On 9 May 2023 Treasurer Jim Chalmers handed down the 2023-24 Federal Budget aimed at addressing challenging headwinds including higher interest rates, inflation and cost of living pressures. A modest surplus of $4.2 billion – the first surplus in 15 years – is a welcome surprise built on tailwinds: favourable commodity prices, a strong labour market and higher migration in the short-term.
The long-term forecast position looks promising. Savings on interest costs and the NDIS are anticipated to help to improve the structural budget position over the next decade. Gross debt is estimated to peak 10.4 percentage points lower, and five years earlier compared to the October Budget.
The 2023-24 Budget includes a substantial improvement in the Federal Government’s fiscal position from the October Budget, largely due to much higher personal income tax and company tax receipts than previously assumed.
In summary, the key announcements were:
Assistance with cost of living: $14.6 billion package includes a range of payments for low- and middle-income families including energy bill savings, cheaper medicines, modest increases to JobSeeker and rent assistance
Dedicated women’s budget statement: Explores factors influencing women’s economic equality and outlines key measures to advance gender equality in Australia – focusing on achieving economic equality, ending violence against women, increasing women’s representation in leadership and decision-making and improving women’s health and wellbeing
Significant funds towards the climate transition: More funding was allocated towards climate action than originally expected. This includes $2.0 billion for the establishment of a new Hydrogen Headstart program and $1.3 billion in funding to establish the Household Energy Upgrades Fund to support home upgrades that improve energy performance and save energy
Defence funding to increase beyond the forward estimates: The cost of the Defence Strategic Review means an increase in spending over the medium term, with Defence spending expected to rise above 2.3% of GDP in 2032-33
Stronger budget position: The structural budget deficit is expected to be 0.5% of GDP in 2032-33, compared to 2.0% in the October budget. Lower NDIS and interest costs mean there has been a very substantial improvement in the budget bottom line over the next decade
Deloitte’s Budget digest provides insights on nine major themes below.
A stronger-than-expected Australian economy has driven a surge in tax revenue and a $41.1 billion turnaround in the fiscal position that was forecast in the October Budget. An underlying cash surplus of $4.2 billion is now forecast for 2022-23.
The Australian economy outperformed Treasury’s forecasts from last October, adding an estimated $134.8 billion in revenue in 2022-23 and the following four years through a surge in both company tax and personal income tax
Government payments are forecast to be $26.7 billion higher over the five years from 2022-23. The Government announced $42.6 billion of spending on new policies over five years, including the $14.6 billion cost-of-living package
The surge in revenue and comparatively small increase in expenses delivered a $41.1 billion turnaround in the fiscal deficit that was forecast last October. An underlying cash surplus of $4.2 billion is now expected in 2022-23 and the cumulative underlying cash deficit has been revised down by $125.9 billion over the five years to 2026-27
The healthier bottom line means net debt is expected to be equal to 21.6% of GDP in 2022-23 and average less than 24% of GDP over the Budget estimates, down from the 26% forecast in October last year
Government spending has also increased, but much more moderately than revenue. The centrepiece of the Budget is a $14.6 billion cost-of-living package that includes a range of payments for low-and middle-income families from savings on energy bills and cheaper medicines to modest increases to JobSeeker and rent assistance.
The Budget is still projected to revert to a deficit over the forward estimates and beyond. However, the forecast long term position has improved significantly compared to what had been expected at the time of the October Budget. Savings on interest costs and the NDIS are now anticipated to help the structural Budget position move closer towards balance over the next decade.
The Australian economy outperformed Treasury’s forecasts from the 2022-23 October Budget. Nominal GDP growth has been revised up to 10.25% in 2022-23 and 1.25% in 2023-24. Rapid population growth and a defiant labour market have resulted in stronger employment growth and higher wages. Treasury has adjusted its approach to forecasting commodity prices, but the methodology remains conservative and is likely to mean the terms of trade (and hence company tax receipts) will be underestimated.
Stronger economic conditions have led to an increase in tax receipts (excluding policy changes and the GST) by $114.2 billion over five years to 2026-27.
Company tax revenue has been revised up by $52.7 billion over the five years to 2026-27 on the back of near-record terms of trade and strong corporate profits for non-mining companies. Personal income tax has been revised up $74.1 billion thanks to Australia’s low unemployment rate and higher forecast wage growth.
The Government is returning 82% of the revenue upgrades to the Budget bottom line with spending forecast to be $26.7 billion higher over the five years to 2026-27. The $42.6 billion in new policy measures includes a $14.6 billion cost-of-living package. But those support payments are relatively modest – such as a $40 per fortnight increase in the JobSeeker allowance for all recipients and a 15% increase in rental assistance – as the Budget seeks to tread the line between providing much-needed relief to struggling households without stoking inflation.
The surge in tax revenue and comparatively small increase in spending has delivered a substantial fiscal turnaround from October’s forecast. The underlying cash deficit has been flipped into a forecast surplus of $4.2 billion in 2022-23. The Budget returns to the red beyond 2022-23, but the cumulative underlying cash deficit is now forecast to be $125.9 billion lower over the five years to 2026-27.
This Budget focused on balancing short-term cost-of-living relief while not making the RBA’s inflation challenge any harder. Eventually, the Government will have to turn to the more difficult task of restoring the Budget’s structural health and the finding the right fiscal settings for Australia’s long-term prosperity.
A stronger-than-expected economy
The main driver of the Government’s unexpected return to surplus is a large increase in Australia’s nominal GDP. The October Budget assumed that nominal GDP would grow just 8.0% in 2022-23 and fall 1.0% in 2023-24. Those forecasts have been revised up to 10.25% in 2022-23 and 1.25% in 2023-24 in the context of persistent price inflation, strong wage growth, a historically tight labour market and strong terms of trade.
Australia’s defiant labour market has pushed Treasury’s projections of a 4.5% unemployment rate (up from the current level of 3.5%) back, to 2024-25 rather than 2023-24. Higher receipts from taxes on individuals have added some $16.9 billion to the Budget in 2022-23 alone.
A surging economy, even if only in nominal terms, is one of the fastest ways to repair the Budget balance. That’s evident in the unexpected return to surplus in 2022-23. But as the RBA’s hiking cycle flows through to higher unemployment and softer wage and price growth, and as commodity prices fall back toward long run averages, the medium-term strain on the Budget will return. An underlying cash deficit of $13.9 billion in 2023-24 is forecast to worsen to $35.1 billion in 2024-25.
Banking most of the revenue windfall
One of the questions going into this Budget was whether the Government would spend or save the unexpected surge in tax revenue. The Government rightly opted for fiscal constraint and returned 82% of the revenue upgrades to the Budget bottom line.
There is no doubt that elevated inflation, negative real wage growth, and the RBA’s rapid tightening cycle are causing financial pain for many households. But it was critical to strike the balance between targeted cost-of-living relief and making sure fiscal policy is helping, rather than hindering, the work of the central bank. The Government’s $14.6 billion cost-of-living package largely strikes this balance, though the fact that policy decisions will add $13.8 billion to spending next financial year may make the RBA’s task slightly more difficult than it otherwise would have been.
A strong foundation for more significant reform
The unexpected return to surplus and improved medium-term outlook creates the risk of complacency and a delay in the big decisions that are needed to place the Budget on a stronger longer-term footing and increase productivity growth.
The Budget included some measures to slow the growth rate of spending. Cutting the growth rate of the NDIS from 13.8% to 8% by July 2026 is expected to save $59 billion over the seven years to 2033-34, while lower debt will materially reduce the cost of interest payments. The $19 billion of new Defence spending over the next four years has been offset by scaling back and delaying other projects.
But the Budget is thin on addressing Australia’s deteriorating productivity growth.
It’s clear that the size of Government will be larger in the future than it has been in the past. The seven areas of spending that are growing most rapidly are health, education, welfare payments, aged care, the NDIS, Defence and interest payments. Australians rightly want their Government to fund and deliver services in these critical areas.
This Budget included minor tinkering to the tax system – including an increase in the tobacco tax, a reduction in superannuation tax concessions, and a relatively constrained increase in the petroleum resource rent tax. But Australia needs loftier goals when it comes to tax reform, which has the potential to simultaneously fix the structural deficit, realign incentives and boost the productive capacity of the economy.
The unexpected improvement in the near-term fiscal position provides the perfect opportunity to fund more significant reform going forward.
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One of the centrepieces of this year’s Federal Budget is the $14.6 billion cost of living package, which comprises of the Energy Price Relief Plan together with increased support payments to many recipients of government payments.
The Energy Price Relief Plan will support approximately 5.5 million households and around 1 million small businesses
The base rate of working age (JobSeeker) and student payments will increase by $40 per fortnight from 20 September 2023
There was no announcement about any changes to personal income tax rates, including the Stage 3 changes which are legislated to apply from July 2024
The Government recommitted to its announced change to reduce the tax concessions available to individual superannuation account balances above $3 million.
There were also no further announcements on other matters such as the proposed individual residency test reforms.
Cost of living package
The Government has announced a $14.6 billion cost of living plan which packages up a number of announcements to provide help with power bills, bring down out-of-pocket health costs (by capping the price of medicines on the PBS), support vulnerable Australians, create more affordable housing and boost wages (aged care workers).
Energy Bill Relief Plan
The Government will provide $1.5 billion over two years from 2023–24 to establish the Energy Bill Relief Fund to support targeted energy bill relief to eligible households and small business customers, which includes pensioners, Commonwealth Seniors Health Card holders, Family Tax Benefit A and B recipients and small business customers of electricity retailers. Eligible households that receive existing state and territory rebates will have this new rebate applied to their bill automatically from 1 July 2023.
Energy Price Relief Rebates will be available from 1 July 2023, co-funded by the Commonwealth, states and territories. A $250 Commonwealth rebate will be available to eligible households in New South Wales, Victoria, Queensland, South Australia and Tasmania delivering $500 in power bill relief in total (including state contributions).
