as well as flow-on outcomes for many Australian individuals and employers.
The measures also include an additional $15.1 million to extend health and financial counselling programs in a direct win for small business owners. Those programs are NewAccess for Small Business Owners and the Small Business Debt Helpline.
The Budget also delivered a boost to the Child Care Subsidy in a bid to enable greater workforce participation.
“Cheaper childcare is a game-changing investment in families, our workforce, and our economy,” said Chalmers.
“It will increase the paid hours worked by women with young children by up to 1.4 million hours a week in the first year alone.
“That’s the equivalent of 37,000 extra full-time workers.”
The Budget also includes a number of outcomes addressing environmental issues and, again, while these initiatives might not have wide-ranging, immediate benefit for Australia’s business owners, they indicate a desire for the Government to move towards a more sustainable future economy.
Those measures include $224.3 million towards a Community Batteries for Household Solar program, which aims to help as many as 100,000 households reduce power bills through energy storage solutions, as well as $1.2 billion in total funding for the Great Barrier Reef by 2030.
Chalmers also called out moves to cut taxes on electric cars and building a national EV charging network, as well as hydrogen refueling stations along highways.
One headline item in tonight’s Budget news is the Government’s planned investments in social and affordable housing, including $10 billion to establish a Housing Australia Future Fund.
The measure will be used to build 30,000 new social and affordable dwelling over the next five years, which means more opportunities for Australia’s construction sector, but also new opportunities for retailers, hospitality businesses and professional services that will service those communities.
Announced ahead of the Budget, another headline item is the Government’s planned investment boost to the NBN, extending access to more than 660,000 homes across regional Australia.
Not only does better connectivity serve the needs of individuals, it will also give consumers better access to the products and services modern businesses are increasingly offering online.
Fee-free TAFE and community-based vocational education places for more than 480,000 people over the next four years will mean more skilled workers entering the workforce will work in combination with a new five-year National Skills Agreement to ‘secure the long-term future of vocations education and training’.
“This Budget also invests more than $770 million for better schools, happy and healthier students, and more qualified teachers,” said Chalmers.
This includes a measure to invest $485 million to create 20,000 new university places over the next two years.
Of particular interest for small businesses, the new Budget also introduces a ‘Startup Year’, which is designed to support 2,000 eligible students a year to participate in a university-based accelerator program.
The Budget also includes some measures to help the ATO bring in revenue through compliance activities, with a specific focus on ‘personal income taxation compliance’, the ‘shadow economy’ and ‘tax avoidance’.
In particular, $200 million in funding for the Tax Avoidance Taskforce over four years will support the ATO to ‘pursue new priority areas of observed business tax risks, complementing the ongoing focus on multinational enterprises and large public and private businesses’. It’s estimated to result in an increase in payments to the ATO of $1.1 billion in the four years from 2022-23.
The Treasurer announced the Government’s intention to make the tax system more sustainable “…by making sure multinationals pay a fairer share of tax in Australia, by extending successful tax compliance programs, and by giving the ATO the resources they need to crack down on tax dodging,” the Treasurer announced.
“Together, these initiatives save a further $4.7 billion over four years.”
The first Budget from the new Albanese Government works hard to tackle some of the fundamentals of economic recovery, with many of the measures aimed at supporting Australians and Australia businesses.
What that means for Australia’s small businesses ultimately depends on what your business is and where you’re located, but time will tell just how far reaching and impactful these measures are in the years to come.