2022 October Budget Summary
Introduction
Against a backdrop of uncontrollable global turmoil – from a pandemic to natural disasters, war, an energy crisis and inflationary pressure - it’s clear the Federal Government has put the focus on everyday Australians in this budget. Treasurer Jim Chalmers outlined his five-point plan to ease the cost of living – cheaper childcare, paid parental leave, cheaper medicine, housing affordability and wage growth.
Business
Establishment of the National Reconstruction Fund
The Government has announced the establishment of a National Reconstruction Fund (NRF), which will see the allocation of $15 billion to partner with the private sector, to support investments capable of growing the economy and increasing employment, with a focus on regional development. Funds will be delivered under the expectation of receiving a return to cover borrowing costs – that is, it will be provided in the form of loans, guarantees and equity.
Key sectors that will benefit from the NRF include: Resources, Agriculture, Transport, Medical science, renewables/low-emission technologies and Defense
Intangible depreciating assets
The Government has decided to reverse the previously announced measures that allowed taxpayers to self-assess the effective life of intangible depreciating assets. This unwinds the Morrison Government’s intentions for the Digital Economy Strategy announced in the previous Budget in March 2022.
The superseded measures (which were due to commence with assets acquired from 1 July 2023) would have allowed business operators to self-assess the effective life of intangible depreciating assets in calculating their annual depreciation. This would have applied to patents, registered designs, copyrights, and in-house software. The Government states this reversal will increase receipts by $500 million over the four years from 2022-23.
Fringe Benefits Tax Exemption for Electric Vehicles
This measure has been previously announced. Legislation has already been introduced to Parliament and is currently before the Senate and scheduled for debate on Wednesday 26 October 2022.
The FBT exemption will apply to battery, hydrogen fuel cell and plug-in hybrid electric cars that are below the luxury car tax threshold for fuel-efficient cars (being $84,916 for the 2022-23 financial year) and first held and used from 1 July 2022.
The exempt electric car fringe benefits will be subject to the Reportable Fringe Benefits regime, and accordingly, will be reported on an employee’s annual PAYG Payment Summary.
Small Business Debt Helpline
An additional $15.1 million, over two calendar years, from 1 January 2023 will be provided to extend the Small Business Debt Helpline and the NewAccess for Small Business Owners program. The helpline and NewAccess programs were introduced to support the financial and mental well-being of small business owners.
The Small Business Debt Helpline is a free service offered to small business owners in financial difficulty, allowing them to speak confidentially to qualified financial counsellors.
Extend ATO Compliance Programs – Shadow Economy Program & Tax Avoidance Taskforce
The Government will extend the existing ATO Shadow Economy Program for a further 3 years from 1 July 2023. The extension of the Shadow Economy Program will enable the ATO to continue a strong and coordinated response to target shadow economy activity, protect revenue and level the playing field for those businesses that are following the rules.
The Government has boosted funding for the ATO Tax Avoidance Taskforce by around $200 million per year over 4 years from 1 July 2022, in addition to extending this Taskforce for a further year from 1 July 2025. The boosting and extension of the Tax Avoidance Taskforce will support the ATO to pursue new priority areas of observed business tax risks, complementing the ongoing focus on multinational enterprises and large public and private businesses.
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 throughout the apprenticeship, comprising $2,000 on commencement, $2,000 per year for up to 3 years, and $2,000 on completion. Additional in-training support places will be made available for all New Energy Apprentices, with extra support for targeted groups including First Nations peoples, mature-age apprentices, regional and remote Australians, and people from culturally and linguistically diverse backgrounds. This measure complements existing investment to support women in trades.
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.
Secure Australian Jobs
The Government will provide $43.2 million over 4 years from 2022–23 (and $11.1 million per year ongoing) to update workplace laws to get wages moving, boost job security, address gender inequity and create more opportunities for Australians.
Funding includes:
$20.2 million over 4 years from 2022–23 (and $5.3 million per year ongoing) for the Fair Work Commission to establish the Pay Equity and Care and Community Sector expert panels, and a specialised research unit
$15.1 million over 4 years from 2022–23 (and $3.8 million per year ongoing) to include an explicit prohibition on sexual harassment in the Fair Work Act 2009
$7.9 million over 4 years from 2022–23 (and $1.9 million per year ongoing) to implement changes to the small claims process in the Fair Work Act 2009.
The Government will also:
Automatically sunset agreement-related instruments made before the commencement of the Fair Work Act 2009 and during the ‘bridging period’ (1 July to 31 December 2009), commonly referred to as ‘zombie agreements’, to ensure employees can access entitlements available under modern awards.
