Labor Budget 2022: What the budget means for you
How Treasurer Jim Chalmers’ budget affects every stage of life from student debt to retirement income.
THE BIG PICTURE
How last night’s budget affects every stage of life from student debt to family cost-of-living pressures and retirement income.
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SINGLE AND STARTING OUT
STUDENTS 18-25
FREYA LEACH, 19
“I think HECS debt is going to be a huge burden, it’s going to be our generation’s debt and I think that’s very concerning.”
• Lives with her parents in Rozelle
• Studies Law and Finance at Sydney University
• Works part time as a researcher
• Loyal Liberal voter because she believes the party has a history of strong economic management
BUDGET TAKEOUT
Freya would like to see tax cuts even at the expense of government programs. “If Labor goes back on stage three tax cuts, what it shows is they’re not committed to the wellbeing of young people and young professionals, what they care about is short term political gain,” she says.
It is now a common understanding among young people that to buy a property you will have to uproot yourself from your community and move to the outer suburbs to be able to afford anything, Freya says. “The question is not when do I want to buy a home, it’s when do I want to remove myself from my home and go to a new part of Sydney? Which is sad.”
STUDENTS & YOUNG WORKERS 18-25:
• This is a budget geared to families rather than young singles like Freya, but there is something here for those looking to extend their vocational education or hoping to buy a home
• 180,000 fee-free TAFE and community-based vocational education places next year in priority areas, like aged care and the digital economy
• The New Energy Apprenticeships program will allow 10,000 apprentices to claim a support payment of up to $10,000.
• The Help to Buy Scheme will allow up to 40,000 Australians on low to moderate incomes to buy a new or existing home with a lower deposit and smaller mortgage, with an equity contribution from the Australian Government.
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ON THEIR WAY
YOUNG COUPLES 25-30
LIZZY MAY, 27, and JOSH JONES, 30 (with their dog Junie)
“We are so fortunate for our age group to get our foot in the door and buy a property in the city.” — Lizzy
• Live in Erskineville
• Both solicitors
• Recently bought their first home in Erskineville on a variable mortgage
• Voting intentions: undecided
BUDGET TAKEOUT
Lizzy’s mother is on the aged pension and is struggling with the cost of living. “It would be great to see a rise in the aged pension and my brother is on the disability support pension as well so I am not pro cutting taxes - I’m all for more money going towards social security, ”she says.
The couple took a big loan to buy their small house in Sydney’s inner west and are worried that if rates continue rise they may be in trouble. They’ve also noticed that the cost of groceries and pet food has increased dramatically.
YOUNG COUPLES 25-30:
• Will have more opportunities to buy a home. Under the new Housing Accord with private industry, 10,000 affordable dwellings will be built in addition to 30,000 new social and affordable homes under the $10 billion Housing Australia Future Fund, with the National Housing Infrastructure Facility supporting another 5,500 new homes.
• The Help to Buy Scheme will allow up to 40,000 Australians on low to moderate incomes to buy a new or existing home with a lower deposit and smaller mortgage, with an equity contribution from the Australian Government.
• Can buy cheaper electric cars with an FBT exemption saving an individual using salary sacrifice up to $4,700 a year and an additional $2500 after the removal of the 5 per cent import tariff.
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KIDS AND KEEN TO GET A HOUSE
YOUNG FAMILIES 30-35
ALYSHA, 30, and SAMUEL MAYBURY, 33, with PARKER, 1, and dog Baxter
“I would like to see free childcare and also steps to tackle housing affordability.” — Alysha.
• Live in a rented apartment in Potts Point
• Samuel works in HR and Alysha works four days a week for a media agency
• They are both swing voters but voted Labor in the last election because of promised child care reforms
• Parker is in childcare costing $140 a day, increasing to $176 a day next year
BUDGET TAKEOUT
Alysha and Sam are keen to buy a house but can’t afford to save for a deposit. “With the rent we pay we could easily afford a mortgage but we can’t get there while we’re paying for childcare as well,” says Alysha. “We want to have more children eventually but once we have more children in childcare I don’t know how we’ll do it.”
YOUNG FAMILIES 30-35:
• Parents like Alysha and Samuel get little cost-of-living relief in this budget but will benefit from an additional 6 weeks of Paid Parental Leave if they have more kids, as they hope, with an extra fortnight added to the scheme each year until the full 26 weeks is available from July 2026. A portion of this leave can be accessed by either parent.
• Parents who earn over $156,647pa are in luck, as from July 1 next year they can opt to be assessed on a dual income threshold of $350,000.
• Parents on a more modest income will benefit from increases in the childcare subsidy rebate, with families earning up to $80,000 refunded 90 per cent of their first child’s fees. That proportion decreases by one per cent for every extra $5,000 earned until it reaches zero per cent for families earning $530,000. A family with a combined income of $120,000 pa with one child in care will save $1780 a year.
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GOOD INCOMES, HIGH MORTGAGE
ESTABLISHED FAMILIES 35-50
GRETA, 37, and RUMESH, 40, SANMUGANATHAN and their sons EZEKIEL, 4, and JUDAH, 3.
“With these rate rises our mortgage would be close to double the repayments from last year when it was at its lowest to now at its highest.” — Greta
• Live in Clovelly.
