Australians are facing a tough couple of years with rising power bills and falling wages foreshadowed in the Albanese government’s first budget.
Treasurer Jim Chalmers paved the way for difficult decisions to be taken in the future, saying tough measures were needed to rein in debt during a period of global economic uncertainty.
Households are facing steeply rising power prices, with a more than 50 per cent increase in retail electricity bills predicted over the next two years.
Gas prices could lift more than 40 per cent in the same period.
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Dr Chalmers said the government was exercising restraint in cost-of-living relief to avoid adding to rising inflation, which is tipped to peak at 7.75 per cent by the end of the year.“We handed down a budget that was really responsible and right for the times,” he told ABC TV on Wednesday.
“We’ve got our fair share of challenges right now, what we were able to do was provide some cost of living relief in a way that doesn’t push up inflation.”
While the budget papers showed a better-than-expected deficit for 2022/23 of $36.9 billion, the figure is on track to blow out to $51.3 billion in 2024/25.
Prime Minister Anthony Albanese denied the government had refused to take tough decisions in its first budget after banking almost all of the extra revenue.
“Putting 99 per cent of the revenue gain back into paying off debt is a good thing for us to do, a tough thing for us to do,” he told the Nine’s Today program.
“We know people are doing it tough out there. But had we had a cash splash, that would have just added to inflation and would have been counterproductive.”
The economy is forecast to grow by 3.25 per cent this financial year, but growth will slow to 1.5 per cent next year.
Mr Albanese said he stood by his pledge to cut electricity prices by $275 a year despite the dire predictions for the coming two years
Dr Chalmers said the government would consider regulatory steps to ease power prices.
“This pressure is coming from a busted energy market around the world, a consequence of the war in Ukraine,” he said.
“But the consequences of that are being borne around the kitchen table and we won’t ignore that.”
Wage growth isn’t expected to outstrip inflation until at least mid-2024 but the prime minister says measures like childcare and paid parental leave will help struggling families.
Childcare will be made cheaper for 1.26 million people, while more than $530 million will be spent expanding paid parental leave to 26 weeks by 2026.An extra $787 million has also been set aside to reduce co-payments for the Pharmaceutical Benefits Scheme, while money has been allocated to support pay rises for low-paid workers.
A national housing accord has set a target of one million new homes to be built over the next five years.
The NDIS will also be boosted by an extra $8.8 billion over the next four years, while $235 million will be spent on urgent care clinics and $750 million to strengthen Medicare.
Budget summary
Economy
* Budget deficit of $36.9 billion in 2022/23
* Deficit expands to $44 billion in 2023/24, $51.3 billion in 2024/25 and drops to $49.6 billion in 2025/26
* Commonwealth net debt to rise to $572.2 billion (23 per cent of GDP) in 2022/23 before hitting $766.8 billion (28.5 per cent of GDP) in 2025/26
* Economic growth to rise by 3.25 per cent in 2022/23, before easing to 1.5 per cent in 2023/24
* Unemployment rate of 3.75 per cent in 2022/23, rising to 4.5 per cent in 2023/24 then remaining stable
* Inflation as measured by CPI to be 5.75 per cent in 2022/23
* Wages to rise by 3.75 per cent in 2022/23
Cost of living
* Cheaper child care for 1.26 million families (costing $4.7 billion over four years)
* Expanded paid parental leave to 26 weeks by 2026
* Cuts to cost of medicines on Pharmaceutical Benefits Scheme
* Support for wage increases for lowest paid workers
Business
* New agency called Jobs and Skills Australia to oversee workforce planning
* Permanent migration expanded to 195,000 in 2022/23
* Energy efficiency grants
Regions
* National Reconstruction Fund providing $15 billion for loans, guarantees and equity for projects in areas such as agriculture, resources, renewable energy and transport
* $2.4 billion investment in NBN, reaching 660,000 extra regional homes
* $1 billion for two new programs: Growing Regions and Precincts and Partnerships
Health
* $109.7 billion budget
* $235 million over four years for urgent care clinics
* $750 million Strengthening Medicare Fund
* $2.6 billion for COVID-19 pandemic support
Women
* $1.7 billion women’s safety plan
* Better reporting by companies on gender pay gap
* Fair Work Commission to consider equity when setting minimum wage
* Housing Australia Future Fund to back social housing for women fleeing violence
* $32 million for network of women’s advisory centres
Housing
* National Housing Accord to set target of an extra one million homes over five years
* Under the accord, $350 million over five years for affordable housing
* National Housing and Homelessness Plan with states and territories
* $10 billion Housing Australia Future Fund
* Four schemes aimed at first home buyers and downsizers
Defence
* $38.3 billion total budget
* Eight per cent boost in defence spending
* New Australia Pacific Defence School
* $22.3 million for Australian Border Force officer network across Pacific
Infrastructure
* $120 billion pipeline of investment over 10 years
* $250 million to expand local roads and community infrastructure program
* $1.2 billion national water grid fund
Education
* $46.3 billion budget
* 480,000 fee-free TAFE places
* 20,000 extra university places
* Funding for improved classrooms
Welfare
* $228.8 billion budget
Aged care
* $2.5 billion over four years to fix urgent crisis
* $845.1 million for COVID-19 expenses
* $540.3 million for broader aged care reform
* Pay rise for aged care workers
Indigenous
* $66.5 million for maintaining and expanding protected areas
* $47.5 million for National Indigenous Australians Agency to support community sector bodies
* $75.1 million over two years to prepare for Indigenous voice referendum
Environment
* $1.2 billion by 2030 to preserve and restore Great Barrier Reef
* $224.5 million in support for threatened native species
Disability
* $166.6 billion over four years for NDIS, up $8.8b
* Extra university places for students with disabilities
* $10.3 million Sport4All program expansion
Integrity
* $262.6 million over four years for National Anti-Corruption Commission
* $30 million for royal commission into robodebt
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