- Federal Budget October 2022-23
- Legislation updates
With a background of rising living costs and economic pressures in Australia and around the world, Federal Treasurer – Dr Jim Chalmers has handed down his first budget.
Acknowledging our financial and economic challenges, this budget focusses on cost of living relief and re-targeting spending.
Following is a summary of the key points for members and business partners.
Key super measures
National Housing Accord
As far as superannuation is concerned, the most significant announcement in this Budget is the National Housing Accord. Under this policy, the government will look to bring together key stakeholders, including superannuation funds to collaborate on real and lasting solutions into affordable housing.
AustralianSuper welcomes this important announcement and is pleased to have joined governments, institutional investors and other key industry representatives in signing the Housing Accord 2022 (the Accord).
AustralianSuper Chief Executive Officer - Paul Schroder, said ‘This is a positive step forward in finding genuine solutions to Australia’s housing supply challenges and as Australia’s largest super fund, we believe we can be part of a broader solution while delivering on our purpose to help members achieve their best financial position in retirement’.
Expanding eligibility for downsizer contributions
The government will allow more people to make downsizer contributions to their superannuation by reducing the minimum eligibility age from 60 to 55 years of age. This measure is currently before Parliament, and if passed, will take effect from the start of the first quarter after receiving Royal Assent.
The downsizer contribution, allows people to make a one-off post-tax contribution to their superannuation of up to $300,000 per person from the proceeds of selling their home. Both members of a couple can contribute and contributions do not count towards non-concessional contribution caps.
This measure provides greater flexibility to contribute to superannuation and aims to encourage older Australians to downsize sooner to a home that better suits their needs. This will also help to increase the availability of suitable housing for Australian families.
Start date: To be confirmed
Incentivising pensioners to downsize
To give pensioners more time to purchase, build or renovate a new home before their pension is impacted, the government is extending the exemption of home sale proceeds from pension asset testing from 12 months to 24 months. Changes will also be made to the income test, to apply only the lower deeming rate (0.25%) to principal home sale proceeds when calculating deemed income for 24 months after the sale of the principal home.
Support for pensioner income
To support pensioner income, the government will provide $61.9 million over two years from 2022–23 to provide age and veterans pensioners 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 in 2022–23 from $7,800 to $11,800, before their pension is reduced, supporting pensioners who want to work or work more hours to do so without losing their pension.
This measure could see more pensioners who work earning mandatory super, particularly since the $450 earnings threshold was removed.
Lifting the Income Threshold for the Commonwealth Seniors Health Card
The government will provide $69.6 million over four years from 2022–23 to increase the income threshold for the Commonwealth Seniors Health Card from $61,284 to $90,000 for singles and from $98,054 to $144,000 (combined) for couples.
In addition, social security deeming rates will be fixed at their current levels for a further two years until 30 June 2024, to help older Australians who rely on income from deemed financial investments, as well as the pension, to deal with the rising cost of living.
Support for residential aged care facilities
A broad range of measures were announced in support of older Australians. These include:
- $2.5 billion in funding over 4 years for aged care facilities to have a registered nurse onsite 24 hours a day, seven days a week
- A commitment of $23.1 million to support the implementation of the Support at Home Program from July 2024. This is aimed at delivering more choice for older Australians in their home
- Investment in addressing the aged care workforce shortage through the expansion of migration programs
Measures to deliver cheaper medicine
To help reduce current cost of living pressures, the government announced $1.4 billion in additional funding for Pharmaceutical Benefits Scheme (PBS) listed new medicines over four years and an additional $787.1 million in spending on PBS to reduce the cost of some medicines from 1 January 2023. The price of subsidised prescription medications will drop from $42.50 to $30 (a 29% reduction), meaning the federal government will increase the amount it spends on subsidising about 17 million scripts filled by about 3 million people a year.
Paid Parental Leave Scheme
From 1 July 2023, reforms will be introduced to make the Paid Parental Leave Scheme flexible for families so that either parent is able to claim the payment and both birth parents and non-birth parents are allowed to receive the payment if they meet the eligibility criteria.
Parents will also be able to claim weeks of the payment concurrently so they can take leave at the same time. Greater flexibility will encourage better balance between paid work and caring responsibilities.
From 1 July 2024, the government will start expanding the scheme by two additional weeks a year until it reaches a full 26 weeks from 1 July 2026.
Both parents will be able to share the leave entitlement, with a proportion maintained on a “use it or lose it” basis, to encourage both parents to access the scheme and to share the caring responsibilities more equally. Sole parents will be able to access the full 26 weeks.
It’s important to note that superannuation is not included in the Paid Parental Leave scheme.
Proposed start date: After 1 July 2023
Cheaper Child Care
A range of measures will be introduced to help make childcare more affordable, making it easier for parents and carers to participate in paid work.
The measures include lifting the maximum Child Care Subsidy rates for families earning less than $530,000 with children in care, and introducing a base entitlement to 36 hours per fortnight of subsidised early childhood education and care for families with First Nations children, regardless of activity hours or income level.
The government estimates these reforms will increase the hours worked by women with young children by up to 1.4 million hours per week in 2023–24, equivalent to 37,000 full-time workers.
Proposed start date: 2022/23 financial year
Key business measures
A broad range of measures were announced to support businesses in an environment of rising costs, rising interest rates and economic challenges. These include:
Support for energy efficiency
The Budget includes $62.6 million over the next three years to support small to medium enterprises to adopt energy efficient equipment upgrades.
Small Business Debt Helpline
$15.1 million in funding was announced to extend the small business mental health and financial counselling programs, New Access for Small Business Owners and the Small Business Debt Helpline.
Infrastructure and investment programs
- The government has reconfirmed its commitment to the $120 billion pipeline of investment in transport infrastructure over the next 10 years. This includes $2.2 billion for the Suburban Rail Loop East in Victoria and $1.4 billion in NSW projects including the High Speed Rail from Sydney to Newcastle.
- $50.5m is proposed for a new Australian Critical Minerals Research and Development Hub and $15 billion over seven years from 2023 for establishing a National Reconstruction Fund to co-invest in priority industries.
Job creation and long-term productivity measures
Funding has been provided from 2022–23 to provide 480,000 fee-free TAFE and community-based vocational education places over four years in industries and regions with skills shortages, starting with 180,000 in 2023. Funding has also been provided for 20,000 additional Commonwealth supported places at universities and other higher education providers commencing in 2023 and 2024.
A further important measure that is relevant to businesses focuses on ATO funding.
Australian Tax Office measures
To help address tax compliance and the recovery of tax arrears, an additional $200 million per year over the next four years, has been announced for the ATO’s Tax Avoidance Taskforce.
It’s important to note that any new measures announced as part of this Budget will need to be legislated before they come into effect.
For detailed information on the Federal Budget and all announcements, visit budget.gov.au
- Australian Institute of Superannuation Trustees (AIST) 2022 Federal Budget summary
- Budget October 2022-23
- ISA Overview - Federal Budget 2022