Federal budget 2023: Treasurer reacts to $300bn tax cuts
Critics have blasted the government for committing to a $300 billion tax vow while Aussies are struggling.
Federal Budget
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Prime Minister Anthony Albanese and Treasurer Jim Chalmers have backed the contentious stage 3 tax cuts, which will cost $69 billion over the next four years.
While not contained within the budget papers, the government has revealed that over the decade, the final stage of the former Morrison government’s tax overhaul will cost the budget close to $300 billion over the next decade.
The tax overhaul changes the threshold for marginal tax rate for everyone earning between $45,000 and $200,000.
Wealthy Australians earning more than $200,000 will get a yearly tax break of up to $9000 from next year.
The total cost to the budget is five times the $14.6bn cost-of-living package that Dr Chalmers announced in the budget.
Dr Chalmers said the government was committed to rolling out the tax cuts next year that would benefit everyone earning more than $45,000 a year.
“We haven’t changed our position … they haven’t actually been a focus of the deliberations for this budget at all,” he told ABC News.
Greens leader Adam Bandt said the move was a “betrayal” of everyday Australians doing it tough.
“A big reason that Labor refused to lift people out of poverty is that they are committed to stage 3 tax cuts for the wealthy while everyday people get next to nothing,” he told ABC News.
TREASURER WARNS OF ECONOMIC HEADWINDS
Millions of Australians will get help with skyrocketing bills through energy rebates, childcare subsidies and increases in welfare payments in a federal budget that has delivered a long-awaited surplus.
But Treasurer Jim Chalmers warned the country still faced economic headwinds that would reduce growth to just over 3 per cent this year and would fall to just 1.5 per cent next year.
That will result in unemployment rising to 4.5 per cent in 2024-25, while inflation will steadily fall, returning to the RBA’s target band in 2024-25.
“Our policies to ease the pressure on households will take three quarters of a percentage point off inflation in 2023–24,” Dr Chalmers said.
There is more support for those on lower incomes, with a $4.9 billion boost in support to around 1.1 million Australians looking for work, studying or doing apprenticeships.
Tax brackets will change next year and will save those earning higher incomes thousands of dollars a year when the “Stage 3” tax cuts take effect.
But some Aussies will be getting pay rises – with $11.3 billion to fund a 15 per cent increase in award wages, for more than 250,000 aged care workers.
See what’s afoot:
COST OF LIVING
*$14.6bn in cost-of-living relief, including $500 energy rebates for 5.5m households and 1m businesses.
*Thousands will miss out on the electricity bill relief worth up to $500 under an income threshold cut-off. For families with one child, the Family Tax Benefit is cut off after you reach a combined income of more than $108,000.
*Relief will be targeted to pensioners, Commonwealth Seniors Health Card holders and households receiving income support including Family Tax Benefit A and B.
*$11.3bn to fund a 15% pay rise for aged care workers
*$9bn in additional childcare subsidies
*$2.2bn for primary health care, the first step in major reforms to Medicare
*$1.9bn to extend sole parent payments until children turn 14.
TAX
* Australians earning less than $126,000 to no longer receive the low and middle-income tax offset.
* “Stage 3” tax cuts from next year will change tax brackets and save high income earners thousands.
CHILDCARE
* $55.31bn across the next four years to make childcare more affordable.
* $72.4m over five years to support the skills and training of workers in the early childhood education and care sector.
* 1.2 million families are set to benefit from July 1 when subsidy rates are lifted.
HOMEBUYERS
*The expansion of the first-home guarantee scheme, allowing family and friends to purchase a home together with a 5 per cent deposit. The government assures the remaining 15 per cent.
*The maximum rates of Commonwealth Rent Assistance by 15 per cent. This will provide up to $31 extra a fortnight for people renting in the private market and community housing.
*A new tax break for build-to-rent projects, cutting the managed investment trust withholding tax from 30 to 15 per cent, and by increasing the liability cap of the National Housing Finance and Investment Corporation by $2 billion, to support more lending to community housing providers.
WELFARE
* $40 per fortnight increase for Jobseeker recipients – plus those on Youth Allowance, Austudy and other income support payments
* Sole parents will be able to receive the single parenting payment until their youngest child turns 14 – up from the current age of eight.
The package will cost the budget about $1.9bn through to 2026-27, with payments to be increased by $176.90 every fortnight from September 20.
* Australians of all ages on Jobseeker are expected to receive a “modest” boost to their fortnightly payments, not just to over 55s.
* The NDIS growth rate will be cut from 13.8 per cent to 8 per cent by mid-2026. The government has put aside $720m to fund staff increases and necessary reforms to drive down costs.
PARENTING
* More than 57,000 single parents will get payments until their youngest child turns 14 – up from the current age of eight.
Parents currently on Jobseeker payments will likely receive an increase of $176.9 per fortnight.
* The much maligned ParentsNext program that forced parents with young children to undertake parenting programs or job training or risk losing their payments will be axed.
HEALTH / MEDICARE
* $3.5 billion to help GPs provide free, bulk-billed consultations to around 11.6 million eligible Australians
* People with chronic illness will be able to buy 60 days’ worth of medicine for the price of a single prescription from September, under a shake up of the Pharmaceutical Benefits Scheme.
* $50m for the Medical Research Future Fund, including Long Covid research.
* the Medicare rebate will be extended for heart health assessments until June 30, 2025.
* $445 million to enable doctors, nurses and allied health professionals to co-operate for better care.
* funding to build 8 more Urgent Care Clinics, so people in regional communities can see a GP.
AGED CARE
More than 250,000 workers will be paid 15 per cent more in an $11.3 billion cash boost over the next four years.
SUPERANNUATION
*Employers to pay super at the same time as wages, instead of quarterly as they are currently allowed.
*Tightening superannuation tax concessions for those with balances exceeding $3 million.
NDIS
The government will spend $47.3 million to crack down on fraud and make the NDIS more sustainable.
JOBS AND WORKERS
* Extra Jobseeker support for those aged 60 and over to include Australians aged 55 and over
* $200 million for place-based partnerships and projects that are delivering measurable success.
*300,000 fee-free TAFE places to train Australians in critical and emerging sectors.
ENVIRONMENT AND ENERGY
* $1 billion to help provide low-cost loans for double-glazing, solar panels and other improvements that will make homes easier – and cheaper – to keep cool in summer and warm in winter.
DOMESTIC VIOLENCE
* 10 days of paid Family and Domestic Violence Leave
SMALL BUSINESS
* A $20,000 instant asset write-off.
* A new Small Business Energy Incentive to support investments in power-saving assets.
* New help for small businesses to adopt and adapt to digital technology.
INDIGENOUS
* $1.9 billion for First Nations’ health, housing, education, employment and other essential services.
* $250 million for a new Central Australia package to improve safety and provide more opportunities for young people in their communities.
VETERANS AFFAIRS
* $64.1 million to continue eliminating the claims backlog, so that Veterans get faster access to the support they need and deserve.
MENTAL HEALTH
• $136 million to support the mental health of survivors of torture and trauma before moving to Australia on humanitarian grounds
• $91.3 million for additional psychology placements, including 500 psychology postgraduate placements, 500 one-year internships, and 2,000 supervisor training sessions (1,000 of which will be refresher places), and a redesign of psychology higher education pathways
• $6.9 million to continue child and youth mental health supports, including supporting digital work and study and student mentoring
• $2.8 million to extend mental health supports for Australians living with eating disorders and their families
• $6.2 million to support children to build and maintain a positive body image and reduce body dissatisfaction and appearance pressures
Originally published as Federal budget 2023: Treasurer reacts to $300bn tax cuts
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