A $175 Commonwealth rebate (generally $350 in total bill relief) will be available to eligible households in Western Australia, Northern Territory and the Australian Capital Territory.
A $325 Commonwealth rebate will be available to eligible small businesses in each state, which translates to a $650 benefit for small businesses in states that have matched the relief.
Support for vulnerable Australian households
The Government will increase support for people receiving working age payments including the JobSeeker Payment. This measure will increase the base rate of working age and student payments by $40 per fortnight. This increase applies to the JobSeeker Payment, Youth Allowance, Parenting Payment (Partnered), Austudy, ABSTUDY, Disability Support Pension (Youth), and Special Benefit, from 20 September 2023.
Eligibility for the existing higher single JobSeeker Payment rate for recipients aged 60 years and over will be extended to recipients aged 55 years and over who are on the payment for nine or more continuous months.
The Government will also extend eligibility for Parenting Payment (Single) to support single principal carers with a youngest child under 14 years of age (previously under 8 years of age).
Increased rent and housing assistance
The Government will increase the maximum rates of the Commonwealth Rent Assistance (CRA) allowances by 15% to help address rental affordability challenges for CRA recipients.
The Government will also introduce a number of housing measures to increase support for social and affordable housing across the country and improve access for home buyers, including:
Expanding the criteria for eligibility for the Home Guarantee Scheme – see announcement here.
Extending the deadline for all existing Homebuilder applicants to submit supporting documentation from 30 April 2023 to 30 June 2025 – see announcement here.
Passenger Movement Charge increase
The Passenger Movement Charge will be increased from its current level of $60 to $70 per departure from Australia, effective from 1 July 2024. Subject to limited exceptions, the charge is applicable to both citizens and non-citizens, 12 years and older, and is normally collected by carriers on behalf of the government when tickets are sold to passengers. It is estimated that this measure will increase passenger movement charge receipts by $520 million over the five years from 2022-23.
Exempting lump sum payments in arrears from the Medicare levy
The Government will exempt eligible lump sum payments in arrears from the Medicare levy from 1 July 2024. Eligibility requirements will ensure that relief is targeted to taxpayers who are genuinely low-income and should be eligible for a reduced Medicare levy.
Government updates on superannuation tax rate for large balances
The Government recommitted to its announced changes to reduce the tax concessions available to individual superannuation account balances above $3 million.
From 1 July 2025, the tax rate applied to earnings attributable to superannuation account balances above $3 million will be 30%. These measures will not impact individuals with total superannuation balances of less than $3 million nor will this change affect that portion of an individual’s balance below the $3 million threshold.
The Government has confirmed that interests in defined benefit schemes will be appropriately valued and will have earnings taxed under this measure in a similar way to other interests. This will ensure commensurate treatment.
The introduction of this measure is estimated to affect around 80,000 people and increase receipts by $2.3 billion in the first full year of receipts collection (2027-28). Over the five years from 2022–23, it is estimated to increase receipts by $950 million and increase payments by $47.6 million. This includes $50 million in receipts associated with updating the notional contribution calculation methodology, applicable to all defined benefit members.
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Australia has confirmed the implementation timeline for the OECD/G20 Pillar Two global minimum tax rules starting from 2024. The most significant revenue impact in the Budget is $7.6 billion, comprising of GST and other tax receipts expected to be collected from an expanded GST compliance program. In addition, the ATO has received significant other funding to continue other compliance activities.
Australia has announced the implementation timeline and costings for the OECD/G20 Pillar Two global minimum tax
The Government will expand and strengthen Part IVA (the general anti-avoidance rule)
As previously announced, the Government will collect an additional $2.4 billion over the forward estimates from modifications to the Petroleum Resource Rent Tax
The patent box initiatives announced by the Coalition Government will not proceed
Small and medium businesses will benefit from an additional deduction for spending on electrification and more efficient use of energy
There will be a one-year temporary increase to the Instant Asset Write-off to $20,000 for small business
Superannuation contributions to be paid on payday from 1 July 2026
Significant additional funding for the ATO
Cross-border taxation developments
Implementation of a global minimum tax and a domestic minimum tax
Australia has announced the implementation of the OECD/G20 Pillar Two global minimum tax. Pillar Two will establish a global minimum tax rate of at least 15% under a globally agreed set of rules that will require groups to undertake annual calculations on a country by country basis. The Government has confirmed Australia’s intention to implement Pillar Two in line with the OECD timeline, consistent with the United Kingdom and European Union states.
Australia will implement a domestic minimum tax for income years beginning on or after 1 January 2024, to ensure that Australia retains taxing rights over undertaxed Australian profits.
Further, the following measures will also be introduced:
The Income Inclusion Rule (IIR) is to apply to income years beginning on or after 1 January 2024
The Undertaxed Profits Rule (UTPR) is to be effective 12 months later (income years beginning on or after 1 January 2025).
The measures will apply to multinational enterprises with a global turnover above €750 million (i.e. approximately $1.2 billion) and will apply to Australian headquartered multinational enterprises as well as Australian subsidiaries of foreign parents. These measures will greatly increase the compliance burden on in-scope Australian groups and Australian subsidiaries of multinationals.
The measure is forecast to increase revenue by $370 million and increase payments by $110 million over the five years from 2022-23.
Expanding the general anti-avoidance rule in the income tax law
The Government will expand and strengthen Part IVA (the general anti-avoidance rule) for income years commencing on or after 1 July 2024, regardless of when schemes were entered into. This measure appears to relate only to the general provisions of Part IVA, rather than other measures such as the Multinational Anti Avoidance Law or the Diverted Profits Tax.
Part IVA will be expanded so as to also include the following:
Schemes that reduce tax paid in Australia by accessing a lower withholding tax rate on income paid to foreign residents. It is expected that the measure is seeking to ensure that Part IVA can be applied in a case where the liability to withholding tax is reduced but not eliminated, as well as a case where the liability to withholding tax is eliminated (reduced to nil)
Schemes that achieve an Australian income tax benefit, even where the dominant purpose was to reduce foreign income tax. To date, the general provisions of Part IVA have been premised upon there being a sole or dominant purpose to obtain a relevant Australian tax benefit. This proposal seeks to ensure that Part IVA can apply where there is an Australian tax benefit even where the sole or dominant purpose was to obtain a foreign tax advantage. It is not yet clear what purpose threshold will apply to the Australian tax benefit.
Energy and resources
Proposed changes to the Petroleum Resource Rent Tax (PRRT)
On 7 May 2023, the Treasurer advised of significant changes to the design of the PRRT. The package of proposed changes, which include integrity reforms, is expected to increase tax receipts by $2.4 billion over the forward estimates. The key announcements are:
The Government has released the Petroleum Resource Rent Tax: Review of Gas Transfer Pricing Arrangements final report (GTP review) prepared by Treasury, together with the Government’s response. The Government will proceed with 8 of 11 recommendations by the GTP Review:
From 1 July 2023, the Government will limit deductible expenditure to the value of 90% of PRRT assessable receipts in respect of each project in the relevant income year (applied after mandatory transfers of exploration expenditure). The amounts that are unable to be deducted because of the cap will be carried forward and uplifted at the government long-term bond rate
From 1 July 2023, the Government will update the PRRT general anti-avoidance rule and the arm’s length rule to clarify their application to the Petroleum Resource Rent Tax Assessment Regulation 2015
From 1 July 2024, the Government will modernise the PRRT for emerging developments in LNG project structures, better reflect the contributions and risks of the notional entities that comprise the LNG value chain, align the regulations with current transfer pricing practices and provide appropriate integrity rules for the regime.
Further, the Labor Government’s response to the Callaghan Review, in respect to recommendations that were accepted but not implemented by the previous Government has been released. The Government will proceed with eight recommendations made by the Callaghan review.
The Government will consult on final design and implementation details for the deductions cap and on the draft GTP rules later this year. Consultation on other policy changes (recommendations from the Callaghan Review and anti‑avoidance rules) will occur in early 2024. The Petroleum Resource Rent Tax Assessment Regulation 2015 will not be remade until the legislation implementing the deductions cap has been enacted.
For more information on this measure, please see our analysis published 8 May 2023 here.
Clarifying the tax treatment of ‘exploration’ and ‘mining, quarrying and prospecting rights’
The Government will amend the PRRT legislation to clarify that ‘exploration for petroleum’ is limited to the ‘discovery and identification of the existence, extent and nature of the petroleum resource’ and does not extend to ‘activities and feasibility studies directed at evaluating whether the resource is commercially recoverable’.
This measure is consistent with the Commissioner of Taxation’s administrative treatment and written binding advice as set out in TR 2014/9, which applies from 21 August 2013. The amendments will apply to all expenditure incurred from 21 August 2013.
This measure will also clarify that mining, quarrying and prospecting rights (MQPRs) cannot be depreciated for income tax purposes until they are used (not merely held) and will limit the circumstances in which the issue of new rights over areas covered by existing rights lead to tax adjustments. These amendments apply in respect of all MQPRs acquired or started to be used after the time of announcement (7.30 pm (AEST) on 9 May 2023 (Budget night).
The Government states that these amendments are designed to ensure the PRRT and income tax legislation operates as intended following the Full Federal Court’s decision in Commissioner of Taxation v Shell Energy Holdings Australia Limited  FCAFC 2.
Patent box announcements will not proceed
The Government formally announced that the three separate patent box measures announced by the former Government will not proceed. These included a patent box regime for Australian medical and biotechnology patents together with a patent box regime for agricultural and low-emissions innovations sectors.