• Greta is a teacher and Rumesh is a mortgage broker.
• They own a property in the western suburbs but rent where they want to live
• Normally Labor voters but Greta voted independent in the last election (Allegra Spender in Wentworth)
BUDGET TAKEOUT
Greta and Rumesh are most concerned about high mortgage payments, which mean they have to cut down on discretionary expenses like getting a babysitter, so they can’t go out as much as they’d like. They would love free child care but knows that is not going to happen.
“We don’t want to be penalised for working. It feels like at the moment you’re penalised for going back full time for mums and I think there should be more incentive to go back to work and more assistance with childcare in order to do that.”
“Everyone at my work is talking about how we’re not getting a pay rise but inflation is huge - inflation is soaring and they don’t want to give you a 5 per cent pay rise,” says Greta.
ESTABLISHED FAMILIES 35-50:
• Early childhood education and care will be more affordable for 96 per cent of families with children in care.
• Families like the Sanmuganathans with two or more children will continue to receive the higher childcare fees subsidy for second and subsequent children.
• Schools will benefit from a $270 million investment in better infrastructure to be rolled out over the next two years
• Medicines will be cheaper with the PBS maximum general co-payment slashed from $42.50 to $30 a script from 1 January next year – saving up to $12.50 per script for about 3.6 million Australians.
• Families may struggle to get in to see their GP with no increase in the Medicare rebate for doctors likely to exacerbate the general practice crisis, but might be able to access one of 50 new Medicare Urgent Care Clinics.
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STILL IN BUSINESS
PRE-RETIREMENT 50-65
DARTO DARTO, 53.
“In the restaurant business the profit margin is only between 1 to 2 per cent and most are losing money or just in survival mode.”
• Lives in his own apartment in Randwick
• Restaurateur who recently sold his Italian restaurant (Isabella’s Italian & Seafood) after 22 years because of the soaring costs in doing business, now looking at other business opportunities.
• Votes Labor because he liked Paul Keating and has stuck with Labor since
BUDGET TAKEOUT
Darto says skyrocketing wages and operating costs have crippled restaurants. He needs to pay staff above the $27 an hour award rate. “Now they want $35; if you don’t pay that much they’ll go somewhere else,” he says. “There are not enough people who want to take up the jobs. There is too much red tape, you have to pay holiday pay, sick pay, fuel has gone up, so you have to put the price of food up and people complain it’s too expensive.
“The government should make it easier for people who want to come and travel on working holidays so they can work in hospitality.”
PRE-RETIREMENT 50-65:
• Not much in this budget for small business owners like restaurateur Darto Darto. They will get some benefit from new energy efficiency grants to upgrade old an inefficient equipment and from more overseas workers to fill labour shortages, as extra funding helps slash the visa backlog. But the instant asset write-off for small-to-medium sized businesses will be scrapped from July next year.
• The PBS maximum general co-payment has been slashed to $30 a script from 1 January next year – saving up to $12.50 per script for about 3.6 million Australians.
• The Government is expanding access to downsizer superannuation contributions for people aged 55 to 59.
• For those looking for a late career change, the High Achieving Teachers program is being expanded to attract 1,500 more professionals into teaching, with a further, 5,000 high quality candidates able to access bursaries worth up to $40,000 to encourage them to study teaching.
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THE GOLDEN YEARS
RETIREMENT 65+
MICHAEL, 78, and ROSIE PARKINSON, 77.
“From what I have seen of people in aged care it’s like a living hell and I would not want to be there.” — Michael
• Live in their own home in Dulwich Hill,
• Self-funded retirees with investments
• Have two children and four grandchildren
• Were lifelong Liberal voters but switched to Labor after they became disenchanted by the Coalition in recent years
BUDGET TAKEOUT
Health insurance is one of their biggest expenses - $6000 a year. “I don’t go to the doctor, so I’m subsidising a lot of other people,” says Michael.
The couple worry that their children are having trouble finding affordable housing and might have to move away, making it difficult for them to see their grandkids.
Michael is also concerned that not enough is being spent on defence. “I was around at the end of WWII and what is happening internationally is a mirror image - Australia is terribly underprepared.”
Michael and Rosie don’t want to go into an aged care facility and would much rather have in-home aged care when the time comes. “I have no intention of leaving this place unless I’m in a box,” Michael says.
RETIREMENT 65+:
• For couples like the Parkinsons who want to have in-home aged care, this budget doesn’t offer much, but those in aged care facilities can look forward to a guaranteed nurse on site 24/7 and a mandated number of average care minutes per resident, starting with 200 care minutes, including 40 nursing minutes.
• Older Australians can downsize more easily to a smaller home which will free up housing stock for younger families. The Government is extending the exemption of home sale proceeds from pension asset testing from 12 months to 24 months. This will give pensioners more time to purchase, build or renovate a new home before their pension is affected.
• Older Australians will be able to keep more of their pension when they work (or work more hours) under a once-off credit of $4,000 to their Work Bonus income bank. The temporary income bank top up will increase the amount pensioners can earn from $7,800 to $11,800, before their pension is reduced.
• The income threshold for the Commonwealth Seniors Health Card will increase from $61,284 to $90,000 for singles and from $98,054 to $144,000 (combined) for couples.
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