The Labor government handed down its second budget last night. “This is a budget that delivers for Canberra and invests in our city to grow and prosper into the future,” the ACT’s four Federal Labor politicians stated. Chief Minister Andrew Barr (Labor), claims the Budget “addresses immediate cost of living pressure while laying the foundations for ongoing economic prosperity and improving outcomes”.
But Independent Senator David Pocock considers it unambitious and a missed opportunity.
“This is against the backdrop of an acute cost-of-living crisis where more and more Australians are struggling to afford the cost of essentials and make ends meet,” Senator Pocock said.
“Now is the time to take bold action. This budget contains nothing of the scale needed for a substantial step in the right direction.”
ACT Greens leader Shane Rattenbury argued that by keeping the Liberals’ $245 billion stage three tax cuts for high income earners, Labor perpetuated the inequality crisis.
“Those struggling in our nation’s capital will draw little comfort in a budget that has left them behind … while filling the coffers of the richest [people in the country],” Mr Rattenbury said.
Critics say that too little has been done to increase welfare payments or social and affordable housing.
Doctors welcome a lavish investment in Medicare rebates, but worry the ACT Government’s payroll tax will erode these benefits.
Welfare
The Budget will increase the base rate of working age and student payments by $40 per fortnight, and lower eligibility for the higher rate of JobSeeker Payment from 60 to 55 (an additional $92.10 per fortnight).
Senator Pocock noted that increasing income support payments by $40 a fortnight was 80 per cent less than the Economic Inclusion Advisory Committee (EIAC) recommended: “Not enough to lift people out of poverty.”
“Poverty is a barrier to people getting back into employment,” Senator Pocock said. “The government has decided to leave them in poverty. … I find it a pretty cruel decision for one of the wealthiest countries in the world. We still have the lowest safety net in the OECD.”
Dr Gemma Killen, CEO of the ACT Council of Social Service (ACTCOSS), also believes welfare is insufficient.
“The increases to rates of JobSeeker, Youth Allowance and Rent Assistance will still leave the more than 8,000 Canberrans on JobSeeker and Youth Allowance and the 9,500 Canberrans receiving rent assistance struggling to make ends meet,” she said. “An increase of $2.85 a day will not go far in a city with some of the highest costs of living, and the highest rents – and rates of rental stress – in the country.
“The government can afford to do more, and ACTCOSS and other advocates will continue to urge the government to do the right thing and raise income support payments to at least $76 per day.”
The maximum rate of Rent Assistance increases by 15 per cent. Labor politicians state this will support 7,700 Canberrans.
However, Senator Pocock remarked that a 15 per cent increase to the maximum rate of Commonwealth Rent Assistance ($31 per fortnight) still put the highest amount of that payment ($568) below the average cost of a rental property, and was less than the EIAC recommended. The average national rent is $662 per week; the new maximum Rent Assistance payment is $94.10.
“Despite the biggest housing crisis this country has ever seen, this budget throws crumbs to those struggling to keep a roof over their head with little more than $1 per day increase in rent assistance,” Mr Rattenbury said.
From September, the age threshold for children whose parent receives Single Parenting Payment will increase from 8 to 14, and the maximum basic rate of payment increases from $745.20 to $922.10 per fortnight.
Dr Killen states this budget measure “delivered critical support”, but Senator Pocock complained the threshold was not raised to 16, as recommended and as originally implemented.
Housing
Through the National Housing Accord, the Federal Government, ACT Government, and other stakeholders commit to build one million new homes from 2024.
Mr Barr said: “We look forward to finalising with the Commonwealth Government the ACT Implementation Schedule under the Housing Accord to increase housing supply, affordability and choice in Canberra.”
The budget states it will encourage investments in build-to-rent projects by reducing the withholding tax rate for eligible fund payments from managed investment trusts attributed to newly constructed build‑to‑rent developments from 30 to 15 per cent, and increasing the capital works tax deduction (depreciation) rate from 2.5 per cent to 4 per cent per year, increasing the after tax returns for newly constructed build‑to‑rent developments.
Mr Barr welcomed the lowered the Managed Investment Trust withholding tax rate. “Capital should no longer be the barrier to increasing long-term affordable rental supply,” he said. Senator Pocock thought this gave Build-to-Rent a boost; the changes to the withholding tax rate for managed investment trusts “created a level playing field”.
