Budget 2023: Everything we know ahead of Jim Chalmers’ second budget

A year on from taking office, and with inflation still running too high, the Albanese government has to walk a fiscal tightrope – don’t add to inflation but help those doing it tough.

The Treasurer has confirmed the budget is forecast to record a “small” surplus of $4bn for the 2022-2023 financial year for the first time in 15 years.

But the budget is then expected to return to deficit for the next four years, in part because of spending pressures on the National Disability Insurance Scheme, aged care, health, Defence and debt interest repayments.

The aged care budget is set to blow out to $24.8bn this year, Defence is seeking to repurpose parts of its budget, and the government is attempting to rein in an out-of-control NDIS.

Budget measures will be in-part paid for by more than $17bn in savings and reprioritisations.

Here’s what we know about the 2023 budget so far:

Cost of living

Dr Chalmers has promised a $14.6bn cost of living package over four years to help Australians struggling with mounting pressures, while also not adding to inflationary pressures.

Part of that includes a $1.5bn electricity package that will provide up to $500 in power bill relief to more than five million households and one million businesses.

A repackaging of a promise made following an emergency parliamentary sitting in December, how much a person receives will depend on where they live given the government had to make individual agreements with each state and territory.

Expect the budget to boast that the government’s decision to intervene in the gas market will also ease gas price rises to just 18 per cent and 4 per cent over the coming two years (instead of 20 per cent in each).

There will also be an electrification package for low-income households and renters designed to boost energy efficiency and insulate households from future price shock in the energy market.

Welfare

Single parents are set to be one of the biggest winners in Tuesday’s budget, with Anthony Albanese announcing on Monday more than 57,500 people will receive government payments for an extra six years.

Sole parents will be able to receive the single parenting payment until their youngest child turns 14 – up from the current age of eight.

The package will cost the budget about $1.9bn through to 2026-27, with payments to be increased by $176.90 every fortnight from September 20.

The Prime Minister said eight was “far too low”, and the change was an “investment” given single parents – overwhelmingly women – faced difficulty balancing caring responsibilities and work.

“I know first hand what it’s like to grow up with a single mum doing it tough, and we want to make sure that the children of single parent families have the best opportunities in life to go on and to fulfil and aspire to a good life with good jobs with security,” he said.

“And we want to look after single parents because we know that the role that they play in raising their children is such a priority for them, and they’re deserving of more support.”

The much maligned ParentsNext program that forced parents with young children to undertake parenting programs or job training or risk losing their payments will be axed.

Australians of all ages on JobSeeker are expected to receive a “modest” boost to their fortnightly payments, not just to over 55s.

The government has made strong suggestions that there may be an increase to Commonwealth Rental Assistance in the budget – as has been widely called for.

It’s unclear yet how much the government would raise the payments by or whether there would be requirements for such an increase.

The NDIS has become one of the biggest strains on the federal budget. As such, the growth rate will be cut from 13.8 per cent to 8 per cent by mid-2026. The government has put aside $720m to fund staff increases and necessary reforms to drive down costs.

Childcare

The government has been promising to make childcare cheaper since before it took office, and 1.2 million families are set to benefit from July 1 when subsidy rates are lifted.

The government will commit $55.31bn across the next four years to make childcare more affordable.

In addition, the government will commit $72.4m over five years to support the skills and training of workers in the early childhood education and care sector.

Defence

A wide-reaching Defence Strategic Review has recommended – and the government accepted – $19bn over the forward estimates to modernise Australia’s Defence posture and force.

Defence Minister Richard Marles last week said there would be a “reprioritisation” of $7.8bn already in the Defence budget.

As for personnel, the DSR recommended more than 18,000 additional troops would be needed by 2040 to keep up.

In a bid to retain existing personnel, the government has already announced a $50,000 bonus to those who stay on for an extra three years after their service requirement is up.

The total program will cost more than $400m.

Workers

Millions of Australians will be better off as part of a budget plan to force employers to pay superannuation on payday, instead of holding out for quarterly or other payments.

