Treasurer Josh Frydenberg has made an election pitch focused on cost of living, jobs and big picture investments in infrastructure and defence as he set the stage for an economic debate that will last until the May federal election.
A cost of living package will be delivered through the Morrison government’s budget in an effort to soothe voters’ back pocket pain, just weeks out from the political contest.
Treasury predicts a strong economic outlook will see unemployment fall to its lowest levels since 1974.
But the shadow of rising inflation continues to loom large as Russia’s invasion of Ukraine and COVID-19 continue to pose risks and create global uncertainty.
Mr Frydenberg’s budget was forced to walk a fine line between splashing cash to addressing immediate pressures and stabilising mounting debt during the COVID-19 pandemic.
The budget shows the deficit in 2022-23 is expected to be $78 billion – the forecast some $20.9 billion better than Treasury’s most recent pre-Christmas update.
Mr Frydenberg’s speech set the stage for the coming federal election campaign, emphasising action on rising expenses, jobs and investments in infrastructure and defence.
"This is a time to stick to our plan," he said in his speech to parliament.
"A plan for a strong economy and a stronger future."
A temporary boom in commodity prices has also helped bolster the budget bottom line, with net debt to reach $864.7 billion in 2025-26, well down from a previous forecast of $980.6 billion in 2024-25.
Part of the cost of living relief in the federal budget is cutting the fuel excise in half.
Cost of living relief
The Coalition delivered a cost of living package described as "temporary and targeted" in the budget, aimed at easing pressures from high fuel and rising food costs.
This will include extending a one-off $420 tax offset to more than 10 million low- and middle-income earners.
It means those eligible will receive up to $1,500 and couples up to $3,000 from 1 July this year - an increase from current rates.
Another move will see a fuel excise tax cut in half to save people 22 cents a litre every time they fill up at the petrol bowser from midnight tonight.
Treasury estimates the average benefit would be around $300 to households with at least one vehicle.
The government has also announced a cost of living payment valued at $250 to be delivered within weeks to six million welfare recipients.
Those eligible will include pensioners, carers, veterans, jobseekers, eligible self-funded retirees and concession card holders.
Jobs and wages
The budget bottom line has been helped by the falling jobless rate – currently at four per cent – with Treasury predicting this will fall further to 3.75 per cent in the September quarter.
The strong result is expected to see sluggish wage growth - that has persistently trailed rising inflation - increase from 2.75 per cent in 2021-22 to 3.75 per cent in 2022-23.
But Treasury has also warned “significant uncertainty” remains around the pace of wages growth in a caution against people banking on the improvement.
Labor's Treasury spokesperson Jim Chalmers said families were falling behind under the Coalition’s economic management because of static wage growth.
"We won't stand in the way of cost of living relief for people who are dealing with those falling real wages," he said.
"But nothing in this budget makes up for almost a decade now of attacks on people's wages [and] job security."
The budget will include a new $2.8 billion investment in trade apprenticeships, involving $5,000 payments to apprentices and $15,000 wage subsidies for employers.
Another $3.7 billion focused on national skills reform will also support 800,000 training places.
Aged care, mental health and the NDIS
Last year’s budget delivered billion-dollar spending promises to key sectors like aged care, mental health and the National Disability Insurance Scheme.
But with this spending now built into budget forecasts, further promises have appeared to be more restrained this time around.
A further $468.3 million has been delivered towards continuing to implement the government’s response to the Royal Commission into Aged Care Quality and Safety.
The budget also includes $547 million over five years for targeted mental health initiatives, including for young Australians, Aboriginal and Torres Strait Islander people and multicultural communities.
The National Disability Insurance Scheme has seen a boost to funding over the long term as it attempts to support some 500,000 people on the program.
Some $33.9 billion will be invested in 2022-23 - a 4.9 per cent increase from the previous year.
Paid Parental Leave
Mr Frydenberg has also announced changes to Paid Parental Leave to expand eligibility for the scheme, with single parents now able to access the full 20 weeks.
This would amount to an additional two weeks of Paid Parental Leave.
The decision sees the government invest $346.1 million over 5 years, including through expanding the income test to include a threshold of $350,000.
Changes also mean partners would be able to access the government’s program at the same time as employer-funded leave allowance.
Women
In a sign of the government’s awareness of the need to show action towards addressing issues focused on women ahead of the election – a series of pledges have also been made.
The budget points to a $1.3 billion package aimed at responding to domestic violence, including for frontline services, emergency accommodation and support to access legal and health services.
A further $330.6 million also goes towards a women’s health package, including addressing the diagnosis of endometriosis, as well as still birth and miscarriage support.
National security and infrastructure
Making defence spending a centrepiece of its election pitch against the backdrop of rising geopolitical tensions, the government has also pointed to a 10-year plan investing $270 billion.
This includes a new announcement investing $9.9 billion in Australia’s offensive and defensive cyber capabilities.
The defence force is also seeking to increase by 18,500 personnel by 2040 at a cost of $38 billion, taking the total number to nearly 80,000 personnel.
The budget also includes $17.9 billion in spending on infrastructure, focused on road and railway projects.
But it’s not immediately clear how the government intends to overcome the workforce challenges posed by turning these pledges into a reality.
Migration and humanitarian visas
Net overseas migration to Australia is estimated to reach 180,000 this financial year in the wake of being rocked by the COVID-19 international border closure.
The pandemic had seen these levels fall into the negative for the first time since after World War II.
Migration is forecast to climb from negative 89,900 people in 2020-21 to 41,000 people in 2021-22, before reaching 180,000 in 2022-23 and 235,000 by 2024-25.
Before the pandemic, net overseas migration had been around 190,000 people in 2019-20.
The government will maintain the Humanitarian Program at 13,750 places in 2022-23 and over the forward estimates, which will remain a ceiling for the program.
But in a significant decision, this will include an additional 16,500 humanitarian places for Afghan nationals across the four years from 2022-23.
It takes the total number of places available to Afghans across the humanitarian and family stream to some 31,500 over the next four years.