The budget states it will support more lending to community housing providers for social and affordable housing projects by increasing the National Housing Finance and Investment Corporation’s liability cap by $2 billion, from $5.5 billion to $7.5 billion.
Overall, however, both Senator Pocock and Mr Rattenbury were dubious.
“There’s no new real money for additional social and affordable housing supply, and no guaranteed funding for the Housing Australia Future Fund,” Senator Pocock said.
“This is a worry when the budget papers note that ‘Investment vehicles that have been more recently established, or that are investing in more early-stage projects, may not see strong returns in the short term’,” he pointed out.
“Especially when the negotiated minimum floor of homes isn’t guaranteed or in the primary legislation. Instead, the commitment is only to amend: ‘NHFIC’s Investment Mandate to require NHFIC to take reasonable steps to allocate a minimum of 1,200 homes to be delivered in each state and territory within 5 years of the Housing Australia Future Fund commencing operation’.”
“What Canberrans need is a better deal from the Commonwealth government,” Mr Rattenbury said. “They need a commitment to invest more in social housing year on year. They need real action to control unaffordable private rents costs. Instead, the Housing Australia Future fund is a stock market gamble on the lives of thousands of people doing it tough.
“This budget dodges the interventions Canberrans need through mechanisms like rent controls and a rent freeze. It shows little change from a long history of federal governments turning their back on the responsibility to ensure everyone has a decent place to live.”
Health
The budget invests $5.7 billion in Medicare, including $3.5 billion to triple bulk billing incentives for consultations with children under the age of 16, pensioners, and other Commonwealth concession card holders. Federal Treasurer Dr Jim Chalmers stated that this is “the largest increase to the bulk billing incentive in the 40-year history of Medicare”.
Medicare rebates will be increased twice this year, in July and November. The budget also provides $98.2 million for new Medicare rebates for consultations of longer than an hour.
Professor Walter Abhayaratna, president of the ACT branch of the Australian Medical Association (AMA), said the $3.5 billion injection went “a long way to address the gap” created by the Medicare rebate freeze introduced in 2013 and subsequent years of inadequate indexation.
Labor politicians predict that 157,000 ACT residents “will get cheaper visits to the GP” at 105 practices already bulk-billing in the ACT.
Professor Abhayaratna said these were the most vulnerable patients, who delay or do not go to their GP. “Improving support for these types of patients, in a targeted way, is a very smart way to improve access for those who can’t afford it.”
The Cleanbill Health of the Nation Report, the first comprehensive survey of GP clinic availabilities and billing practices, published last month, showed that the ACT had the lowest bulk billing rate (5.5 per cent; national average is 35.1 per cent) and the highest average out of pocket costs ($49.11; national average is $40.42) in Australia.
Senator Pocock considers this “the biggest win for our community”, given the ACT has the highest out of pocket costs and lowest bulk billing rates in Australia: “A real acknowledgement that our universal health system is not as universal as we would like to think it is.”
ACTCOSS’s Dr Gemma Killen hoped that “Canberra will receive its fair share of that investment”.
However, Shane Rattenbury noted that “children and concession card holders are not the only ones struggling to afford primary healthcare”.
Professor Abhayaratna also welcomed government support for GP-led primary care through the introduction of MyMedicare, a new voluntary scheme to create stronger relationships between doctors and patients, produce better continuity of care and easier access to telehealth consultations. MyMedicare supports longer GP telehealth consultations with reduced administration for practices ($5.9m); provides new funding packages for general practices to provide comprehensive care to patients who are frequent hospital users ($98.9m); and for Australians in residential aged care ($112.0m).
“MyMedicare is a really good initiative, because it allows primary care to be GP-led, which is something that we’ve advocated for a long time,” Professor Abhayaratna said. “GP-led primary care improves patient outcomes at a lower cost.”
From September, pharmacies will be able to dispense two months’ worth of more than 300 medicines (a $2.2 billion investment). Labor politicians state that nearly 100,000 ACT residents will have “cheaper access to the medicines they need”: patients will be able to save up to $180 per annum, while concession card holders can save up to $43.80 per medicine.
The Royal Australian College of GPs (RACGP) said the federal Budget was a game changer for GPs, practice teams, and patients: “A groundbreaking investment in the health of all Australians by strengthening general practice care.”
However, Professor Abhayaratna is concerned that the ACT Government’s threatened payroll tax will “erode any of the benefits” from the budget.
“Increased taxes is going to increase costs, which will make running those medical practices an impossibility without increased charges,” Professor Abhayaratna said. “We want people in the ACT to be able to access care in an affordable way.”
Last month, the RACGP warned that doctors could be forced to increase their bills by $15 a consultation or close their clinics if it goes ahead.
- Price hike for Canberra doctors on the cards (20 April)
In 2021, the NSW Civil and Administrative Tribunal determined that tenant GPs are employees, and that medical practices must pay payroll tax on them – “A huge leap that these doctors are actually employees,” Professor Abhayaratna said. “Really, they’re contracted, and pay a service fee for their support from their practice.” Doctors say that the ACT Revenue Office, following the example of other states, has contacted GP clinics about the payroll tax.
“Already, some of our members state that they have been given letters to say that they are going to retrospectively pay payroll taxes,” Professor Abhayaratna said.
The AMA is holding discussions with the Chief Minister’s office, Professor Abhayaratna said, to argue that the ACT, “with the out-of-pocket expenses that exist in our healthcare system, cannot afford further cost through a payroll tax”.
The Tasmanian government has said that they will not impose the payroll tax.
Nor, Professor Abhayaratna argues, will the ACT benefit as it should from increases to the Workforce Incentive Program, which encourages doctors, nurses, and allied health practitioners to work in regional, rural, and remote areas. The budget increases the WIP by 30 per cent ($445.1 million), a maximum payment of $130,000 per practice. However, much of the ACT is classified 1 (metropolitan areas) or 2 (regional centres).
“GP practices will not receive the funding that really they should be getting because of the disadvantages the ACT has in terms of its medical workforce,” Professor Abhayaratna said. “We’ve been saying for some time that this is an issue, because we are not like metropolitan areas in the rest of the country with our workforce and general practice.”
The increased funding for the WIP would allow GPs to have partnerships with nurses and allied health staff in one space, “almost an integrated approach to caring for the patient community” – necessary to increase care for Canberrans with chronic and complex medical conditions, Professor Abhayaratna argues.
“Because of the lack of that support in the community, we’re finding those patients coming into emergency departments in hospitals for their care. That type of care is extremely expensive. We should be getting that type of support to be able to enhance care in the community and primary care.”
The AMA will advocate for GPs to get increased payments so they can get nursing and allied health into their practices.
Other measures for the national capital
The budget allocates more than $535 million over four years for nine cultural and historical institutions, seven of them in the ACT: the Museum of Australian Democracy (Old Parliament House), the National Archives of Australia, the National Film and Sound Archive, the National Gallery of Australia, the National Library of Australia, the National Museum of Australia, and the National Portrait Gallery of Australia.
This includes $33 million for the National Library’s online library database, Trove.
Mr Barr said the ACT Government had lobbied for this support. “These organisations attract millions of visitors every year, and strengthen the Canberra economy and Australian culture,” he said.
“This funding will flow into Canberra residents’ salaries and work projects.”
Questacon receives $60 million for property upgrades, and the Australian National Botanic Gardens receives $14 million for the Ian Potter Centre and the Seedbank.
A new National Security Office Precinct will be built in Barton – costing $3.1 million over four years for a carpark, Senator Pocock remarked.
Measures for the Australian Public Service include $10.9 million to establish in-house consulting, $8.4 million to address service-wide challenges, and $3.4 million to achieve 5 per cent First Nations employment by 2030.
The budget invests $7.5 million in the ACT Government’s Sustainable Household Scheme. Mr Barr said this would “assist more Canberra households to electrify their homes and vehicles, reducing their long-term running costs”. Senator Pocock welcomed the investment but was disappointed a $12 million Suburb Zero pilot to electrify an ACT suburb was not funded.
The Federal and ACT governments have jointly funded annual energy rebates of $175 for households and $325 for small businesses. Federal Labor politicians state that more than 56,000 households and 17,000 small businesses will be eligible from July.
More than 20,000 families will benefit from lower childcare costs from July, while 3,000 free TAFE places have been funded in the ACT.
More than 5,000 aged care workers’ wages will increase by 15 per cent.
The budget also spends $737 million to reduce smoking and vaping, particularly among young Australians. Mr Barr said the ACT government and Commonwealth will “stamp out the black market in illegal vaping and end the sale of vapes in retail settings such as convenience stores”.
