Federal Budget 2022 - 2023

HIGHLIGHTS FOR BUSINESS

Support for business

• Flood relief: $3 billion in the contingency reserve to meet the disaster recovery costs from the flooding events this year. Funding will go towards government payments to individuals and help support state efforts to alleviate the immediate hardship being experienced by communities and businesses.
• Natural disaster resilience: $200 million per year nationwide on prevention and resilience initiatives through the Disaster Ready Fund. The Fund will support projects such as flood levees, sea walls, cyclone shelters, evacuation centres and fire breaks.
• Disaster insurance: $22.6 million over 4 years to help reduce the cost of insurance in disaster prone communities. This funding will be used to establish partnerships between government and the insurance sector.
• Sovereign Manufacturing: National Reconstruction Fund to provide $15 billion of capital to transform and strengthen priority industries. This investment will support employment growth, drive regional development and help build a future made in Australia.
• The National Reconstruction Fund will provide loans, guarantees and equity, partnering with the private sector to unlock further investment. It will invest in 7 priority sectors focusing on opportunities to add value to primary products and leverage Australia’s natural and competitive strengths.
• Small business counselling: $15.1 million to extend the tailored small business mental health and financial counselling programs, NewAccess for Small Business Owners and the Small Business Debt Helpline.
• Food innovation in NSW: $17.2 million for a pilot Food Manufacturing Innovation Hub in New South Wales.

Tax

• Tax reform is not a feature of the first Chalmers Budget – major changes have been left for the longer term.
• A 4.7 billion crackdown on tax avoidance over four years includes $3.7 billion from an extension of the Australian Tax Office’s tax avoidance and black economy taskforce and improved personal income tax compliance.
• The 20 per cent tax deduction for small businesses to improve their employees skills and take up new technology has been retained – a welcome win for businesses seeking to improve productivity through digital upgrades in the face of tight labour market conditions.
• The instant asset write for small and medium sized businesses is retained for now but is set to expire at the end of the financial year.  The final year of the Temporary Expensing policy underscores the need for a greater focus on supporting private sector investment.
• The much debated “Stage 3” personal tax cuts remain for now with a 30 per cent tax rate to replace the current 32 per cent, abolition of the 37 per cent tax bracket entirely and an increase of the 42 per cent tax threshold from $180,000 to $200,000.

Infrastructure

• Improving NBN connectivity: $2.4 billion to improve NBN connections to 1.5 million homes with full fibre provision (330,000 of which are in NSW).
• NSW high speed rail: $500 million for corridor acquisition, planning and early works on high-speed rail between Sydney and Newcastle
• NSW transport infrastructure: $300 million for the Western Sydney Roads Package $500 million nationally to help reduce transport emissions, including electric vehicle charging infrastructure at 117 highway sites and hydrogen highways for key freight routes. $268.8 million for the New England Highway – Muswellbrook Bypass and $110.0 million for the Epping Bridge
• NSW dams deferred: Deferral of Dungowan and Wyangala dam projects until business cases completed
• Electric vehicle incentives: To cut taxes on electric cars and encourage their uptake, the $345 million Electric Car Discount will exempt eligible electric cars from fringe benefits tax (FBT) and the 5 per cent import tariff. For an electric car valued at about $50,000, the FBT exemption would save an employer up to $9,000 a year or, for an individual using a salary sacrifice arrangement, their saving would be up to $4,700 a year. Removing customs duties will also help the purchaser save up to an additional $2,500 if the car was previously subject to an import tariff.

Housing

• New Housing Accord: Creation of a new accord between government, industry and investors (including the superannuation sector) to deliver one million new houses over the 5 years from 2024.
• Housing funding: $350 million over 5 years to deliver 10,000 affordable dwellings at an energy efficiency rating of 7 stars or greater (or a state or territory’s minimum standard). This commitment is in addition to the 30,000 new social and affordable dwellings delivered through the Housing Australia Future Fund.

Energy

• Rewiring the Nation: $20.0 billion in funding to provide concessional loans and equity to invest in transmission infrastructure projects that will help strengthen, grow and transition Australia’s electricity grids (no NSW projects specified – initial announced projects are Victoria Renewable Energy Zones and Marinus Link connecting VIC to TAS)
• SME energy efficiency: $62.6 million to support small and medium-sized businesses in improving their energy efficiency and reducing energy use.
• No action on gas prices, yet: Dr Chalmers signposted potential future interventions on gas prices but nothing specific is included in this budget.