Remove unnecessary complexity and make the Better off Overall Test simple, flexible and fair by streamlining the enterprise agreement approval process and consideration by the Fair Work Commission of whether an employee is better off under the proposed award.
Increase the capacity of the Fair Work Commission to proactively help workers and businesses reach agreements by reducing the level of disputation required to access arbitration.
Retirees
Superannuation – expanding eligibility for downsizer contributions (previously announced)
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. The measure will have effect from the start of the first quarter after Royal Assent of the enabling legislation.
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.
Incentivising Pensioners to Downsize
The Government will provide $73.2 million over 4 years from 2022–23 (and $0.4 million per year ongoing), including:
extending the assets test exemption for principal home sale proceeds from 12 months to 24 months for income support recipients
changing the income test, to apply only the lower deeming rate (0.25 per cent) to principal home sale proceeds when calculating deemed income for 24 months after the sale of the principal home.
This measure will reduce the financial impact on pensioners looking to downsize their homes to minimise the burden on older Australians and free up housing stock for younger families.
Plan for Cheaper Medicines
The Government will provide $787.1 million over 4 years from 2022–23 (and $233.4 million per year ongoing) to decrease the general patient co-payment for treatments on the Pharmaceutical Benefits Scheme from $42.50 to $30.00 on 1 January 2023.
Incentivise pensioners into the workforce
The Government will provide $61.9 million over two years from 2022–23 to provide aged and veteran pensioners a one-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.
Lifting the Income Threshold for the Commonwealth Seniors Health Card
The Government will provide $69.6 million over 4 years from 2022–23 to increase the income threshold for the Commonwealth Seniors Health Card from $61,284 to $90,000 for singles and $98,054 to $144,000 (combined) for couples.
The Government will also freeze social security deeming rates at their current levels for a further two years until 30 June 2024, to support older Australians who rely on income from deemed financial investments, as well as the pension, to deal with the rising cost of living.
Housing
The Government has announced a Housing Accord with a target to build one million homes in five years commencing from 2024-25. It has outlined three key measures it believes will assist to provide more affordable housing.
The Australian Government will provide $350.0 million over 5 years from 2024–25 to support funding of an additional 10,000 affordable homes under a Housing Accord with state and territory governments and other key stakeholders.
The Commonwealth support will include availability payments over the longer term to facilitate institutional investment, including by superannuation funds, in affordable homes.
This measure complements the Government’s investment in the Housing Australia Future Fund, which will provide a further 30,000 social and affordable homes over 5 years.
Safer and More Affordable Housing
The Government will invest $10 billion in the newly created Housing Australia Future Fund, to be managed by the Future Fund Management Agency, to generate returns to fund the delivery of 30,000 social and affordable homes over 5 years and allocate $330 million for acute housing needs.
In the first 5 years these investment returns will fund:
$200 million for the repair, maintenance and improvements of housing in remote Indigenous communities, where some of the worst housing standards in the world are endured by our First Nations people
$100 million for crisis and transitional housing options for women and children fleeing domestic and family violence and older women on low incomes who are at risk of homelessness
$30 million to build more housing and fund specialist services for veterans who are experiencing homelessness or are at risk of homelessness.
The Government remains committed to ensuring that of the $10 billion fund, the returns from $1.6 billion will be directed to long-term housing for women and children fleeing domestic and family violence, and older women on low incomes who are at risk of homelessness.
In addition, the Government will provide $348.6 million over 4 years from 2022–23 for several further initiatives to deliver more social and affordable housing. Funding includes:
$324.6 million over 4 years from 2022–23 to establish the Help to Buy scheme to assist people on low to moderate incomes to purchase a new or existing home with an equity contribution from the Government
$15.2 million over 4 years from 2022–23 (and $4.4 million per year ongoing) to establish a National Housing Supply and Affordability Council to support the Australian Government to develop housing supply and affordability policy through research and advice
$0.5 million over 4 years from 2022–23 (and $0.1 million per year ongoing) to establish Housing Australia, by renaming and expanding the remit of the National Housing Finance and Investment Corporation, to deliver the Australian Government’s social and affordable housing programs
$8.3 million over 4 years from 2022–23 to the Treasury and Housing Australia to administer the Housing Australia Future Fund.
The Government will also:
establish the Regional First Home Buyers Guarantee to support eligible citizens and permanent residents who have lived in a regional location for more than 12 months to purchase their first home in that location with a minimum 5 per cent deposit, with 10,000 places per year to 30 June 2026, by redirecting funding from the Regional Home Guarantee component of the 2022–23 March Budget measure titled Affordable Housing and Home Ownership, with no financial impact
broaden the remit of the National Housing Infrastructure Facility to directly support new social and affordable housing in addition to financing critical housing infrastructure, with no financial impact, as announced at the Jobs and Skills Summit.
