Budget: Real Revenue Reform Delayed Until 2024 Amid Structural Deficit for Services

Federal Budget 2023-24 has delayed solving Australia’s structural revenue problem, deferring any change to the Stage 3 tax cuts ($254b over 10 years) or fossil fuel tax credits ($9.4b in 2023-4) until at least May 2024, before the next federal election.

The decision to delay revenue reforms leaves the Budget ill-equipped to meet the needs of the Australian people across welfare, housing, climate change, the NDIS and health.

While minimal increases to JobSeeker, Youth Allowance and other payments are welcome, Australia Institute economists warn they fall far short of the “substantial increase” recommended by the Economic Inclusion Advisory Committee to lift people above the poverty line.

Positive Measures:

  • A 15% per fortnight increase to Commonwealth Rent Assistance
  • $1.3b to establish a household energy upgrades fund
  • A 15% pay rise for aged care workers
  • $500 energy relief subsidy for households
  • $5.6b over 5 years to strengthen medicare, increase bulk billing

Missed Opportunities:

  • Stage 3 tax cuts for high income earners, worth $254b over 10 years
  • Fossil fuel subsidies, with the fuel tax credit increasing to $9.4b in 2023-24
  • PRRT changes will raise less revenue ($2.4b) than the increase in the tobacco tax ($3b)
  • JobSeeker will receive an insufficient $3 a day increase, well short of the $25 a day needed to lift those on Jobseeker out of poverty. With unemployment set to increase to 4.5%, 140,000
  • More Australians will likely be pushed below the poverty line

“This budget confirms that change is going to be incremental and slow,” said Matt Grudnoff, senior economist at the Australia Institute.

“With a budget in structural deficit any decision on changes to the Stage 3 tax cuts for high income earners or changes to fossil fuel subsidies have been delayed until May 2024, before the next election.

“The Commonwealth will need real revenue solutions going forward to pay for essential services in housing, the NDIS, health, welfare, and climate.

“The insufficient increase to JobSeeker is a major concern considering the Budget papers are predicting unemployment to increase to 4.5%, which would mean an additional 140,000 unemployed people plunged below the poverty line.

“Changes to the Petroleum Resource Rent Tax (PRRT) will raise less revenue ($2.4b) than the increase in the tobacco tax ($3b). At a time of unprecedented gas prices, the PRRT will make up less than half a percent of tax revenue. Australians will continue to miss out on the super returns from our own resources.

“Housing affordability is given lip service in this budget. Both the Government and Opposition continue to put forward policies that will make no real difference to those struggling to rent or buy a home. After decades of neglect, policies to make housing cheaper now require substantial structural change.

“Thankfully for the Government, there are plenty of options for raising the revenue needed to help households through the cost of living and housing crisis and fix our structural revenue challenge.”