What to expect in tonight’s Federal Budget 2022-23

What to expect in tonight’s Federal Budget 2022-23 150 150 Hugh Goodfellow

The 21-22 Federal Budget saw Treasurer Josh Frydenberg prepared to spend and declare that Australia was “coming back” after the pandemic. With 2022 an election year, what can we expect when the Treasurer addresses Australians from 7:30pm AEDT on the 29th of March?

It’s all about “cost of living”

The budget is set to again be dominated by a “C”, however this time it is the “cost of living”. With inflation rising faster than wages, the government will be keen to assure voters that they can provide relief, especially with an election due to be called in the coming weeks.

Barnaby Joyce, however, was yesterday keen to stress that the Government “can’t cure everything” placing blame for rising food and fuel prices with Putin but it is still expected that this budget is consumed by short term aims with any key reform put on hold until next year.

Expect the following to be addressed…

Labor will labour the point that wages are not keeping pace with inflation. This is likely to put pressure on the government to curb its spending, despite a better than forecast year for the Government’s books, due to the need to address cost of living pressures.

The Treasurer highlighted in his pre-budget speech that this will be done in a targeted and proportionate way – likely to come through a one-off payment deposited before the May election, along with an extension of the low-medium income tax offset for one more financial year.

Fuel prices will also be on the agenda with a potential cut to the fuel excise, however there are concerns that this will not pass on to Australian consumers due to Australia being a “price-taker”.

Housing affordability is also likely to take centre stage. With 45.8% of family income required to meet mortgage repayments, and housing affordability the worst it has been since 2008 the government is being lobbied to act with a national plan. Previous policy has been focused on adding demand, especially for first-home buyers so now eyes will be looking at how housing supply can address this affordability.

After last year’s record aged care budget of almost $18 billion over five years, the 2022-23 Federal Budget is not expected to top these figures. However, the Government will look to address key workforce issues. As Covid-19 continues to put pressure on front line aged care workers, funding may be given to front line workers to ensure they do not leave the industry. Further investment in training and workforce opportunities to help build a sustainable sector is also top of the list for many.

With investments in new and existing infrastructure projects in every state and territory, the Government’s national rolling 10-year infrastructure investment pipeline will increase from $110 billion to over $120 billion. This aligns with the government’s plan for a stronger future, with an emphasis being placed on investing in projects that create jobs and drive economic growth in order to sure up the books in the future.

It is an election year so the government’s top priority is likely to be encouraging economic growth and addressing short term issues, this means that Australian’s are unlikely to see any key reform that would have long term impacts on structural issues in the Australian economy.

With the budget likely to lack key reform it is unlikely clients will be directly affected come Wednesday morning. Viridian would encourage clients to look back on changes to superannuation that were announced last budget that have now been legislated as they may impact retirement planning. This includes repealing the work test for voluntary non-concessional and salary sacrificed superannuation contributions for those aged 67 to 74 and extending access to downsizer contributions. You can read more about those changes from Executive Advisor Jason King here.

We look forward to bringing you key insights on the 2022-23 Federal Budget from the Viridian community through our Federal Budget Hub.

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