Aged Care
COVID-19 Package – aged care
The Government will provide additional funding of $845.4 million in 2022–23 to support older Australians and the aged care sector with managing the impacts of the COVID-19 pandemic. Funding will support:
claims made by aged care providers for additional costs incurred due to COVID-19 outbreaks that occur until 31 December 2022
extending the current in-reach testing arrangements in Residential Aged Care Facilities to 31 December 2022
extend the operation of the Victorian Aged Care Response Centre to enable the continued support of residential aged care facilities to manage COVID-19 outbreaks in Victoria during Winter 2022.
Fixing the Aged Care Crisis
The Government will provide $2.5 billion over 4 years from 2022–23 to reform the aged care system.
Funding will support:
the quality of care in residential aged care facilities by 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
aged care infrastructure and services that provide additional support to older First Nations peoples, and older Australians from diverse communities and regional areas
establishing the Aged Care Complaints Commissioner within the Aged Care Quality and Safety Commission
financial transparency through the introduction of new financial reporting requirements for residential aged care providers
providing better food for residential aged care and home care recipients
establishment of a national registration scheme and code of conduct for personal care workers in the aged care sector.
The Government will also:
improve continuity of care by requiring aged care providers to preference direct employment for their staff
improve governance in the aged care sector by strengthening the regulation of aged care providers
cap administration and management fees charged by providers in the Home Care Packages Program.
Implementing Aged Care Reform
The Government will provide $540.3 million over 4 years from 2022–23 to improve the delivery of aged care services and respond to the Final Report of the Royal Commission into Aged Care Quality and Safety.
Funding supports:
essential aged care information and communication technologies system maintenance and enhancements, and to enable aged care sector reform
extending and expanding the Regional Stewardship of the Aged Care outreach model to strengthen governance and to support the implementation of aged care reforms in regional areas
extending the Disability Support for Older Australians Program to 31 December 2023
expanding eligibility for the Australian National Aged Care Classification Transition Fund by including the Basic Daily Fee supplement in the calculation that determines the amount of financial support for facilities
establishing the Inspector-General of Aged Care and the Office of the Inspector-General of Aged Care as a Statutory Agency
implementation of the Support at Home Program from July 2024.
The Government will also extend existing grant arrangements for the Commonwealth Home Support Programme for a further 12 months to 30 June 2024 to reflect the new start date of 1 July 2024 for the Support at Home Program.
Families
Child Care funding
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, easing the cost of living for families and reducing barriers to greater workforce participation. This includes $4.6 billion over 4 years from 2022–23 to:
increase the maximum Child Care Subsidy (CCS) rate from 85 per cent to 90 per cent for families with the first child in care and increase the CCS rate for all families earning less than $530,000 in household income
maintain current higher CCS rates for families with multiple children aged 5 or under in child care, with higher CCS rates to cease 26 weeks after the older child’s last session of care, or when the child turns 6 years old
task the Australian Competition and Consumer Commission to undertake a 12-month inquiry into the cost of child care and the Productivity Commission to conduct a comprehensive review of the childcare sector
improve the transparency of the childcare sector by requiring large providers to publicly report CCS-related revenue and profits.
The Government will also provide $43.9 million over 4 years from 2022–23 for measures that support the National Agreement on Closing the Gap targets and improve early childhood outcomes for First Nations children. Funding includes:
$33.7 million over 4 years from 2022–23 to introduce 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
$10.2 million over 3 years from 2022–23 to establish the Early Childhood Care and Development Policy Partnership with Coalition of Peaks partners and First Nations representatives to develop policies on First Nations early childhood education and care.
The Government will also provide $9.5 million over two years from 2022–23 to communicate the changes to the CCS system to families and childcare providers.
Parental Leave
The Government will enhance economic security, improve gender equality, and enhance and provide more flexibility for shared care arrangements at a cost to the budget of $531.6 million over 4 years from 2022–23 (and $619.3 million per year ongoing).
The Government will introduce reforms from 1 July 2023 to make the Paid Parental Leave Scheme flexible for families so that either parent can 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.
Both parents will be able to share the leave entitlement, with a proportion maintained on a “use it or lose it” basis, to encourage and facilitate 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.
Summary
The October 2022 budget is focused on easing the cost of living for everyday Australians. It is a conservative budget and does not include any major changes. However, for families, retirees and the aged there are some favorable outcomes.
From all of us at Luka Group, we hope our summary has assisted you in understanding the budget and how it may impact your circumstances.