Jobs and skills

• Fee Free TAFE places: The Government will provide $921.7 million over 5 years from 2022–23 to strengthen Australia’s Vocational Education and Training system and address skills shortages. Funding includes:
  • $871.7 million over 5 years from 2022–23 to provide 480,000 fee-free Technical and Further Education (TAFE) and vocational education places in industries and regions with skills shortages. Around 180,000 fee-free TAFE and vocational education places will be delivered in 2023 in areas of highest skills need as part of a one-year National Skills Agreement with the states and territories commencing 1 January 2023.
  • $50.0 million over two years from 2022–23 to establish a TAFE Technology Fund to modernise IT infrastructure, workshops, laboratories, telehealth simulators, and other facilities at TAFEs across Australia.
• Australian Skills Guarantee: The Government will undertake the initial design and implementation of the Australian Skills Guarantee, in consultation with stakeholders, to ensure that one in ten workers on a major Commonwealth funded project is an apprentice, trainee or a paid cadet, with sub-targets for women.
• Cessation of PaTH and National Work Experience Programme: The Government will achieve savings of $50.0 million over 4 years from 2022–23 by ceasing work experience and internships programs under Workforce Australia. Savings include: $27.9 million over 4 years from 2022–23 by ceasing the Youth Jobs PaTH internships and $22.1 million over 4 years from 2022–23 by ceasing the National Work Experience Program.
• Increased migration: As announced at the Jobs and Skills Summit, the Government will increase the 2022–23 permanent Migration Program planning level from 160,000 to 195,000. Priority will be given to offshore applicants and on-hand applications for the Skilled Independent visa – New Zealand stream.
• Visa processing: $42.2 million over two years from 2022–23 for the Department of Home Affairs to increase visa processing capacity and raise awareness of opportunities for high-skilled migrants in Australia’s permanent Migration Program
• Productivity, Education and Training Fund: $8.9 million over 3 years from 2023–24 to establish a Productivity, Education and Training Fund to support employer and union representatives to improve safety, fairness and productivity in workplaces.
• Fair Work Commission: $7.9 million over 4 years from 2022–23 for the Fair Work Commission to support the uptake of enterprise bargaining for small businesses
• Carer Friendly Workplace Framework: $2.0 million over 3 years from 2022–23 to develop a Carer Friendly Workplace Framework to assist employers to develop and adopt practices to support employees with caring responsibilities to enter and remain in the workforce
• Student visa holders: extended the relaxation of work restrictions for student visa holders and secondary training visa holders until 30 June 2023.
• Additional University places: $485.5 million over 4 years from 2022–23 (and $563.8 million over 11 years) for 20,000 additional Commonwealth supported places at universities and other higher education providers commencing in 2023 and 2024. These places are dedicated to students under-represented in higher education, including First Nations peoples, those who are the first in their family to study at university, and students from rural and remote Australia. The places are for courses in areas of skills shortage, including teaching, nursing and engineering.
• Pacific Australia Labour Mobility scheme: The Government will provide $67.5 million over 4 years from 2022–23 (and $12.4 million per year ongoing from 2025–26) to expand and enhance the Pacific Australia Labour Mobility (PALM) scheme, including scaling up the aged care training pathway with an additional 500 places in 2022–23.

Support for the workforce

• Aged Pension: 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.
• Paid Parental Leave: The Government will introduce reforms from 1 July 2023 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. 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.
• New Energy Apprenticeships: The Government will provide $95.6 million over 9 years from 2022–23 to support 10,000 people to complete a New Energy Apprenticeship. Eligible apprentices will be able to claim a New Energy Apprentice Support Payment of up to $10,000 over the duration of the apprenticeship, comprising $2,000 on commencement, $2,000 per year for up to 3 years, and $2,000 on completion.
• New Energy Skills Program: The Government will provide $9.6 million over 5 years from 2022–23 to support Australia’s workforce to transition to a clean energy economy. This funding will support a new mentoring program to help train and support new energy apprentices, the development of fit-for-purpose training pathways, and a capacity study by Jobs and Skills Australia to evaluate Australia’s workforce needs to transition to a clean energy economy.
• Cheaper child care: The Government will provide $4.7 billion over 4 years from 2022–23 (and $1.7 billion per year ongoing) to deliver cheaper child care, including increasing the maximum Child Care Subsidy rate from 85 per cent to 90 per cent.