Screen production incentives
The Government will amend existing screen and production related tax incentives as follows:
Increase the Location Offset rebate rate to 30% whilst increasing the minimum Qualifying Australian Production Expenditure (QAPE) thresholds to $20 million for feature films and $1.5 million per hour for television series
Funding of $6.9 million over four years from 2023–24 (and $1.8 million per year ongoing) for Ausfilm to continue to market Australia as a destination for screen production
Funding of $0.5 million over three years from 2024–25 (and $0.2 million per year ongoing) for the Australia-India Audio-Visual Co-Production Agreement to enable eligible producers to access the Producer Offset, a refundable tax offset for approved Australian expenditure
With the Digital Games Tax Offset (DGTO) provisions currently before Parliament, additional funding of $12 million over four years from 2023-24 (and $3 million per year ongoing) for Screen Australia to support Australian interactive games businesses to grow operations and capitalise on emerging opportunities.
Reduce compliance costs for general insurers
The insurance industry has been concerned to ensure the current tax legislation for insurance companies is updated to reflect changes under the new accounting standard, AASB17 Insurance Contracts, which applies for income years commencing on or after 1 January 2023. The new accounting standards apply to all insurance entities and aligns to the global accounting standard IFRS17.
The Government announced it will introduce legislation to amend the tax law under Division 321 to minimise the regulatory burden facing the general insurance industry, to ensure that the tax laws will align to the new accounting standards, and hence allow the continued use of audited financial reporting information under AASB17, as the basis for their tax returns.
The measure will have effect for income years commencing on or after 1 January 2023.
It is not yet clear as to the effect of this announcement for life insurance companies under Division 320, and whether any transitional measures will be introduced in respect of any tax impacts on transition from the current to the new accounting standard.
Small and medium business tax measures
Small business energy incentive
The Government announced an additional 20% deduction on spending that supports electrification and more efficient use of energy for eligible businesses with annual turnover of less than $50 million. Up to $100,000 of total expenditure will be eligible for the incentive, with the maximum bonus tax deduction being $20,000 per business.
Eligible assets or upgrades will need to be first used or installed ready for use between 1 July 2023 and 30 June 2024. Eligible expenditure will include investment in electrifying heating and cooling systems, upgrading to more efficient fridges and induction cooktops, and installing batteries and heat pumps. Full details of eligibility criteria will be finalised in consultation with stakeholders. Certain exclusions will apply such as electric vehicles, renewable electricity generation assets, capital works, and assets that are not connected to the electricity grid and use fossil fuels.
Temporary increase to the instant asset write-off threshold
Small businesses, with aggregated annual turnover of less than $10 million, will be able to immediately deduct the full cost of eligible assets costing less than $20,000 that are first used or installed ready for use between 1 July 2023 and 30 June 2024. The $20,000 threshold will apply on a per asset basis. Assets valued at $20,000 or more (which cannot be immediately deducted) can continue to be placed into the small business simplified depreciation pool and depreciated at 15% in the first income year and 30% each income year thereafter.
The provisions that prevent small businesses from re-entering the simplified depreciation regime for five years if they opt-out will continue to be suspended until 30 June 2024.
Tax administration relief for small business
The Government will introduce reforms to cut paperwork and reduce the time small businesses spend doing taxes:
From 1 July 2024, small businesses will be permitted to authorise their tax agent to lodge multiple Single Touch Payroll forms on their behalf, reducing paperwork
From 1 July 2024, small businesses will benefit from faster, safer and cheaper income tax refunds by reducing the use of cheques
From 1 July 2025, small businesses will be permitted up to four years to amend their income tax returns, reducing the burden of making revisions.
Small business PAYG and GST instalment relief
The Government will amend the tax law to set the GDP adjustment factor for pay as you go (PAYG) and GST instalments at 6% for the 2023–24 income year, a reduction from 12% under the statutory formula.
The 6% GDP adjustment rate will apply to small businesses and individuals who are eligible to use the relevant instalment methods (up to $10 million aggregated annual turnover for GST instalments and $50 million annual aggregate turnover for PAYG instalments) in respect of instalments that relate to the 2023–24 income year and fall due after the enabling legislation receives Royal Assent.
Small business lodgement penalty amnesty
A lodgement penalty amnesty program is being provided for small businesses with aggregate turnover of less than $10 million to encourage re-engagement with the tax system. The amnesty will remit failure-to-lodge penalties for outstanding tax statements lodged in the period from 1 June 2023 to 31 December 2023 that were originally due during the period from 1 December 2019 to 29 February 2022.
Tax incentives to increase the supply of rental housing
The Government will offer incentives to increase the supply of rental housing by changing arrangements for investments in built-to-rent accommodation.
For eligible new build-to-rent projects where construction commences after 7.30 pm (AEST) on 9 May 2023 (Budget night), the Government will:
Increase the depreciation rate from 2.5% to 4% per year
Reduce the withholding tax rate for eligible fund payments from managed investment trusts to foreign residents on income from newly constructed residential build-to-rent properties after 1 July 2024 from 30% to 15%, subject to further consultation on eligibility criteria.
This measure will apply to build-to-rent projects consisting of 50 or more apartments or dwellings made available for rent to the general public. The dwellings must be retained under single ownership for at least 10 years before being able to be sold and landlords must offer a lease term of at least three years for each dwelling. The reduced managed investment trust withholding tax rate for residential build-to-rent will apply from 1 July 2024. Consultation will be undertaken on implementation details, including any minimum proportion of dwellings being offered as affordable tenancies and the length of time dwellings must be retained under single ownership.
Extending the clean building managed investment trust withholding tax concession
The Government will extend the clean building managed investment trust (MIT) withholding tax concession to data centres and warehouses. This measure will extend eligibility for the concession to data centres and warehouses that meet the relevant energy efficiency standard, where construction commences after 7.30 pm (AEST) on 9 May 2023 (Budget night). This measure will apply from 1 July 2025.
This measure will also raise the minimum energy efficiency requirements for existing and new clean buildings to a 6-star rating from the Green Building Council of Australia or a 6-star rating under the National Australian Built Environment Rating System. The Government will consult on transitional arrangements for existing buildings. These changes will support investment in energy efficient commercial buildings, and in turn, reduce energy usage and energy bills for commercial tenants.
Superannuation contributions to be paid on payday
From 1 July 2026, employers will be required to pay their employees’ superannuation at the same time as their salary and wages.
Unpaid superannuation contributions are a chronic issue in the system, with the ATO estimating the net superannuation guarantee gap for 2019-20 to be 4.9% or $3.4 billion. More frequent super payments will reduce the risk of non-payment, allow employees to keep better track of their payments and support better retirement outcomes. It will be particularly beneficial for those in lower paid, casual and insecure work who may otherwise miss out when superannuation is paid less frequently. The Treasurer has noted more frequent superannuation payments will make employers’ payroll management smoother with fewer liabilities building up on their books.
To further strengthen the system, the ATO will receive additional resourcing to help it detect and act on unpaid superannuation payments. The Government will also set enhanced targets for the ATO for the recovery of payments.
Treasury and the ATO will consult closely with industry and stakeholders on the design of these changes with the final design considered in the 2024-25 Budget.
Amendments in respect of superannuation NALI provisions
On 24 January 2023, Treasury released a consultation paper considering options to amend the non-arm’s length income (NALI) provisions for superannuation funds. The NALI provisions are an integrity measure to prevent income from being diverted into superannuation funds to benefit from lower rates of tax compared to other entities, particularly the marginal rates applying to individual taxpayers. Where income is deemed to be derived from a non-arm’s length transaction, it is taxed at the highest marginal rate of 45%.
Following feedback from industry on the consultation paper, the Government has announced changes to their original proposal for amendments to the NALI provisions. As a result:
Large APRA regulated funds will be exempt from the NALI provisions for both general and specific expenses
Self-managed superannuation funds (SMSFs) and Small APRA regulated funds (SAFs) will have income taxable as NALI, limited to twice the level of a general expense. Fund income that is taxable under these provisions will exclude contributions
All expenditure occurring prior to the 2018-19 financial year will be exempted.
Additional funding for ATO
The Government will provide additional funding for the ATO (and other regulators) including but not limited to:
$588.8 million to the ATO over four years from 1 July 2023 to continue a range of activities that promote GST compliance. This measure is estimated to increase GST receipts by $3.8 billion, and other tax receipts by $3.8 billion, over the five years from 2022–23. These activities are aimed at ensuring businesses meet their tax obligations, including accurately accounting for and remitting GST, and correctly claiming GST refunds. Funding through this extension will also help the ATO develop more sophisticated analytical tools to combat emerging risks to the GST system
$89.6 million to the ATO to extend the Personal Income Tax Compliance Program for two years from 1 July 2025 and expand its scope from 1 July 2023. This measure is estimated to increase receipts by $474.9 million
Additional funding over four years from 1 July 2023 to enable the ATO to engage more effectively with businesses to address the growth of tax and superannuation liabilities. This measure is estimated to increase receipts by $718.0 million
$21.8 million over four years from 2023–24 (and $1.4 million per year ongoing) to the ATO to lower the tax-related administrative burden for small businesses
$4.4 million in resourcing to the ATO to administer and ensure compliance with proposed changes to the PRRT
$40.2 million to the ATO in 2023–24, to improve data matching capabilities to identify and act on cases of superannuation guarantee underpayment by employers and funding for consultation and co-design
$1.9 million over two years from 2023–24 to establish a public registry of beneficial ownership of companies and other legal vehicles, including trusts.
Road user charge to increase by 6% annually
The road user charge (RUC) will be increased annually by 6% on 1 July in 2023, 2024 and 2025. In dollar terms, the RUC will increase by 1.6 cents per litre (c/l) to 28.8 c/l on 1 July 2023 (currently 27.2 c/l), followed by further increase to 30.5 c/l on 1 July 2024 and to 32.4 c/l on 1 July 2025.
