It’s Federal Budget time! What’s in it for you?
In this pre-election Budget, we were expecting a number of cash boosts for Aussie families and Treasurer Josh Frydenberg has certainly delivered. The familiar themes of housing affordability, household budgets and tax reductions are all addressed in this year’s Budget.
‘Temporary and targeted’ seemed to be a mantra of Mr Frydenberg last night, so let’s take a look at some of the top items that are set to benefit some 16 million individuals from this year’s Budget.
50% reduction on fuel excise
Soaring fuel prices have been in the headlines for weeks. The move to cut the fuel excise by 50%, from 44.2c down to 22.1c per litre, should be an immediate boost across the economy and took effect from midnight last night. This excise cut should be reflected at pumps today or tomorrow. But take note, this temporary cut is only slated to last until 28 September 2022 after which the fuel excise will bounce back up to the standard rate.
One off cash payment
A cash boost of $250 will be made to eligible pensioners, concession card holders, welfare recipients and veterans as a one-off cost of living payment. It’s expected that around 6 million people will receive this payment and it will be rolled out in a matter of weeks, no doubt prior to the Federal election.
Lamington…aka Low and Middle Income Tax Offset
Does an extra $420 in your tax return sound good? Well, if you earn up to $126,000 per year then this cost of living tax offset is for you. This increase to the Low and Middle Income Tax Offset (also known as the lamington or LMITO) will see a single person get up to $1,500 back instead of the previous $1,080, while couples could receive up to $3,000. It’s expected that around 10 million Australians will benefit from this change.
First home buyers
The New Home Guarantee scheme is set to be expanded. An additional 50,000 places will be available on the scheme which is designed to help first home buyers jump onto the property ladder with a smaller deposit, without incurring the additional cost of Lenders Mortgage Insurance. With as little as 5% deposit, or 2% for single parents, first home buyers are supported by a guarantee from the National Housing Finance and Investment Corporation. With the median house price in Australia around $1m, this will be welcome news for first home buyers looking to boost their deposit for a purchase.
Training support for Tradies
This is one of the few employment incentives in this year’s Budget and is touted as the ‘foundations for a national skills reform’ by Mr Frydenberg. Apprentices could receive $5,000 in training support payments and their employer up to $15,000 in wage subsidies – provided the apprenticeship is on the official list of skills in demand.
A number of measures were announced earlier this month and are already in effect:
Pension and welfare payments
The increase in pension and welfare payments took effect from 20 March 2022. Singles received a boost of $20.10 in their pocket each fortnight, while couples saw an additional $30.20 per fortnight.
Childcare subsidy relief pulled forward
Childcare subsidy changes were introduced four months earlier than anticipated on 7 March 2022 with the subsidy rate increasing for a second child under five. The subsidy increase ranges between 10-30% depending on the family income bracket.
Treasurer Josh Frydenberg stressed that this Budget balanced the need for macro-economic repair post-COVID and helping Australians cope with the rising costs of everyday items. With national debt forecast at $78 billion for 2022-23 and inflation sitting at 3.5% (and forecast to rise) it certainly is a balancing act.
Who knows if this Budget will be enough to win the election for the incumbent government but the immediate nature of many of the cash payments are likely to help Aussies who are being hit hard by cost of living increases.
It will be interesting to see how the Reserve Bank of Australia reacts next week with the announcement of the Cash Rate – will it remain at an all-time low, or will pensioners everywhere be dancing with relief as they finally see higher returns on their retirement savings? Check back next week for our RBA round up!