The good, the bad and the budget
It’s that time of the year again – federal budget time! Daniel Swane outlines the winners and losers of this years budget, and explains the changes impacting students.
Last week, Treasurer Jim Chalmers presented the 2023 Federal Budget. As Australia and the world faces economic hardship not seen since the aftermath of the Global Financial Crisis, this year’s budget will prove to be one of the most important budgets in over a decade.
The federal budget sets out the spending agenda of the government for the next 12 months, and its effects touch the lives of every Australian. This year, Treasurer Jim Chalmers was tasked with tackling the worst inflation in decades, soaring energy prices and a housing affordability crisis.
So, with all that said, what was good, bad and otherwise interesting from this budget, and most importantly what does this all mean for students?
Why not start with some positive news follow that ominous opening? Let’s discuss the key positives from this budget.
The first obvious upside in this budget is that the government has recorded the first surplus in over a decade, $4.2 billion to be precise, primarily off the back of record high mineral prices fuelling royalty revenue.
This budget also took steps to provide funding to those who need it most. Increases in welfare spending, rent assistance and energy relief among other funding will come together to make up a $14.6 billion cost of living relief package.
Single parents will now be able to access the full single parent’s payment until their youngest child is 14 years old, a bump of 6 years over the previous threshold of 8 years old.
There will be an overall $40 bump to the amount paid in Jobseeker and an extension of Jobseeker eligibility for those over 55 years old.
The government has also committed to an energy bill relief package that will assist some Australian families to the tune of $500 a year.
The Home Guarantee Scheme will be expanded to allow any two people the ability to purchase an eligible home with a 5% deposit. This should hopefully help more Australians break into the housing market at a time where home ownership seems like less and less of a possibility.
Low-income renters will receive a 15% increase in Commonwealth Rent Assistance, a scheme that benefits roughly 1.1 million Australians. This will come as a welcome relief for those who are being hit hardest by the current rental situation around Australia.
For the students out there, Austudy and Youth Allowance will also receive a $40 fortnightly increase. This, combined with the Commonwealth Rent Assistance boost will go some way to helping students living out of home with supporting their studies.
Unfortunately, as with any year, there are a number of negatives to this year’s budget. Some of the biggest losers in this budget happen to be from some of the largest demographics in Australia.
The first negative from this budget is the sobering fact the increase in spending will outstrip this year’s unexpected surplus. By not sourcing an increase in revenue to offset this increase in spending or cutting spending in other areas to limit an overall net increase in spending, this budget will add to an already enormous national debt. Considering this debt was a major point of the current government’s 2022 election campaign, adding to it could leave many swinging voters with the feeling of a promise unfulfilled.
The biggest losers in this budget are the middle-class. Middle income families that are renting will not receive any assistance, despite often occupying higher cost rentals. Middle income families will also not benefit from any home ownership schemes, tax offsets or any funding increases of any kind. As these families make up not only the bulk of the population, but also provide the majority of income tax revenue, leaving this demographic behind seems like a pretty harsh move.
Another downside to this budget is the simple fact that the energy relief package will likely not bring energy bills back in line with pre-2023 levels. The average increase in the cost of energy bills is far greater than the amount offered for relief. This too will likely not sit well with voters as the current government promised Australians a $275 annual reduction in power prices.
Something that will likely leave a sour taste in the mouth of many Australians is the eye-watering $159 million increase in spending for federal politicians. This will mainly be diverted to increase travel allowances and ‘electorate staff resources’. At a time where so many Australians are hard up against it, seeing this government splash out on themselves doesn’t pass the pub test.
Finally, students simply did not receive enough help. Apart from a marginal increase to Austudy, there was no student specific relief put in place. There was nothing to address course fees, HECS/HELP debt or the Student Services and Amenities Fee. This will no doubt lead to numerous students forgoing tertiary education because it will simply become too expensive to continue.
It was a good and necessary move to provide funding for the most vulnerable Australians. Quite simply, they needed it. The economic climate was punishing them and unfortunately it will continue to do so. However, the fact that there has been nothing done to offset this spending simply means it will add on to a ballooning national debt, a debt we are still failing to repay.
The ranks of Australia’s top economists are split on whether or not this budget will worsen inflation. While it is not a certainty and there is no exact number figure attributed to the increase in inflation expected from this, what is certain is that this budget will not lower it and that is the key problem.
It is likely that the RBA will have to continue to respond to economic pressures by raising interest rates, and with thousands of fixed rate mortgages due to move over to variable rates this year, the failure to adequately tackle inflation will likely hurt thousands of middle-low income Australians who are simply striving to achieve the Australian dream.
Feature image by Mohamed Hussan via Pixabay