The effect of the higher RUC will be to reduce the level of fuel tax credit entitlement for businesses using petrol or diesel in heavy vehicles travelling on public roads. This measure is forecast to decrease the government’s expenditure on fuel tax credits by $1.1 billion over four years from 2023-24. Further details can be found here.
Increased tobacco duty
The Budget includes an extra $3.3 billion over five years from increased tobacco duty, comprising:
Three 5% increases over three years (in addition to the normal twice-yearly CPI-based increases), starting on 1 September 2023
Bringing the impost on loose-leaf tobacco products into line with cigarettes by progressively lowering the ‘equivalisation weight’ from 0.7 to 0.6 grams. These decreases will occur on 1 September each year from 2023 through to 2026.
As well as making tobacco products less affordable in this way, the Government will direct $737 million to programs that address the harm caused by smoking and vaping, discourage their uptake, or support quitting, and expand compliance activity to address illicit tobacco.
Streamlining excise administration for fuel and alcohol: delayed start date for some measures
The start date for some components of the ‘Streamlining excise administration for fuel and alcohol’ package will be delayed by 12 months to 1 July 2024. The changed start date applies to the measures that will:
Remove overlapping Australian Border Force and ATO systems
Streamline license application and renewal requirements
Remove regulatory barriers for certain excise and excise equivalent customs goods (including lubricants, bunker fuels for commercial shipping industries, and vapour recovery units)
Provide a public register of entities that hold excise licences to store or manufacture excise and excise equivalent customs goods.
Introduction of cost recovery arrangements for clearance of low value imported cargo flagged
In the context of an announcement about funding to strengthen Australia’s biosecurity system, the Budget papers mention the Government’s intention to partially offset the cost by introducing cost recovery arrangements for the clearance of low value imported cargo, a measure expected to raise $81.3 million over three years from 2024–25.
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The Federal Budget presents decarbonisation, electrification, adaptation and nature as underpinning Australia’s future growth and development. Across the funding announcements made, the Government has clearly linked energy and climate action to the re-industrialisation of the Australian economy.
A new $83.2 million Net Zero Authority will coordinate an orderly transition for Australia’s transition-exposed regions, working closely on the deployment of the $1.9 billion Powering the Regions fund
$1.6 billion for small business and household energy efficiency upgrades, divided between the Small Business Energy Incentive and Household Energy Upgrades fund
$2 billion Hydrogen Headstart program, which will provide revenue support to Australian hydrogen projects, managed by ARENA
Over $2.2 billion in a range of disaster preparedness, response and resilience measures including funding to rebuild post-disaster, enhance resilience, response and systems capability, and for human wellbeing
Australia has made good on its promise to deliver much needed reforms to our environmental laws by committing $214.1 million to implement the actions outlined in the Nature Positive Plan
Adaptation is back on the agenda with the development of Australia’s first National Adaptation Plan, guided by the nation’s first National Climate Risk and Opportunity Assessment
For example, this Budget sees funding for the development of a competitive hydrogen industry, a focus on scaling renewable energy, critical minerals and decarbonisation technology, and prioritisation of disaster resilience and reforms to protect Australia’s environment.
More detail is required on the specifics for some of the larger announcements such as Hydrogen Headstart and the Net Zero Authority, but overall this Budget positions Australia to benefit from decarbonisation and keep communities safer from increasingly damaging natural disasters, whilst protecting and restoring our natural environment.
The energy transition continues to accelerate
The Government continues to deliver on its priorities of accelerating Australia’s energy transition and capturing net zero upside:
A new $83.2 million Net Zero Authority to coordinate an orderly transition for Australia’s transition-exposed regions and work to corral transition activities and private sector investment into industrial regions
A $1.3 billion funding envelope targeting energy efficiency to drive savings for households and renters. This includes $1 billion for the Clean Energy Finance Corporation to support banks to make low interest loans to 110,000 households for improvements, including battery-ready solar PV and appliances. A further $300 million is made available for energy upgrades to social housing, leveraging additional investments from the states and territories to enable 60,000 social housing properties to save up to 30% off their energy bills
$310 million for a new Small Business Energy Incentive available to businesses with turnover of up to $50 million to invest up to $20,000 in energy efficiency
More details of the Powering the Regions Fund show that the Government will allocate $1.3 billion over five years from 2022–23, from $1.9 billion provided in the 2022–23 October Budget to support the decarbonisation of existing industries, develop new clean energy industries and support sovereign manufacturing capacity essential to the energy transition
$450.3 million over four years from 2023–24, to establish the Safeguard Transformation Stream to support decarbonisation investments at trade-exposed industrial facilities covered by the Safeguard Mechanism
$400.0 million over four years from 2023–24, to establish the Industrial Transformation Stream to support clean energy development and emissions reductions at existing industrial facilities in regional Australia
$400.0 million over three years from 2023–24, to establish the Critical Inputs to Clean Energy Industries Stream to support the manufacturing of inputs essential to the development of Australia’s clean energy industries (steel, cement and lime, alumina and aluminium)
To ensure reliability of the electricity system as renewables are increasingly bought online, the Government will establish the Capacity Investment Scheme as agreed with State Governments. While some funding has been announced for AEMO ($9.9 million over four years) and for DCCEEW ($6.4 million) to design the auction process, other funding has not been disclosed due to commercial sensitivities. This is accompanied by $80 million over four years to support the Australian Energy Regulator to support energy market reforms and compliance. Auctions will commence in South Australia and Victoria with other states to follow
Building on existing announcements, the Government is moving forward with the National Reconstruction Fund (NRF) Corporation over the next four years. The NRF Corporation will administer funding of $15 billion, of which $3 billion will support small to medium enterprises and start-ups to commercialise renewable energy and low emissions technologies.
Beginning of the long response to the Inflation Reduction Act
We called attention to the scale and challenge the Inflation Reduction Act posed to Australia's Renewable Energy Superpower aspirations in Australia's Hydrogen Tipping Point earlier this year and noted the need for urgent government intervention.
The 2023-24 Budget has delivered, with the Federal Government signalling development of a dedicated $2 billion revenue support program - Hydrogen Headstart - to bridge the commercialisation gap for renewable hydrogen. We would expect to see this operate as a production credit on a dollar per kilogram of hydrogen basis, but details still need to be provided.
Six things to watch for as Hydrogen Headstart details emerge:
Domestic vs Export Use: Clarification of whether successful projects will be eligible for export to be determined. The policy could be complementary with other forms of support offered by countries such as Japan and Korea
Speed: Details of how Hydrogen Headstart will be implemented will need to be quickly communicated to instil market confidence. Expect to hear more after the Energy Ministers meet later in May 2023
Scale: At $2 billion, the program is comparable to the EU’s recently announced Hydrogen Bank
Access process: The Budget papers refer to competitive production contracts. Combined with ARENA managing the program, comparisons could be drawn to the EU’s fixed premium hydrogen auctions
Emissions Intensity Rules: The Government is continuing to pilot its Guarantee of Origin scheme for hydrogen which shows where hydrogen is produced and with what lifecycle emissions. We would expect the proposed Hydrogen Headstart program to align with the Guarantee of Origin scheme and favour projects with lower lifecycle emissions. The Budget provides $38.2 million to progress the Guarantee of Origin scheme
Interaction with State Support: We would expect that the Hydrogen Headstart program is stackable with existing production incentives offered by State Governments. Further details are likely as state hydrogen strategies are revised this year.
Two smaller measures also warrant attention. First, $2 million is set aside to establish a fund to support First Nations people and businesses to engage with hydrogen project proponents. This could facilitate greater participation from First Nations groups in projects, as we are beginning to see in the renewables sector.
Second, the Government has allocated a further $5.6 million to identify ways to leverage Australia’s strengths across the energy-industrial complex – from critical minerals, renewables and a highly skilled workforce – to accelerate clean industrial and manufacturing capabilities. More details are expected with actions to be announced by the end of the year.
Disaster preparedness, risk and resilience
Following a rapid succession of large-scale disaster events resulting in billions of dollars of loss and damage, we see in this Budget a substantial commitment to both disaster preparedness and recovery, and to risk reduction and resilience. There is over $2.2 billion aggregate spend on a raft of disaster preparedness, risk and resilience measures in the Budget. Highlights include:
$231.8 million for disaster recovery support, delivered though Services Australia
$125.7 million over five years and $28.3 million ongoing per year to the National Emergency Management Agency for resilience and recovery initiatives
The previously announced $10.1 million over two years, to modernise emergency service communications
$8.6 million to supplement and maintain disaster response resources
$8 million over four years in financial assistance to New Zealanders in Australia following a disaster event
$7.4 million over four years to establish and maintain a Disaster Recovery Management System
$7.2 million for mental health support services
$2.3 million for a Regional Small Business Support Program Pilot
An undisclosed amount of funding to finalise a new national cell broadcast messaging system to improve emergency warning communications
Of the $1.9 billion announced for ‘Enhancing Pacific Engagement’, $114.3m is being directed to disaster preparedness and other related measures over four years
$1.4 billion for continued disaster recovery funding under the Disaster Recovery Funding Arrangements.
These wide-ranging disaster funding allocations recognise the continuing role of the Commonwealth in disaster preparedness, recovery and resilience.
Support for the implementation of environmental reforms
Released in December 2022, the Nature Positive Plan detailed the Government’s response to Graeme Samuel’s Independent Review of the EPBC Act. In the Plan, the Australian Government agreed to implement many of the suggested reforms and this Budget sets aside $214.1 million to deliver on this commitment. Overall, the reforms intend to support a more proactive and outcomes focused approach to conserving Australia’s environment. This includes:
$121 million to establish Environmental Protection Australia which would enforce environmental laws
$51.5 million to establish Environment Information Australia to provide an authoritative source of environmental information
$34 million to deliver legislative reforms and to develop national environmental standards
$7.7 million to establish the Nature Repair Market.
