2022 Australian Federal Budget Summary
What you need to know now:
The Federal Budget deficit is $78 billion, better than the mid-year budget review forecast of $98.9 billion.
- The better than expected deficit is a result of record high iron ore/coal prices and a reduction in Covid stimulus/support payments.
- This is an “election budget”, with most expecting a May 14 or 21 election, many of the funding pledges are aimed at appealing to undecided voters.
- The 2021-22 budget deficit was last estimated to be $106.6 billion (5% of GDP).
- The 2020-21 budget deficit was $161 billion (7.8% of GDP).
- Gross Government debt is $817 billion, this is expected to increase to $1.2tn by 2026.
- A $250 cash payment to low income earners, fuel excise cut, mental health services, $1bn for local manufacturing, $18bn for infrastructure and a surprise LMITO increase headline the budget.
- The unemployment rate has fallen to 3.75%, the lowest since 1974.
- Anthony Albanese’s budget reply speech could be delayed due to President Zelensky addressing the Australian parliament on Thursday evening.
Why it Matters:
- The economy is front of mind for most of the electorate due to inflation and post-Covid debt.
- This is an election budget, specific announcements could have an influence on the results in certain marginal seats.
- Treasurer Josh Frydenberg is expected to be a major player in a Liberal party leadership contest if the Coalition loses the election. His record as treasurer will likely play a big part in his pitch to the party and public. Frydenberg also faces a stiff challenge in his seat of Kooyong from well funded independent Dr Monique Ryan, so any contentious budget issues will likely be politically weaponised.
The Important Announcements:
Cost of Living
- $250 cash payment to low income earners to counteract rising cost of living. It is understood that the government kept these payments to $250 to prevent further stimulating the economy and worsening inflation.
- Lowering of the fuel excise, currently set at 44.2 cents per litre to 22.1 cents per litre.
- The new home guarantee is being expanded to 50,000 places to stimulate young home ownership.
- Defence spending to comprise 2.1% of GDP.
- $9bn to cybersecurity and intelligence.
- $800 million for strategic and scientific research in Antarctica - this is seen as an investment in curbing China’s antarctic influence.
- Space Command to counter China's influence in Space.
- Large investment in mental health services. Specifically youth suicide, treatments, and new medicines. The prime minister has announced $260 million for youth mental health.
- $49.5 million to subsidise training for people who want to work in the aged care sector, funding 15,000 places in vocational education.
- $1.3bn to prevent domestic violence through emergency accommodation, access for legal and health services for women and children in need.
- JobSeeker and pension payments to 4.9 million people increased on March 20, adding an extra $2.2 billion to the budget.
- Increasing of child care subsidies.
An $18bn boost to the nation’s existing infrastructure pipeline has been announced:
$3.1 billion in new commitments to deliver the $3.6 billion Melbourne Intermodal Terminal Package (VIC), including:
$1.2 billion for the Beveridge Interstate Freight Terminal in Beveridge, taking the total investment to $1.62 billion;
$280 million for Road Connections, including Camerons Lane Interchange, to the Beveridge Interstate Freight Terminal;
$740 million for the Western Interstate Freight Terminal in Truganina; and
$920 million for the Outer Metropolitan Ring - South Rail connection to the Western Interstate Freight Terminal.
$1.6 billion for the Brisbane to the Sunshine Coast (Beerwah-Maroochydore) rail extension(QLD)
1.121 billion for the Brisbane to the Gold Coast (Kuraby – Beenleigh) faster rail upgrade(QLD)
$1 billion for the Sydney to Newcastle – (Tuggerah to Wyong) faster rail upgrade (NSW)
$678 million for Outback Way (NT, WA, QLD)
$336 million for the Pacific Highway - Wyong Town Centre (NSW)
$336 million for the Tasmanian Roads Package – Northern Roads Package – Stage 2 (TAS)
$200 million for the Marion Road – Anzac Highway to Cross Road (SA)
$145 million for the Thomas Road – Dual Carriageway – South Western Highway to Tonkin Highway and interchange at Tonkin Highway (WA)
$140 million for Regional Road Safety upgrades (WA)
$132 million for Central Australian Tourism Roads (NT)
$120 million for the Adelaide Hills Productivity and Road Safety Package (SA)
$46.7 million towards the Athllon Drive Duplication (ACT)
$2.264 billion for the North South Corridor - Torrens to Darlington (SA)
$352 million for the Milton Ulladulla Bypass (NSW)
$320 million for the Bunbury Outer Ring Road (Stages 2 and 3) (WA)
$200 million for the Tonkin Highway Stage 3 Extension (WA)
$45 million for the Ballarat to Ouyen – Future Priorities (VIC)
$68.5 million for the Cooktown to Weipa Corridor Upgrade bringing the total Australian Government funding to the corridor to $258.5 million (QLD)
- $1 billion in local manufacturing.
- $15 million for a new battery in Broken Hill, to improve energy security in regional NSW.
- $5000 payment for new apprentices
- Low and Middle Income Tax Offset (LMITO). The LMITO was introduced by Scott Morrison in his last budget as treasurer, offering a $1,080 tax refund to low to medium income earners. The LMITO was only meant to last one year, but has been extended for the previous two. In a surprise, the Coalition has increased the LMITO to $1,500, benefiting those making under $126,000 per year. Some had speculated that the Coalition would remove the LMITO in favour of bringing forward stage 3 tax cuts.
Watch the Treasurer's Full Speech:
- If Labor forms government at the upcoming election, shadow Treasurer Jim Chalmers has vowed to hold a second budget later in the year to correct a “decade of rorts and waste”.
- It is unclear what Labor plans to put in this second budget, and they are intentionally entering this election without large policy announcements. This small target strategy is proving successful so far.
- More clarity will come in Anthony Albanese's budget reply speech, on Thursday the 31st of March.
A number of Labor MPs (Penny Wong, Kristina Keneally, Clare O'Neil, Terri Butler) have circulated this image today, summing up their coordinated response:
The Long Term State of the Budget:
How this years expected $78 billion deficit stacks up:
How this year's gross government debt stacks up: