Federal Budget 2022-23: Pre-election pitch

29 March 2022

Handing down his fourth budget, and third during the COVID-19 pandemic, Treasurer Josh Frydenberg declared that Australia has overcome “the biggest economic shock since the Great Depression”. As we head towards a May Federal Election, commentators have described this Budget as a pre-election pitch against the backdrop of rising uncertainty.

The Treasurer indicated that, with more Australians in work and fewer on welfare, the unemployment rate is at four per cent – its equal lowest in 48 years. Mr Frydenberg went on to suggest that this Budget will see the rate go “even lower” by delivering more jobs and higher wages.

Mr Frydenberg also revealed that while the expected deficit for 2022‑23 of $78 billion is 3.4 per cent of GDP, this will reduce to 1.6 per cent over the next three years. He indicated that at 30 June 2026, net debt as a share of the economy will peak at 33.1 per cent – significantly lower than forecast last year.

Providing much-anticipated relief to address increasing cost of living expenses, Mr Frydenberg has announced a series of “temporary, targeted and responsible” measures, including a one‑off $420 tax offset for low‑and‑middle income earners in addition to a one‑off $250 payment for job seekers and concession card holders. In addition, Mr Frydenberg confirmed the fuel excise will be halved for six months, seeing savings of 22 cents per litre at a cost of $12 billion in 2022-23.

Building on previous Budget measures to support women’s safety and health, this year’s Budget includes a $1.3 billion package aimed at preventing violence against women and children, as well as an expansion of eligibility for Paid Parental Leave.

The Budget also aims to provide young Australians with secure skilled jobs, investing $2.8 billion to increase take-up and completion rates of apprenticeships through $5,000 payments to new apprentices and up to $15,000 for employers in wage subsidies. The Budget also includes an additional 8,000 training places as part of its $3.7 billion national skills reform package.

The Treasurer also announced incentives to small business to invest in skills and new technologies through a $120 tax deduction for every $100 spent on employee training. It will also provide similar deductions for investments in digital technologies, including cloud computing, eInvoicing, cyber security and web design.

As announced on Monday, the Budget confirms the doubling of the Home Guarantee Scheme to 50,000 places annually. Additionally, $2 billion has been allocated to affordable housing through the National Housing Finance and Investment Corporation.

Noting that the global COVID-19 pandemic is not yet over and with the ongoing war in Ukraine serving as a backdrop to this Budget, Mr Frydenberg referenced these uncertainties as “a powerful reminder that we must increase our self‑reliance”. Reflecting this statement, the Treasurer announced funding for vulnerabilities in Australia’s supply chain and funding for new manufacturing initiatives, such as the recently-announced Victorian mRNA vaccine manufacturing facility.

Infrastructure spending continues to be a focus of the Government, with this Budget increasing the 10-year infrastructure investment pipeline from $110 billion to $120 billion. Significant projects funded include $3.1 billion for the Melbourne Intermodal Terminal Package in Victoria and $2.26 billion for the North South Corridor in SA.

The Budget also includes infrastructure investment in regional Australia, including a new $7.4 billion investment in dams and water projects to improve water security and irrigation, and a $2 billion regional accelerator program to invest in skills, education infrastructure, export market development and supply chain resilience for our regions.

Health, including mental health, also received additional funding, including cheaper medicines for 2.4 million Australians and more Headspace services, community‑based treatment centres and digital mental health support.

Highlighting the need to ensure our nation is strong and secure, Mr Frydenberg announced a $38 billion expansion to increase the size of the Defence workforce. Also announced was a $9.9 billion investment over ten years in Australia’s offensive and defensive cyber capabilities.

For further information on key portfolio measures, please refer to GRACosway’s detailed briefings:

Key Parameters 2022-23:

Underlying cash deficit of $78 billion
$714.9 billion in net debt, equal to 31.1 per cent of GDP
Real GDP forecast to grow by 3.5 per cent
Inflation forecast to moderate to 3 per cent, down from 4.25 per cent in the current financial year
$508.4 billion in total tax receipts

Further Reading: