SUMMARY OF THE FEDERAL BUDGET 2022-2023

The Federal Budget announced by Treasurer Josh Frydenberg this week, which contained measures to boost consumer spending and reduce cost of living expenses. There is also an added investment in training, digital innovation and taxation benefits for businesses.

Visit the Federal Budget homepage at budget.gov.au

Economic position

• Net debt is estimated to be $631.5 billion in 2021-22 (27.6% of GDP), increasing to $714.9 billion (31.1% of GDP) in 2022-23 and then rising to $864.7 billion (33.1% of GDP) in 2025-26.

• Inflation is expected to increase in the near term, with CPI to grow by a forecast of 4.25% in the year through to June 2022. Headline inflation is predicted to moderate to 3% in the year to June 2023, reflecting pressure from global supply chains, then decrease to 2.75% by June 2024
• Wage growth as measured by the WPI increased to 2.3% in the year to December and is expected to rise to 2.75% in the year to June 2022. It is then forecast to rise to 3.25% in 2023 and 2024, its highest annual rise in almost a decade.
• The unemployment rate is forecast to continue to fall over the next few quarters, reflecting the solid domestic economy, down to 3.75% by September 2022 and remain there until 2024-25.
• Net overseas migration is expected to rise from negative 90,000 in 2020-21 to be positive 41,000 in 2021-22; it will then increase to 180,000 in 2022-23 and 213,000 in 2023-24, and an estimated 235,000 persons in 2024-25 and 2025-26.
• Business Investment is strong, driven by non-mining investment; overall new business investment is forecast to grow by 5.5% in 2021-22, 9% in 2022-23, but then fall to 1% in 2023-24.

Summary of support 

The Budget includes several new, extended and enhanced measures to support small businesses, including:

• Temporary halving of fuel excise of 22.1 cents per litre for six months from tonight.
• Cost of living tax offset (increase in the LMITO payment) of $420 from 1 July to over 10 million individuals earning under $126,000
• $250 one-off income tax-exempt payment in April 2022 to 6 million pensioners, welfare recipients, veterans and eligible concession cardholders.

• Small business skills and technology investment boost, with a 20% tax bonus (investment allowance) for investment in digital technology and expenditure incurred on external training courses for upskilling staff.
• $1.85 billion cash flow support for small businesses by lowering tax instalments.
• Additional $6 billion in COVID-19 health winter response plan

Small Business

• For every hundred dollars a small business spends on training its employees, they will get a $120 tax deduction.
• From tonight, every hundred dollars these small businesses spend on digital technologies like cloud computing, e-Invoicing, cyber security and web design will see them get a $120 tax deduction.
• $10.4 million to enhance and redesign the Payment Times Reporting Portal and Register, making it easier to view the payment practices of Australia’s largest organisations.
• $5.6 million for a dedicated small business unit in the Fair Work Commission, making it easier for them to meet workplace obligations.
• $8 million to the Australian Small Business and Family Enterprise Ombudsman, making it easier to access expert advice.
• $4.6 million to extend Beyond Blue’s NewAccess for Small Business Owners program, making it easier to access mental health support.
• $2.1 million for Financial Counselling Australia’s Small Business Debt Helpline making it easier for small business owners to receive financial advice.
• The GDP uplift rate that applies to PAYG income tax and GST instalments will be reduced to 2 per cent for the 2022-23 income year. 
• This will mean lower tax instalments, delivering $1.85 billion in cash flow support for 2.3 million small to medium businesses, sole traders and others who use the instalment amount
• More than 3.6 million small businesses with an annual turnover of less than $50 million will be able to claim a bonus 20 per cent deduction for the cost of expenses and depreciating assets, up to $100,000 of expenditure per year. 
• Eligible expenditure includes items such as portable payment devices, cyber security systems and subscriptions to cloud-based services. 
• The boost will apply to expenditure incurred from 7:30 pm (AEDT) on 29 March 2022 (Budget night) until 30 June 2023.

Skills and training

• A new $2.8 billion investment to increase take up and completion rates.
• Providing $5,000 payments to new apprentices.
• And up to $15,000 in wage subsidies for employers who take them on.
• National skills reform with a $3.7  billion investment, supporting an additional 800,000 training places.
• From 1 July 2022, the Australian Apprenticeships Incentive System will provide broad support to the economy through wage subsidies for employers in priority occupations and hiring incentives for employers in non-priority occupations. Apprentices and trainees in priority occupations will also receive a generous direct payment of up to $5,000 over two years to assist with the cost of undertaking an apprenticeship.
• As we move into the second phase, the Federal Government says the Australian Apprenticeships Incentive System will shift to supporting occupations in demand or skills need, with a hiring incentive of up to $4,000 to be provided for employers in priority occupations, as well as a new Australian Apprentices Training Support Payment of up to $3,000 paid directly to apprentices in priority occupations.
• It will be guided by a new Australian Apprenticeships Priority List, which sets out the occupations with an apprenticeship or traineeship pathway with strong current and future demand. The list is based on the National Skills Commission analysis and will be updated every year.
• Young Australians will also benefit from more support provided for young apprentices aged 15 to 20 years to improve their chances of completing their training, whether in the cities or across regional Australia.