May 2023 Federal Budget Summary

 

Last night the Government released their budget for 2023 2024.

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They have targeted cost of living relief, investment in Government services and claim to have alleviated inflationary pressures.  For the first time in 15 years a budget surplus has been forecast. 

High commodity prices, a strong jobs market and increasing immigration have been credited for the surplus.

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Not everyone is happy with the budget and there has been some very vocal opponents.

Adam Bandt and the Greens are rarely happy and he believes the budget has not delivered strongly enough for single parents and all the Australian who are doing it tough.  The party also suggests the surplus is unnecessary and more should have been provided to those who are struggling.  His comment that Labor’s budget is a ‘betrayal of the people’ is a little harsh for mine.

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It was even less of a surprise that Lidia Thorpe was not happy, clearly still smarting after her life ban from Maxine’s Gentlemen’s Club.  She described the housing policy as ‘shameful’.

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Economist Gigi Foster suggests it is ‘insulting to Australians’ to simply offer cash handouts for electricity and childcare because such measures are inflationary.  And she also suggests aged care workers will just spend the extra $10,000 they receive and this too will add to inflation.  I think she must be the only person in the country suggesting these low paid workers should not receive a pay rise.

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Shadow Finance Minister, Jane Hume, suggests stubbornly high inflation will be ‘the great thief in the night’ and will eat up all handouts and cost reductions.

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What I take from the budget is that, once again, it is impossible to keep everyone happy all of the time.  The budget will assist those who are really struggling amidst crippling inflation rates.  I am surprised by the surplus but we have to pay the money back one day.  Another surprise was the announcement that the stage 3 tax cuts will go ahead.  Many argue this unfairly benefits higher income earners and will also be inflationary.

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Superannuation

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Tax concession reduction on super balance over $3m

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From 1 July 2025, earnings on an individual’s total super balance of more than $3m (not proposed to be indexed) will attract an additional 15% tax.  I’ve written about this before and have no doubt we will see accountants and advisers busily determining options other than super.  Initially, I cannot see the budget saving anywhere near the amount that is claimed.  However, without indexing, this could be a big tax collect for the Government of the day in 10 or 15 years.

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Employer Superannuation payments to align with paydays

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From 1 July 2026, employers will be required to make superannuation guarantee payments at the same time as salaries and wages are paid.

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Minimum Drawdown Rates

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No further extension of the 50% reductions has been announced.  We can expect the minimum to revert back to legislated rates from 1 July 2023.

 

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Tax

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There were no announcements to any changes which means the stage 3 personal income cuts will come in from 1 July 2024.

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Social Security

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The Government proposes to increase certain social security payments by $40 per fortnight.
This includes JobSeeker, Youth Allowance, Parenting Payment, Austudy and Disability Support Pension (youth).

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Electricity Bill Relief

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From 1 July 2023 $500 electricity bill relief will be available to those who receive:

• Pensioner Concession Card

• Health Care Card 

• DVA Gold Card

• Commonwealth Seniors Health Card

• Carer Allowance

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