This package of funding is in addition to $741.3 million to support environmental and agricultural outcomes and $355.1 million for Commonwealth National Parks and marine reserves. Combined with other complementary measures, the Budget has allocated over $1.3 billion in programs and policies targeted at delivering outcomes for Australia’s environment.
Reducing the impacts of climate change
Adaptation is back on the national agenda as the Australian Government has committed it will deliver Australia’s first National Adaptation Plan, which will be informed by a National Climate Risk Assessment. This will help bring Australia into line with other OECD countries and builds on the climate risk investments made during the October Budget. The announcement of $28 million for the National Climate Adaptation and Risk Program puts Australia on firm footing globally to deliver adaptation priorities – and additional investments in future Budgets
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There has been significant activity in the Defence Portfolio over the past two months, including the AUKUS announcement relating to nuclear-powered submarines in March and the long-awaited release of the Defence Strategic Review in April.
An increase in Departmental funding over the forward estimates of $736.6 million
The Government has committed to the establishment of the Australian Submarine Agency from 1 July 2023
In terms of its workforce, Defence has committed to converting over 1,000 external labour roles to ASL (Average Staffing Levels) in 2023-24
The Government has committed to continuing to build sovereign manufacturing capability to repair our supply chains and build on our national security
The Department of Veterans’ Affairs will accelerate the elimination of backlogged claims via investment in improved technology systems
The Government’s commitment of $19 billion across the forward estimates will require the Department of Defence (Defence) to generate savings elsewhere. This will include reprioritising its Integrated Investment Program to deliver on these required capability investments, including:
Long-range strike capabilities
Strengthened northern bases
Workforce growth and retention
The pleasing outcome from the budget is that Defence funding will increase to above 2.3% of GDP in 2032-33.
An increase in Departmental funding over the forward estimates of $736.6 million:
Despite the recent announcements, when eliminating the increase in funding associated with Operations and Foreign Exchange, the Defence budget has declined by $1.5 billion over the forward estimates. This reduction has predominately been driven by the transfer of funds to the Australian Signals Directorate which remains part of the Defence Portfolio (-$783.8 million) and savings associated with reductions in external labour, advertising, travel and legal expenses (-$631.9 million). The above-mentioned amounts do not include the impact of budget measures and adjustments that are “not for publication”.
The Government has committed to the establishment of the Australian Submarine Agency from 1 July 2023:
The budget associated with the nuclear-powered submarines is $9 billion over the forward estimates. The allocation of this funding between Defence and the Australian Submarine Agency will be finalised ahead of the new Agency’s creation.
In terms of its workforce, Defence has committed to converting over 1,000 external labour roles to ASL (Average staffing Levels) in 2023-24:
To retain military personnel, Defence will spend $397.4 million over the next two years. This includes $395.4 million to pilot a $50,000 continuation bonus to Australian Defence Force personnel who are nearing the end of their relevant initial period of service.
The Government has committed to continuing to build sovereign manufacturing capability to repair supply chains and build on our national security, including the:
Establishment of the Advanced Strategic Capabilities Accelerator within Defence which will work in close partnership with Australian industry
Extension of the Defence Industry Pathways Program within the Western Australian shipbuilding sector
Equity injection into the Australian Naval Infrastructure Proprietary Limited to enhance our submarine capability in South Australia
The Department of Veterans’ Affairs will accelerate the elimination of backlogged claims via investment in improved technology systems:
This is in response to the Royal Commission into Defence and Veteran Suicide, with investments focused on modernising and sustaining new and legacy ICT systems and accelerating the elimination of the backlog of claims.
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The health Budget headlines point to considerable investments to address the decline in GP bulk billing
rates, via a tripling in the bulk billing incentive at a cost of $3.5 billion. Behind the headlines are important
signposts of reform to provide team-based care, blended funding models, longer consults and digital technology.
These comparatively small investments signal an important shift to a more modern health system.
The NDIS target growth rate will be cut from the current 13.8% to 8% by July 2026, saving more than $59 billion over the seven years from 2027-2034. This is offset by $733 million to expand NDIA capacity to deliver reforms and drive down costs
Historic investment to strengthen Medicare – $5.7 billion over 5 years from 2022–23 as part of a package of practical measures, including expanding workforce and operating hours, bulk-billing incentives and multidisciplinary models of care
The cost of delivering aged care services will increase from $26.9 billion in 2022-23 to $39.9 billion in 2026-27. $11.3 billion over the forward estimates is earmarked to implement the Fair Work Commission’s 15% increase in wages for direct care workers and senior food service employees
The government has identified $1.3 billion in Budget savings over four years by allowing two months’ worth of certain PBS medicines to be dispensed by pharmacies from 1 September 2023. This will be reinvested through $1.3 billion aimed at supporting community pharmacies to reduce patient costs and improve access to medicines and related services
The government will invest $1.9 billion over five years from 2022-23 to deliver sustained, practical actions to improve the lives and economic opportunities of Aboriginal and Torres Strait Islander people
Health as a share of total government expenditure is expected to decline from 15.6% in 2023-24 to 15.1% in
2026-27 – while it is not about what you spend but how it’s spent, this does reveal government’s funding priorities.
In comparison, investments in aged care and the NDIS have increased from 9.9% to 12.4% over the same period, even
with the targeted expenditure caps for the NDIS.
This Budget lays the necessary foundations to better integrate health with social care programs to benefit more
NDIS participant numbers and annual investment in the NDIS is projected to grow over the forward estimates to $56.1 billion by 2026-27
$732.9 million has been allocated for NDIS reforms over four years, including increased staffing for the NDIA and reforms to improve the sustainability of the Scheme and reduce costs
Pre-Budget estimates forecast NDIS costs to grow by up to 14% per annum. The NDIS Financial Sustainability Framework includes an annual growth target of 8%. This aims to make the Scheme more sustainable and is estimated to save $622.8 million in 2026 and $59 billion over seven years from 2027-2034
This will likely be a first tranche of funding for reforms ahead of reports from the NDIS Review and the Royal Commission into Violence, Abuse and Exploitation of People with Disability in the latter part of 2023.
An historic $5.7 billion investment to strengthen Medicare will make it easier for Australians to receive the care they need
This includes the injection of $3.5 billion that will triple the bulk billing incentive for children aged under 16, pensioners and other Commonwealth concession care holders, providing free GP consultations to over 11.6 million eligible Australians
The bulk billing incentive for standard consultations in both metropolitan and rural areas will triple, making healthcare more affordable for Australians and arresting the sharp declines in bulk billing rates
$358.5 million for the establishment of eight new Medicare Urgent Care Clinics are expected to relieve pressure on hospitals and general practices and importantly, come at no cost to patients
$118.2 million for new and amended MBS items, including heart health checks, will protect Australians against heart disease
$98.2 million to support doctors to provide high-quality care to people with chronic conditions and complex needs with the introduction of a new MBS item for longer consultations of 60 minutes or more
$46.8 million will fund Medicare rebates for nurse practitioners and participating midwives to prescribe PBS medicines and services under Medicare supporting expansions to scope of practice
The need for improved digital infrastructure to support the primary care sector is signalled by a $429 million investment in the upgrading of the My Health Record, as well as an initial investment of $19.4 million committed to implementing the MyMedicare system
An initial investment of $29.8 million over four years will go toward tackling Medicare fraud and strengthening the integrity of the Medicare system
Expanding the scope of primary care practices, including support for nursing, allied health and multidisciplinary services, has been supported by a $445.1 million boost to the Workforce Incentive Program – Practice Stream, and an additional $143.9 million of measures to expand access to afterhours programs.
In 2022-23, spending on aged care exceeded federal contributions to the states for hospitals. It is estimated that in 2023-24, it will overtake spending on Medicare
$11.4 billion will be spent to fund and meet the outcome of the Fair Work Commission’s decision on the Aged Care Work Value Case. This will apply to direct care employees and senior food services employees (e.g. personal care workers, Enrolled Nurses, Registered Nurses, recreational activity officers, certain food service employees and home care workers)
One of the key savings identified within the portfolio is a reduction in the residential aged care provision ratio from 78.0 places to 60.1 places per 1,000 people aged over 70. It is expected to save $2.2 billion over three years from 2024-25. Additional funding of $338.7 million over four years from 2023-24 will improve the in-home aged care system, including $167 million in 2023-24 to release an additional 9,500 Home Care Packages. Funding for the COVID-19 aged care response will cease after 2023-24
There will be an additional $309.9 million over five years from 2022-23 to implement recommendations from the Royal Commission Aged Care Quality and Safety to strengthen regulation and improve health and safety of older Australians receiving aged care. The largest component of this spending is $139.9 million over four years from 2023-24 to enhance the Star Rating system
There will be $827 million over five years from 2022-23 to continue to improve delivery of aged care services and respond to the Final Report of the Royal Commission in areas such as disability support for older Australians, improvements to general practitioner attendance in residential aged care to reduce avoidable hospital admissions, business advisory support for sector viability, Aged Care Act implementation and ICT changes.
PBS and medicines
Framed as a key cost of living measure, as expected the government announced a shift from the current 30-day prescription supply to a 60-day prescribing policy applicable to over 300 medicines for stable, chronic conditions
This is expected to save the government $1.2 billion over five years and is estimated to save consumers $1.6 billion in out-of-pocket costs in general practice and pharmacy visits over the forward estimates
In total, the government is banking $1.3 billion in savings (including the $1.2 billion above), which will be entirely reinvested back into community pharmacies to reduce patient costs and improve access to medicines and related services – including substantial measures targeting rural and remote community pharmacies and digital infrastructure related to e-scripts. Key measures include:
$655 million over four years for community pharmacy programs under the Seventh Community Pharmacy Agreement
$378 million over four years to improve access to the PBS Opioid Dependence Treatment program
$112 million over four years for electronic prescription delivery infrastructure and services
$80 million over four years to double the Regional Pharmacy Maintenance Allowance.
