The Albanese Federal Labor government claims that its first Budget since coming to power, revealed on Tuesday evening, is a “responsible” one, to take Australia through the challenges it faces: flooding, a global economic slowdown, high inflation, rising interest rates, skills shortages, falling real wages.

It will, the government states, relieve cost-of-living pressures; create a stronger, more resilient, and more modern economy; and repair the Budget.

This is the second Budget of the year; Labor claims the Budget they inherited from the Liberals –viewed by many as an election sweetener – was burdened by $1 trillion of debt and persistent structural deficits.

“This is a solid and sensible Budget, suited to the times we are in and the conditions we confront,” the government stated.

But there have been concerns from across the political spectrum that the budget benefits fossil fuel companies and the wealthy at the expense of struggling Australians. Similarly, the government’s failure to scrap stage three tax cuts and to waive the ACT’s housing debt have irked many.

“The ACT Greens acknowledge there are some good things for Canberra in the latest budget but would like to see an end to handouts, directed to fossil fuel companies and the wealthiest Australians, at the expense of the environment and the least advantaged,” Rebecca Vassarotti, ACT Minister for Homelessness and Housing Services, said.

Economic outlook

“The Australian economy is facing headwinds from a deteriorating global economy, a global price shock, natural disasters, high inflation, and rising interest rates,” the Budget states. “While more Australians are in jobs, wages growth is not keeping pace with price rises, and higher interest rates are placing even more pressure on many households.”

The economy is expected to grow by 3¼ per cent over 2022–23, before slowing to 1½ per cent in 2023–24 as global challenges and cost-of-living pressures weigh on households and the economy. Employment growth is expected to ease, but jobs will continue to be created, and the unemployment rate is expected to stay low by historical standards, at 4½ per cent in June 2024.

Supply constraints and high global energy prices persist, and are exacerbated by recent floods. Inflation is forecast to peak at 7¾ per cent by the end of 2022, and ease gradually over the next two years. As wages grow more strongly, and inflation moderates, the government expects real wages to grow again in 2023–24.

Cost-of-living relief

The Budget, the government states, delivers a five-point plan for responsible and targeted cost-of-living relief. “While more Australians are in jobs, wages growth is not keeping pace with price rises, and higher interest rates are placing even more pressure on many households.”

Budget measures include cheaper child care for 1.26 million families ($4.7 billion over four years); cheaper medicines under the Pharmaceutical Benefits Scheme ($787.1 million over four years to reduce the general patient co-payment for treatments on the PBS from $42.50 to $30 per script); expanding the Paid Parental Leave Scheme to 26 weeks by 2026 ($531.6 million over four years); a new national Housing Accord to supply up to 20,000 new affordable homes; and getting wages moving again.

Chief Minister Andrew Barr said the ACT Government welcomed the five-point plan to address cost-of-living pressures. Cheaper Childcare would support approximately 23,200 Canberra families, while the Government had committed to a Medicare Urgent Care Clinic on Canberra’s southside.

“The National Housing Accord … will go a long way to addressing the supply and affordability of housing here in the ACT,” Mr Barr said. “We look forward to working with the Federal Government on the implementation plan as set out in the Accord to deliver the immediate actions here in the ACT.” 

Ms Vassarotti said: “We are particularly welcoming of the announcement of additional funding into the Housing Accord to build more homes for Australians who are being blocked out of the private market due to high costs and rising interest rates. I am keen to see the detail around this announcement and have a better understanding about how we will address housing affordability within the ACT and across the country.”

Stronger, more resilient, and more modern economy

Budget measures include establishing 480,000 fee-free TAFE places, and setting up a $50 million TAFE Technology Fund to modernise TAFES; providing 20,000 additional university places for disadvantaged Australians; supporting student well-being, and improving classrooms ($474.5 million over two years).

It will encourage women to work and gender equality. It will boost the Work Bonus income bank so pensioners can work and keep more of their pension.

A Powering Australia Plan will drive investment in cleaner, cheaper energy, including upgrading electricity infrastructure ($20 billion). To act on climate change, the government will make a $1.8 billion investment to protect the environment. Up to $200 million per year will be spent on disaster prevention and resilience through the Disaster Ready Fund, while flood-affected communities will receive additional funding.

The National Reconstruction Fund will provide $15 billion of capital to transform and strengthen priority industries (resources; agriculture, forestry and fisheries sectors; medical science; renewables and low emission technologies; defence capability; transport; and enabling capabilities).

More than $120 billion will be invested in transport infrastructure over the next decade. To improve the NBN and mobile connectivity, fibre access will be extended to 1.5 million more premises ($2.4 billion), with a further $1.2 billion for regional and rural Australians.

Finally, farmers will be protected from pests and diseases.

Repairing the Budget

The government states its immediate focus is to avoid inflation. It promises to restrain spending during the period of high inflation, and return almost all of the improvements in tax receipts to the budget; improve the quality of spending, and make investments that grow the economy and expand its productive capacity; make responsible savings, and unwind wasteful and duplicative spending; and improve the integrity and fairness of the tax system.

Budget measures include $28.5 billion in budget repairs: spending reductions, re-prioritisations, and strengthening the tax system; returning 99 per cent of upgrades to tax receipts to the Budget; offsetting nearly all policy decisions across this year and next; $235 million to rollout Urgent Care Clinics; $750 million for the Strengthening Medicare Fund; $3 billion to deliver better aged care; preparing for a referendum to enshrine a First Nations Voice to Parliament in the Constitution; restoring the NDIS and securing its future; $1.7 billion over six years to support women’s safety; deepening relationships with Pacific countries; funding for Defence to rise to more than 2 per cent of GDP over the forward estimates; ensuring the integrity and security of Australia’s borders; and establishing a National Anti-Corruption Commission to restore trust and integrity in government.

Get local, national and world news, plus sport, entertainment, lifestyle, competitions and more delivered straight to your inbox with the Canberra Daily Daily Newsletter. Sign up here.