Some experts predict it will make young workers $50,000 better off at retirement.

It’s not all good news for workers, though, with more than 10 million Australians earning less than $126,000 to no longer receive the low and middle-income tax offset.

Instead, the government is gearing up to roll out so-called “stage 3” tax cuts from next year that will change tax brackets and save high income earners thousands.

Health

Just as Australia had finally almost won the war against cigarettes, flavoured e-cigarettes – or vapes – reared their ugly heads, targeting young people.

The government says it will make vapes harder to obtain, announcing Australians will soon require a prescription from their doctor before they can buy a flavourless vapes as a stop smoking treatment only.

Health Minister Mark Butler announced the budget would include $234m to fund the new measures.

In a bid to curb smoking more broadly, the government has announced taxes on cigarettes will be raised by 5 per cent, totalling a $3.3bn increase in revenue over the next three years to help pay for health programs.

At the pharmacy, up to six million Australians will be allowed to buy double their medication for the price of a single script as part of a shake-up to the Pharmaceutical Benefits Scheme.

Long Covid research will also benefit from the budget, with the government announcing a $50m investment into the Medical Research Future Fund.

And, the Medicare rebate will be extended for heart health assessments until June 30, 2025, in order to target the country’s “biggest killer”: heart disease.

The budget is expected to contain more details about the government’s Medicare overhaul.

Aged care

An increasing ageing population is set to continue to put immense pressure on the budget, as aged care becomes the fifth-largest area of federal government expenditure.

The costs will rise to an estimated $29.6bn this coming financial year, up from $24.8bn in 2022, a leap of 23 per cent.

Rising costs have been attributed to Australia’s ageing population, with the number of aged care recipients growing 3.5 per cent from 2020-21 to 2021-22 to reach 1.5 million.

Aged care workers will start receiving their 15 per cent pay rise – as promised by the Albanese government and determined by the Fair Work Commissions – from July 1.

It will cost the budget $11.3bn over the next four years to fund the increase for the 250,000 workers in the sector.

Costs will be recuperated by raising costs for services within the sector.

Homebuyers

Family and friends wanting to buy a house together will be able to under an overhaul to the first-home guarantee and its regional counterpart.

The expansion of the scheme will allow thousands more Australians to access the government’s guarantee – which means they can purchase a home with as little as a 5 per cent deposit, with the government to assure the remaining 15 per cent.

Oil and gas

Big oil and gas producers will have their tax deductions capped and face tougher tax compliance measures as part of a budget crackdown estimated by Treasury to raise $2.4bn over four years.

The biggest revenue raiser out of the 16 technical petroleum resources rental tax (PRRT) changes will be limiting annual deductions for expenditure at 90 per cent of the project’s income each year from July 2023.

Schools

More than 1300 schools across the country will benefit from a share of $32m in grants to upgrade school infrastructure and equipment.

The funding, part of a $250m commitment to improving school infrastructure, will go towards projects like new or improved outdoor learning areas, new or upgraded airconditioning, better ventilation, and new tablets and laptops.

Natural disasters

State-of-the art technology will be invested in to help save the lives of Australians living in areas impacted by natural disasters.

The national messaging system will be operational by 2024, but the government won’t reveal how much the program will cost.

The government will spend $10.1m to establish a taskforce to set up a new broadband system that will help all emergency services agencies across jurisdictions communicate more effectively.

Elsewhere, in the wake of recent floods, an additional $4.4m will go to 83 emergency and flood relief providers across Queensland and Western Australia.

Environment

To improve the quality of water flowing to the Great Barrier Reef, the government has committed $150m.

There’s also an extra $262.3m for national parks, including Uluru.

Culture

Australia’s nine “national collecting institutions” – including Old Parliament House, the National Archives and the National Portrait Gallery – will receive $535.3m over four years for urgent repairs and improvements.

Originally published as Budget 2023: Everything we know ahead of Jim Chalmers’ second budget