The government will also provide $2.2 billion over five years from 2022-23 for new and amended listings on programs including the PBS, RPBS and Life Saving Drugs Program
Overall, the net impact of this will result in spending on the PBS to decrease by a forecasted 7% in real terms over the forward estimates.
$2.7 billion increase to National Health Reform Funding for public hospital funding with no mention of any change to the existing 45% Commonwealth contribution or 6.5% growth cap
COVID-19 response Budget has moved from hospital activity and out of the National Health Reform Agreement, resulting in over $3.1 billion of Budget being removed from the public hospital funding pool. The new National Partnership for Priority Groups COVID-19 Testing and Vaccination program takes the lead in COVID-related funded priorities for PCR testing and vaccine administration for greater risk priority patient cohorts.
This Budget invests $1.9 billion over five years from 2022–23 to deliver sustained, practical actions to improve the lives and economic opportunities of Aboriginal and Torres Strait Islander people
This includes critical investments to strengthen educational outcomes and protect traditional knowledge, improve economic participation, enhance access to preventative healthcare and strengthen housing and infrastructure. These holistic investments signal a commitment to investing in the social determinants of health to improve equity of outcomes
In addition, the government is delivering on its promise to implement the Uluru Statement from the Heart by providing $250 million to deliver the plan for A Better, Safer Future for Central Australia, with a focus on investing in programs related to community cohesion, job creation and preventative and primary care.
In line with the National Preventative Health Strategy 2021-2030 , the Federal Budget reaffirms this commitment through a strong multi-pronged approach that focuses on vaping regulation and reform and a smoking cessation package, providing $511.1 million over four years from 2023-24, as well as pledging a $101.1 million ongoing commitment into the future
The early detection of lung cancer will be supported by a $263.8 million spend to establish and maintain a national lung cancer screening program
Targeted public health programs to reduce the uptake of smoking and vaping address both a broad scope $63.4 million for the first national anti-vaping campaign, a targeted indigenous smoking prevention program ($141.2 million), and $29.5 million to offer smoking cessation support services
In tandem with a proposed increase to the tobacco excise (5% per year for three years) these changes signal a clear commitment to a nationwide focus on vaping and smoking cessation.
Australian Center for Disease Control (ACDC)
$3.2 million was allocated in the October 2022-23 Budget for early work to establish an Australian Centre for Disease Control (ACDC), as one of the primary learnings from the pandemic. A further $91.1 million over two years has been allocated in the Budget to progress this work and establish a world-class ACDC to better prepare for future pandemics and threats
The National Medical Stockpile will also move to be within the scope of the ACDC
A further $43.0 million has been allocated over two years to strengthen ICT infrastructure for COVID-19 and future pandemic readiness.
Compared to previous Budgets and given the rising cost of mental health as a share of total health costs, this Budget delivered relatively little for mental health. The only announcement related to $556.2 million over five years from 2022–23 (and $36.0 million ongoing) to strengthen Australia’s mental health and suicide prevention system.
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With a review of Australia’s Infrastructure Investment Program underway, the 2023-24 Federal Budget reflects the Government’s focus on managing inflationary pressure in a resource-constrained infrastructure market. New announcements on supporting future social and economic growth with investments in social and cultural infrastructure offer a more holistic approach to nation building.
Specific announcements are limited to social and cultural infrastructure initiatives such as:
$687.4 million for a national approach to sustainable urban development, seeking to improve the liveability of our cities and affordability of housing
$535.3 million to support the operations and long-term financial sustainability of nine National Collecting Institutions
$305 million in funding for the Macquarie Point Precinct and University of Tasmania Stadium
Spending will support the delivery of infrastructure solutions that will contribute towards the growth of our health and defence industries while introducing sustainable practices.
Australian Capital Territory to receive support for its National Institutions
The Government will provide $520.9 million in funding to support capital works upgrades and maintenance of national institutions located in the Australian Capital Territory, including:
$146 million for the National Library of Australia to support the continued investment in the Trove digital database, extensions of storage facilities, building maintenance and IT infrastructure
$199.1 million for the National Gallery of Australia to provide building upgrades and maintenance
$175.8 million allocation for National Collecting Institutions projects, including refurbishments to the National Museum of Australia, Museum of Australian Democracy, National Archives of Australia, National Film and Sound Archives and the National Portrait Gallery Museum.
New South Wales to receive funding to support productivity and jobs
New South Wales will receive $361.9 million in funding to support the delivery of infrastructure projects, including safety upgrades to the Bells Line of Road and Nowra ByPass planning. No other major transport infrastructure investments (over $100 million) were made.
Commonwealth equity funding was confirmed for the WSA Co Ltd to construct facilities at the new Western Sydney International (Nancy-Bird Walton) Airport.
Northern Australia to be supported with development funding
The Government will provide $1.7 million to update the Our North, Our Future White Paper on Developing Northern Australia. This will be used to identify opportunities to address new and emerging geographics and economic challenges in the region. No other specific capital projects were announced.
Tasmania to receive major funding for its Macquarie Point Precinct and University of Tasmania Stadium delivery
Tasmania will receive over $305 million in funding for the Macquarie Point Precinct and University of Tasmania Stadium to contribute towards urban renewal initiatives.
Queensland to receive funding to deliver venue infrastructure for the 2032 Brisbane Paralympic Games
Queensland will receive over $3.4 billion in funding over 10 years to deliver venue infrastructure for the 2032 Brisbane Olympic and Paralympic Games. This includes:
$2.5 billion to fund the development of the Brisbane Arena
A capped investment of up to $935 million towards 16 new or upgraded venues as part of the Minor Venues Program.
South Australia will receive funding for local roads
South Australia’s major announcements were limited to $60 million for supplementary local road funding.
No other specific infrastructure project announcements were observed for Western Australia and Victoria in the context of the Infrastructure, Transport, Regional Development, Communications and the Arts portfolio.
Other major infrastructure investments in the Federal Budget May 2023 include:
$1.3 billion in road maintenance and safety programs
$267.4 million to support delivery of Departmental and regulatory-focused land, maritime and aviation transport priorities – including to increase productivity and maintain safety
$211.7 million for the establishment of the Thriving Suburbs Program to provide grants for community infrastructure
$159.7 million to establish the Urban Precincts and Partnership Program
$20.9 million for initiatives to decarbonise the transport and infrastructure sectors, including the development of Fuel Efficiency Standards to support electric vehicle uptake.
Following its preliminary Budget in October last year, the 2023-24 Federal Budget demonstrates the Government’s current focus on reviewing the scale and value for money of the national infrastructure investment pipeline in the current inflationary environment. This Budget seeks to balance climate resilience and productivity improvements with affordability in the face of short-term resource and long-term fiscal constraints.
In advance of the Budget, the Government announced a review of Australia’s Infrastructure Investment Program covering $120 billion in land transport projects, which is due to conclude in August 2023. The review is a key influence on the Budget, with prudent investment and project delivery a key focus, reflecting challenges in managing both:
Current high inflationary and supply chain pressures in the construction industry
Challenges in existing major project investments, for example with significant cost increases and delays to the Snowy Hydro 2.0 and Inland Rail projects.
Accordingly, the Budget demonstrates a measured approach to transport infrastructure investment, with a movement away from significant expenditure on new and existing mega projects in favour of management and delivery of existing core programs, and targeted co-investment with states on smaller-scale transport, urban development and other social/cultural infrastructure projects.
Consequently, we see the Budget having the following potential impacts:
Contractors should not expect new multi-billion-dollar transport projects coming to market. Instead, they should prepare themselves for a more diverse range of infrastructure projects which aim to resolve energy and climate, health and defence needs
State Governments will likely need a renewed focus on demonstrating the nation building significance of their projects to receive Commonwealth support.
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Economic equality, safety and protecting vulnerable cohorts feature strongly in this year’s Women’s Budget Statement. Some of the headline spending items include $11.3 billion towards the predominantly female aged care workforce, $1.9 billion to expand eligibility for the Parenting Payment (Single) and $2.7 billion towards increased Commonwealth Rent Assistance payments.
$11.3 billion to support the Fair Work Commission’s decision to provide an interim wage increase of 15% for the aged care sector, where women make up 70% of managers and 84% of non-managers
$2.7 billion over five years to support Commonwealth Rent Assistance participants, supporting single women who make up 49% of recipients, compared to 30% for single men
$1.9 billion over five years to expand payments to single parents whose youngest child is aged 14 years, up from the current cut-off of eight years, supporting the 37% of single mothers who live below the poverty line and abolishing the ParentsNext Program
$589 million on women’s safety to continue to underpin the National Plan to End Violence against Women and Children 2022–2032, including $194 million for the first dedicated Aboriginal and Torres Strait Islander Action Plan for family violence
Support for women in male-dominated trade apprenticeships to provide education, advice and support to create more culturally safe and inclusive workplaces, eliminate cultural and gendered barriers to women’s participation and support business to attract and retain women
Investment in research and data collection relating to women’s health, mental and reproductive health and women’s representation in sport. This includes funding for the Australian Longitudinal Study on Women’s Health and Woman centred care
Enhancing the gender perspective in government decision-making by embedding gender responsive budgeting system across the budget process and expanding the scope of gender impact assessment across Government proposals
The new measures meet four of the six urgent priority action areas put forward ahead of the Budget by the Women’s Economic Equality Taskforce (WEET). However, abolition of the Childcare Subsidy Activity Test and payment of superannuation for primary carers while they are on Paid Parental Leave – two of the more significant items on the WEET’s priority list – have not been included. Further, there is a notable absence of investment in women’s specific health initiatives.
Overall, the Budget signals a positive step for women. However, there are further opportunities to achieve a step change and strengthen the intersectional approach to entrenched disadvantage.
