Federal Treasurer Jim Chalmers delivered an updated Budget 2022–23 on Tuesday 25 October 2022. The budget measures were sensible in containing inflationary pressures and providing a modest cost of living package around cheaper child care, more paid parental leave, cheaper medicine, affordable housing and reforms to get real wages moving for Australians.

Although Australia is expected to avoid a recession in the years ahead, the budget was rationally curated in challenging global economic conditions including the war in Ukraine, shaky Chinese economy and a sharper downturn in major developed economies.

In this financial year ending 30 June 2023, the economy is expected to grow by 3.25% before slowing to 1.5% in 2023–24, the rate of unemployment 3.5% which will increase to 4.5% in 2023–24, the inflation 7.75% before moderating to 3.5% in 2023–24 and the wage growth 3.75% which is expected remain at the same level in 2023–24. The budget deficit is expected to be $36.9 billion in 2022–23 which would rise to $44 billion in 2023–24.

The main measures of the budget include the following:

Child care    

The budget allocated $4.7 billion to increase child care subsidy rates for families with children in care. From 1 July 2023, this will reduce 90% of the child care cost for the first child and up to 96% for any additional child in care aged 5 and under for eligible families earning less than $530,000 a year. Australian Competition & Consumer Commission (ACCC) will conduct a study and report by 31 December 2023 on the drivers of childcare price increases and budgetary affordability of offering a universal 90% subsidy in the sector.

Paid Parental leave

A funding of $531.6 million is provided to pay for an extension of paid parental leave from 18 to 26 weeks, increasing by a fortnight each year until the full 26 weeks are available on 30 June 2026. This measure is expected to close the gender gap by increasing workforce participation of over 100,000 women in the economy.

Affordable housing

The budget establishes a Housing Accord to build 1 million homes over 5 years from 1 July 2024. For a start, the budget commits $350 million to build an additional 10,000 new affordable homes. The government will invest $10 billion in the Housing Australia Future Fund and from its returns it will build 30,000 new social and affordable homes in the next 5 years.

Health care

An allocation of $235 million is made over 4 years from 2022–23 to roll-out 50 Urgent Care Clinics in order to reduce the pressure on the hospital system. The maximum co-payment is reduced from $42.50 to $30 from 1 January 2023 which will provide Australians with cheaper medicines. An incentive payment of up to $10,500 is committed to General Practitioners for encouraging them to practice in rural and reginal communities. Other measures include $314.5 million to strengthen First Nations health, $452 million to support the establishment of 2 world class cancer centres and $327.7 million to support Australians with type 1 diabetes.

Aged care

At a cost of $2.5 billion over 4 years, aged care facilities will be afforded a registered nurse on site 24/7 and the residents will receive better food, which is fresh, healthy and safe. There is a funding allocated for a pending Fair Work Commission pay rise to be given to over 30,000 aged care workers. Other budget initiatives include capping management fees and banning exit fees for residential aged care services and the establishment of an Aged Care Complaints Commissioner as well as an Inspector-General of Aged Care to serve the needs of the senior Australians in this sector.

Education

An amount of $1 billion is provided for fee-free TAFE and vocational educational places in areas of skill shortages. Schools have over $770 million for qualified teachers and buildings. Universities will receive $485 million to create 20,000 new places over the next two years for students from disadvantage backgrounds.

Environment

The budget allocated $20 billion to upgrade and expand Australia’s electricity grid, $500 million to build charging stations on highways and waive fringe benefit taxes on electric vehicles (EVs), the Government plans to have 75% of all new Commonwealth car purchases and leases to be EVs by 2025, $1.2 billion to protect and restore the Great Barrier Reef and established a $1 billion fund to mitigate potential losses and damages due to natural disasters such as flood and fire.

Migration

In 2022–23, the migration program will be increased to 195,000 people, 90% of which will be skilled migrants. Student and secondary training visa holders will have their work restrictions relaxed until 30 June 2023 to allow them to work additional hours.

Other budget measures

The Government will establish the National Reconstruction Fund to provide $15 billion of capital to transform and strengthen priority industries which will help build a manufacturing base in Australia. The budget increases the amount of money pensioners can earn from $7,800 to $11,800 before their pension is reduced. At the cost of $37.7 million, a Fraud Fusion Taskforce will be established to strengthen fraud detection in NDIS. The budget drops the age from 60 to 55 at which Australians can contribute a lump sum into superannuation funds which will increase housing supply in the real estate market.