The October Budget delivers on a range of welcome bread & butter commitments, but has deferred solving Australia’s meat and potatoes revenue problems until at least May 2023, according to independent think-tank the Australia Institute.
“The meat and potatoes revenue reforms Australia needs, like scrapping stage 3, a windfall profits tax, or fixing the PRRT have disappointingly been deferred until at least May 2023,” said Matt Grudnoff, senior economist at the Australia Institute.
“While this Budget delivers a welcome entrée of spending in education, childcare, health, aged care, housing and tax compliance measures, the main course of revenue reform – including scrapping the stage 3 tax cuts for high income earners and reforms to resource taxation – is the real work to come,” Mr Grudnoff said.
The growing revenue needs of the NDIS, aged care, income support, housing, climate action and defence will require substantial reform in subsequent budgets.
- Cheaper early childcare education costing $4.7 bn over the forward estimates, bringing a real economic dividend, expanding participation rates
- Expansion of paid parental leave to 26 weeks and a better split between parents. $530 million over 4 years from 2022-23
- Scrapping the quarter of a trillion dollars of Stage 3 tax cuts for high income earners. Stage 3 will cost about a third of the deficit in the two out years.
- Any decision to reform and improve tax measures on resources like gas, coal and oil, whether via a windfall profits tax or reforms to fix the PRRT, have been deferred until May 2023 at the earliest.
Budget Measures Delivered:
- Among other large election commitments are aged care reforms for registered nurses 24/7
- 20,000 university places for in-demand skills including nursing, teaching and other professions targeted at low-SES worth $485.5m
- Cheaper medicines policy at $786m
- $228m for strengthening Medicare
- $410 for the electric vehicle discount policy
- The budget will also allocate an extra $520m for community organisations, including housing, Indigenous and domestic violence services, to help deal with rising inflation.
- Other significant costs to be reflected in the budget include the cost of servicing government debt, which is expected to grow by 14% annually, while spending on the NDIS will grow 14.7%, and defence 5.4%.
- An increase to foreign aid has also been included in the budget, with a $900m boost to official development assistance (ODA) for the Pacific and a $470m increase to aid for South-East Asia.
- Multinational corporations pay more tax, with the move to raise $1bn over four years from 2023-24.
- It also forecasts a $3bn improvement to the bottom line by clawing back extra revenue through extending and boosting existing tax compliance programs.