Women’s economic equality
There are key structural elements which limit women’s economic potential. Women are more commonly employed on a casual basis and are more commonly underemployed compared to men. Women are also more likely to be employed in lower paying industries, such as aged care and early childhood education. The pay gap remains at 13.3%.
No changes have been made to the Stage Three personal income tax cuts, legislated to come into effect in July 2024. This will consolidate gender income gaps for the long-term as there are much fewer women in the top 10% (men in the top 10% of taxpayers will receive almost 40% of the tax cut, while women in the top 10% of taxpayers will receive only 15% of the tax cut).
The government has outlined key policies to address women’s economic inequality, with particular focus on older women, single mothers and women with lower incomes. This includes:
$11.3 billion to provide an interim wage increase of 15% for aged care workers, supporting the Fair Work Commission’s decision and to help the industry retain its skilled workforce, attract more people and stop paying high agency rates to fill current gaps
$2.7 billion over five years to support Commonwealth Rent Assistance participants. From 20 September 2023, the maximum payable rate will increase by 15%. This will support single women who make up 49% of recipients compared to 30% for single men
$1.9 billion over five years to expand payments to single parents whose youngest child is aged 14. This will come into effect in September 2023. Parents will receive a higher base rate of $922.10 per fortnight until their child turns 14. This is an extra $176.90 per fortnight compared to the current JobSeeker Payment. This supports 37% of single mothers who live below the poverty line
Abolishing the ParentsNext Program, to be replaced by a new voluntary program that will better meet the needs of parents while removing the punitive elements of ParentsNext
$91.3 million in funding to support the mental health workforce, including an additional 500 psychology postgraduate placements and other training programs
$72.4 million to support, build and retain the early childhood education and care workforce. This includes improving access to professional development and providing financial assistance to educators to complete necessary professional requirements
$5.1 million over five years to improve the child support system and implement key recommendations made by the Joint Select Committee on Australia’s Family Law System
$5 million over three years from 2024-25 to organisations with appropriate expertise to support women in male-dominated trade apprenticeships to provide education, advice and support to create more culturally safe and inclusive workplaces, eliminate cultural and gendered barriers to women’s participation and support business to attract and retain women
Extending eligibility for the existing higher JobSeeker basic rate for those aged 55 and older to benefit 52,000 recipients, 55% of whom are women, to address barriers such as age discrimination and/or poor health. JobSeeker recipients aged 60 years and older will also see a $40 increase per fortnight to their basic payment rate
Developing a comprehensive NDIS workforce strategy to ensure NDIS participants can access the supports they need. An independent NDIS Review is underway and will be delivered in October 2023. It will examine ways to build a sustainable workforce, consulting widely with participants, providers and the community
Improving pathways for women, apprentices with disability, First Nations apprentices and remote apprentices to enter male-dominated workforces.
Ending violence against women and children
Violence against women and children is one of the most significant epidemics in Australia today. One in four Australian women experience intimate partner violence during their life, one in five experience sexual violence in their lifetime and in 2020-21, one woman was killed every fortnight by a current or former intimate partner.
Sustained preventative, early intervention and recovery efforts are needed to combat violence. The National Plan to End Violence against Women and Children 2022–2032, a policy framework guiding efforts and action, was introduced by the federal, state and territory governments in October 2022. The $1.7 billion invested in the October Budget to underpin the plan is extended upon in this Budget, with an additional $589.3 million to support women’s safety. This includes:
$194 million over five years for the first dedicated Aboriginal and Torres Strait Islander Action Plan for family violence, including $145.3 million in crisis supports, $23.2 million in culturally responsive healing programs, $17.6 million on family safety initiatives, and $7.8 million for a First Nations National Plan for Family Safety
$134.1 million over four years for the Office of the eSafety Commissioner to support women’s safety online
$51.7 million to establish the statutory Parliamentary Workplace Support Service, to respond to the bullying and sexual harassment identified within Australian Government parliamentary workplaces in the Set the Standard report
$46.5 million on two family law property programs to improve family law property settlement processes and outcomes, supporting vulnerable women, and $18.4 million to make Australia’s implementation of the Hague Convention safer for women and children impacted by international parental child abduction
$6.5 million to strengthen sexual assault and consent laws and improve justice responses to sexual violence, and $12.1 million on social media resources on consent for young people
Support for migrant women and women on temporary visas, including $10 million to expand family violence provisions within the Migration Act
Additional targeted investments under the National Plan, including $159 million to extend the National Partnership with states and territories, and $46.1 million for other programs and initiatives to end gender-based violence
Increasing funding through updated indexation for community organisations that support women and children experiencing violence
Increasing the supply of affordable and social housing, including support specifically for women experiencing violence or who are at risk of homelessness.
Leadership and decision-making
Better representation of women in leadership positions and in decision-making is essential to achieve gender equality across all facets of society. In Australia, positive changes have been observed because of effective targeted gender equality strategies. For example, the proportion of women in senior executive roles in the Australian Public Service has increased from 28.6% in 2001 to 52.0% in 2022.
However, women continue to be underrepresented across all management positions. In 2022, women made up 39.6% of managers and 35.7% of ASX200 directors. In the federal parliament, 10 out of 23 Cabinet positions are held by women. Crucially, only 14 CEOs in the ASX200 are women. It is expected that the lack of representation in leadership and decision-making is even more prominent among women with intersectional disadvantages.
The government has outlined several measures to enhance women’s representation, participation and influence in leadership positions and to government in the following ways:
The Women’s Leadership and Development Program provides grant funding to a range of organisations that support diverse women to prepare for and enter leadership position
$5 million over five years to Women for Election Australia to equip and encourage more women to enter politics
In this Budget, the government implemented four of six key recommendations from WEET. They include: the reinstatement of the Parenting Payment (Single) for women; abolition of the ParentsNext program; increase of the rate of Commonwealth Rental Assistance; and investing in an interim pay rise for all early childhood educators and aged care workers
Gender responsive budgeting is embedded across the budget process and gender equality outcomes are monitored across the budget cycle, led by the Office for Women
Gender impact assessments continued largely in the areas of jobs and skills, housing and the care economy. It will also involve a wider range of proposals across different portfolios if they meet certain criteria such as total value exceeding $250 million
The Australian Bureau of Statistics received funding to ensure its ongoing and regular collection of the Time Use Survey that provides estimates on time spent on unpaid work and care, as well as employment, study, leisure and personal care
The Women and Women’s Safety Ministerial Council supports the implementation of the National Plan to End Violence Against Women and Children and the provision of public sector workforce data on six Gender Equality Indicators to the Workplace Gender Equality Agency
The National Strategy to Achieve Gender Equality is currently under development and expected to be released in the second half of 2023.
Women’s health and wellbeing
One in three women will experience a reproductive or gynaecological health problem in their lifetime. Most of these conditions are severely under-funded. Women also experience a range of mental health conditions, including eating disorders, depression, and anxiety at higher rates compared to men. Women are 37% more likely than men to develop a 12-month mental disorder.
Women and girls face a range of challenges to participating in sport, including caring responsibilities, socio-cultural factors and a lack of female role models. Only 56.4% of Australian girls aged 0–14 play sport compared to 66.5% of boys of the same age.
The Government has introduced a range of measures to address medical research gaps, women’s reproductive and mental health and barriers for women to participating in sport. These include:
$26.4 million to support research and data collection around women and girls’ health outcomes, including
Funding to continue and strengthen Australian Longitudinal Study on Women’s Health, particularly for diverse participants
Support for the implementation, monitoring and evaluation of Women centred care: Strategic directions for Australian services
Subsidised storage of eggs, sperms, or embryos for Australians with cancer and those at risk of passing on genetic diseases
$16.8 million to introduce a new Medicare Benefits Schedule (MBS) item for the EndoPredict® brand gene expression profiling test, which is used to determine a patient’s risk of recurrent breast cancer
$6.2 million to support children to build and maintain a positive body image and reduce body dissatisfaction pressures
$6.0 million to extend the Australian Red Cross Lifeblood’s role to maintain and expand the delivery of donor milk across Australia
$5.3 million to continue support for the Australian Breastfeeding Association’s National Breastfeeding Helpline
$3.5 million to The Glen for Women, which is a culturally appropriate alcohol and other drug treatment service for First Nations women
$2.8 million to extend mental health support for Australians living with eating disorders and their families
$2.1 million to the Department of Health and Aged Care and the Australian Sports Commission for improving women and girls’ participation in talent and development programs.
This Budget also includes a range of substantive health investments that aren’t specific to but will benefit women. For example, $3.5 billion to address the decline in general practitioners’ bulk-billing on low-income earners and children and $99.1 million to introduce a new MBS item for consultations of 60 minutes or more – noting women are more likely to require longer consultations and that female GPs may also be more likely to have complex patients requiring longer consultations compared with male GPs.
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While this Budget focused on incremental improvements to existing policies and prioritised support for those currently outside the workforce, this comes at the cost of truly modernising the workforce to prepare for the new digital economy.
Some new investments in education, in anticipation of the Universities Accord; a new National Skills Agreement, National Schools Reform Agreement and major reviews into early childhood education sector occurring this year
Investment in critical and emerging sectors to lift the skills base by broadening access to foundational skills programs for Australians aged over 15, encouraging more women into apprenticeships through a new Australian Skills Guarantee
Net overseas migration is forecast at 400,000 in 2022–23 and 315,000 in 2023–24 with strong focus from the Government on providing certainty for skilled migrants via pathways to permanent residence
Funding realigned to the Government’s industrial relations priorities, including commitment to industrial relations legislative reforms for the second half of 2023
$116 million investment over 5 years to support the development of emerging technologies, starting with AI and Quantum computing
A one-off funding boost for psychosocial health and safety, with the allocation of $2 million over two years to develop training packages for safety representatives in the Commonwealth jurisdiction
Policy measures to enhance workforce participation for older Australians through $4.9 billion in changes to JobSeeker and $3.7 million of pensioner incentives
To realise the Treasurer’s ambition for a modern economy, further initiatives to increase the productivity, capacity and efficiency of the Australian workforce are critical.
