The Treasurer Jim Chalmers delivered the Albanese Government’s first budget on Tuesday, fulfilling their election commitment to reprioritise expenditure allocated by the previous Government in March of this year.
To this end, the Treasurer has made modest changes that largely reflect the priorities of the new Government as outlined in their election platform. Additionally the Treasurer has demonstrated restraint in pushing recent windfall revenues from strong commodity prices through to the bottom line, reducing the deficit materially for the current year.
The economic environment surrounding the two budgets of 2022 is materially different. The narrative that deficits are acceptable in response to the extraordinary circumstances of the pandemic has been replaced with the burgeoning understanding that the budget must provide for increasingly higher interest payments to service this debt and a recognition that the unconstrained nature of budget measures introduced in past years must be addressed.
The increase in the National Disability Insurance Scheme (NDIS) payments should not be a surprise, but addressing it today will be a challenge akin to the unwinding of free tertiary education introduced in 1974 with fees being reintroduced in 1989.
The NDIS is a case study in the challenges of legislating social policy that has individual merit but unknown parameters. As noted in our 2013 newsletter when discussing the introduction of the disability scheme (when $1 billion was allocated and $10 billion pushed to some point in the future) … Perhaps DisabilityCare is an expenditure that is socially responsible but the decisions as to what we as a nation are going to forego to find this money have all been pushed into the future.
In 2018 the budget forecasted the cost at $9 billion. Today it is $35 billion and forecasted to reach $52 billion in 2032. Our view back in 2018 was as follows and this view has not changed… The NDIS is a good example of how programs can impact the budget for many years simply because of the subjective nature of the policy’s intent. It will be challenging for future Governments to curtail this expenditure because each individual example will have social merit to be funded. It is only collectively when an expenditure appears unsustainable.
The Budget papers show expenditure to cover debt repayments and the NDIS are each increasing at 14% per annum. These two figures already account for two thirds of the increase in spending pressures over the next decade. These payments must be brought under control before a government (of either side) could comfortably consider introducing new expenditure initiatives.
The Treasurer noted the need for the Government to make the difficult decisions many times but didn’t articulate any details. When you consider the politics of the 3 year Federal Government election cycle, the upcoming Budget in May 2023 becomes the best opportunity to bring bold measures that address the budget’s structural challenges.
This Budget is largely well accepted without material surprises. The priorities are consistent with what the incoming Government said they wanted to prioritise. We are likely to have to wait until May 2023 to gauge the conviction of the Albanese Government in addressing the structural deficiencies in the Budget that are highlighted in these documents. The measures provided in Tuesday’s Budget are summarised below.
- no changes to the Stage 3 tax cuts which will take effect from 1 July 2024, and
- no extension of the Low and Middle Income Tax Offset, which ended 30 June 2022.
- A commitment to the ‘Help to Buy’ scheme which will support first home buyers to buy a home with the Federal Government being a part owner, resulting in a lower balance to be funded by the individual themselves.
- A Regional First Home Buyer Guarantee from 1 October 2022 which, similar to the existing First Home Deposit Guarantee scheme, is expected to provide up to 10,000 first home buyers with a guarantee over their mortgage, removing the need for lenders mortgage insurance.
- Establishing an aged care complaints commissioner, introducing new financial reporting requirements, supporting the sector in providing better food for residential and home care recipients and establishing a national registration and code of conduct for workers.
- Capping administration and management fees in the Home Care Packages Program and abolishing exit fees.
- Requiring all facilities to have a registered nurse onsite 24 hours per day, 7 days a week from 1 July 2023 and increasing care minutes to 215 minutes per resident per day from 1 October 2024.
- Improving aged care infrastructure and services that support older First Nations people, and older Australians from diverse communities and regional areas.
- $385 million in 2023/24 in additional funding to the National Disability Insurance Agency (NDIA) for operational funding to support NDIS participants.
- $21.2 million over three years from 2022/23 for NDIS Appeals providers to support people with disability and their families with the Administrative Appeals Tribunal (AAT) appeals process.
- $18.1 million over two years from 2022/23 to review NDIS design, operations and sustainability.
- $12.4 million in 2022/23 to introduce an expert review pathway to resolve disputes arising from NDIA decisions, reduce the number of appeals to the AAT, and provide better and earlier outcomes for NDIS participants.
Advancing gender equality measures
DISCLAIMER: We suggest that you do not act on the basis of the material contained in this article because the items herein are general comments only and may be liable to misinterpretation in a particular circumstance. Also, changes in legislation sometimes occur quickly. We therefore recommend that advice be sought before acting in any of these areas.
Thank you for contacting us.
We will get back to you as soon as possible.
There was an error sending your message.
Please try again later or call 07 4613 0514.
Thank you for subscribing!
Oops. Something went wrong. Call us on 07 4613 0514
Graham Financial | Website by dms CREATiVE | Clear Pixel