A modern economy needs a modern workforce. There are opportunities to further support education and skills development, increase skilled migration and embrace a holistic approach to the health and prosperity of the workforce - including prioritising psychological workplace health and safety to yield greater wellbeing, productivity, and capacity to perform complex work.
The Treasurer has signalled a clear intent to create a modern economy, however this Budget introduces only a few new initiatives to accelerate the transition to a modern workforce. Investments in new and emerging technologies, measures to increase participation to improve inclusiveness and social inclusion are positive steps.
The transition to a modern workforce also requires a greater focus on initiatives to improve productivity and efficiency, enhance workplace health and create a workplace relations framework which promotes flexibility, productivity and growth at the enterprise level.
Investment in developing emergent technologies
A modern economy needs a workforce enabled by emergent technology. The Budget announcement indicated this will drive economic growth, boost technology industries and support the creation of new jobs.
Investment to support the development of emerging technologies, starting with AI and Quantum computing provides an opportunity to accelerate the application of these technologies across multiple industries. In doing so employers will be able to redesign work, addressing productivity stagnation, capacity constraints and skills shortages.
Targeted measures to increase workforce participation for older Australians
This Budget has outlined eligibility extensions to JobKeeper and Age Pension arrangements to increase participation of older Australians in the workforce. These measures are likely to increase and diversify workforce supply to a range of sectors of the Australian economy and bring significant experience and varied perspectives to these workplaces.
These measures also have the potential of realising substantial benefits in upskilling older workers in more modern, digital and collaborative ways of working. Government and employers will need to be deliberate in where these workers are best deployed and how they are supported as they re-enter the workforce.
Employment and workplace relations
The Government has identified savings across the Employment and Workplace Relations portfolio of $212.9 million over five years from 2022–23. It will redirect funds to other portfolio priorities and has reinstated its commitment to the workplace relations legislative reforms expected to be introduced in the second half of 2023.
While there was no substantial new funding in the education sector, this Budget sets down a view of education as a growth engine and a way to improve social access and equity. During 2023 broad-based education reviews will be in progress in early childhood education and care, schooling and the university sector which are likely to establish a platform for more substantive reform in the future. In the short term, this Budget consolidates existing initiatives in areas of priority - namely support for child care, access to fee-free TAFE - and makes modest efforts to strengthen the education workforce in the face of major supply pressures.
Early childhood education and care
The Budget includes some modest funding commitments to Early Childhood Education and Care (ECEC), largely through workforce measures. This follows the Government’s headline commitment in the last Budget to increase Child Care Subsidy (CCS) payments to families as part of a broader economic agenda to increase parents’ and carers’ workforce participation.
The Budget includes $72.4 million over five years to build and retain the current ECEC workforce, including $34.4 million for mandatory or highly recommended training and $33.1 million to support educators to undertake a paid practicum as part of a bachelors or post-graduate initial teacher education course. In addition, $4.8 million will support 2,000 early childhood professionals to undertake a practicum exchange at a different service, in particular in regional and remote locations.
Many of the education commitments outlined in the Budget are expected to be delivered through savings realised in a targeted focus on fraud and non-compliance with the CCS program ($139.4 million over four years). Emphasised as ‘safeguarding’ the CCS program, the Budget included $18.6 million to increase the Government’s capability to further reduce fraudulent claims.
The Budget’s $3.7 billion investment in an updated five-year national skills agreement with the states and territories will set a roadmap for the sector. An immediate-term investment in vocational education is centred around equity of access to skills for social and economic inclusion, with key measures including funding an additional 300,000 fee-free TAFE places to train Australians in ‘critical and emerging sectors’.
Additionally, a redesigned Commonwealth foundation skills program to improve access to training for all Australians seeking to develop their language, literacy, numeracy and digital skills features in the Budget, with expanded eligibility for and a mix of national and local solutions to improve access and delivery. This reflects a commitment from the Jobs and Skills Summit to support vulnerable Australians to gain secure employment.
Funding of $8.6 million has been committed over four years from 2023–24 (and $1.5 million per year ongoing) to implement the Australian Skills Guarantee, ensuring one in 10 employees working on major Australian Government-funded projects is an apprentice, trainee or paid cadet. The Guarantee will incorporate targets for women employed as apprentices, trainees and paid cadets.
In the higher education sector, the Universities Accord is expected to prompt substantial reforms. Ahead of the Interim Report of the Accord in June 2023, this Budget focuses investments in expanded funding for equity cohorts, both through Commonwealth Grants Scheme-funded places and in student support. This includes $128.5 million to fund 4,000 additional university places over the next four years for students in STEM disciplines in support of the AUKUS program, with 800 of these places to be allocated to South Australian universities. Other targeted investments in educational equity include an additional $4.3 million in the Higher Education Disability Support Program to assist students with disabilities to access, participate in and succeed in higher education, and a two-year extension of the Women in STEM Cadetships and Advanced Apprenticeships program.
There are limited major changes to funding and spending in the schooling sector, with the Australian Government undertaking a major review of schooling policy before negotiating a new National Schools Reform Agreement with the states and territories for 2025.
The Budget includes modest new spending to support the delivery of the National Teacher Workforce Action Plan, which seeks to address serious workforce challenges being faced by schools across Australia. $35 million over four years has been allocated to attract more people to the teaching profession and retain more teachers in the workforce. This includes $25 million over four years from 2022–23 to establish a Teacher Workload Reduction Fund to pilot new ways to reduce teacher workloads and maximise the time they have to teach.
With a focus on supporting First Nations students, a further $32.8 million has also been allocated to support the Clontarf Foundation to extend its successful program to up to 12,500 young Aboriginal and Torres Strait Islander men to improve their confidence, school engagement, Year 12 attainment and post-school pathways.
At first glance, this Budget doesn’t have a strong education and training focus, which is no surprise given the multiple reviews into early years, schooling and tertiary education currently under way. That said, there is a recognition in this Budget that education and training are the vehicles to drive the economic and social outcomes the Government is intending to deliver.
The Government’s view of education as a lever for workforce and economic growth is reflected in the investments in tertiary education, chiefly the $3.7 billion investment into the skills agreement with states and territories. 300,000 fee-free TAFE places for critical and emerging industries and a further 4,000 Commonwealth Grants Scheme-funded university places will also help to build capacity in the sector to produce the future workforce we will need. At the same time, the additional funding for student disability support services and women studying pre-degree courses in STEM support the Government’s access and equity goals. Nonetheless, forthcoming changes that are expected to arise out of the Accord process or new National Schools Reform Agreement leave much room to speculate about potential future reform.
Behind the scenes of the Government’s big election commitment – Cheaper Child Care – is the capacity of an already stretched ECEC workforce to deliver. As more families are able to save on out-of-pocket costs for child care, it’s yet unclear how many more will be looking to sign up for longer hours or more days. The inclusion of professional development support may go some way to helping staff provide high quality, as well as high quantity, services. The modest investments here will likely be bolstered by findings from the ACCC and Productivity Inquiry reviews announced in the previous Budget.
The Government’s immigration focus is on creating certainty for skilled migrants to Australia and thus improving Australia’s attractiveness as a global destination, while generating revenue via significant increases to visa application charges.
Population and migration
The return of temporary migrants to Australia since our international borders reopenedhas started to increase. However, on current forecasts, net overseas migration will still be cumulatively lower than pre-pandemic forecasts, with an overall recovery likely to take another six years.
Net overseas migration is forecast to be 400,000 in 2022–23 and 315,000 in 2023–24. This is a direct result of the post-COVID catch up. These larger numbers are temporary in nature and expected to return to normal levels in 2023-24. The Government will return the permanent Migration Program level to 190,000 places for 2023-24, with an allocation of approximately 70% of places to skilled programs to address ongoing skill shortages in Australia.
Changes to visa types and charges
The Government will provide additional funding to support visa processing and improve existing visa processing systems. Funding will also be dedicated to enforcement and compliance activities to maintain the integrity of the migration system.
From 1 July 2023 Visa Application Charges (VAC) will be increased. The VAC will be increased by between 6% and 40% depending on the visa category, with the most significant increase being for business innovation and investment visas.
From 1 July 2023, the Government will grant an extra two years of post-study work rights to international higher education graduates of Australian institutions with eligible qualifications. International student visa holders will be permitted to work 48 hours per fortnight, an 8-hour increase per fortnight from the pre-pandemic level.
The Government will improve pathways to permanency for Temporary Skill Shortage (TSS) (subclass 482) visa holders. TSS visa holders whose occupation is on the short-term list – and therefore currently unable to apply for permanent residence in Australia (under company sponsorship– will have this restriction removed. Furthermore, the limitation on TSS visa holders on the short-term list only being able to apply for one subsequent TSS visa onshore will also be removed.
Targeted measures and humanitarian support
The Temporary Skilled Migration Income Threshold (TSMIT) will be increased from $53,900 to $70,000 from 1 July 2023. This will apply to all TSS visa applications lodged after this date and represents the first increase in TSMIT in 10 years.
From 1 July 2023, the Government will provide a direct pathway to Australian citizenship for New Zealand citizens in Australia. New Zealand citizens on non-protected Special Category visas (Subclass 444), who meet general residence and other legislative requirements, will be able to apply directly for citizenship without first becoming a permanent resident in Australia.
The Government will provide a permanent residence pathway to holders of Temporary Protection (Subclass 785) and Safe Haven Enterprise (Subclass 790) visa holders who held or applied for this category of visa prior to 14 February 2023.
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