The Federal Government has delivered a big-spending 2022 budget, taking immediate steps to reduce cost of living pressures for working Australians while implementing a range of massive infrastructure and defence spending measures.
The Government will slash the fuel excise by half, effective immediately, as well as provide a one-off cash hand out of $250 to a range of social security recipients, and a $450 additional tax offset for low- and middle-income earners, in what is clearly a ballot-box friendly budget.
Productivity will be boosted across the nation by enhanced training incentives, dramatic tax measures to drive greater digital adoption and improve computer-based efficiencies as well as steps to boost the nation’s overall level of self-sufficiency.
Concerns about the growing budget deficit, which has now reached $78 billion, have been largely put on the back burner with confidence placed in the fact that as the economy grows, this will naturally reduce.
A bounding economy
And the Australian economy has posted astonishing growth. It has come roaring out of two years of pandemic induced lockdowns, to post strong growth across the nation, spurred on by higher prices for coal, iron ore and wheat.
Gross domestic product is expected to expand by a massive 4.2% this year while wages are expected to grow by 2.75% and surge by 3.25 % in the following year. Unemployment is currently 4%, but this is expected to drop to 3.75 % over the next six months - its lowest level since 1974.
An extra 100,000 Australians have found work compared to employment numbers recorded when the pandemic first hit in March 2020. This in turn is expected to help slash welfare payments by $11 billion across the next four years.
A focus on increased productivity
Training and improved productivity remains a key focus with the Government implementing a $365 million extension to the existing apprentice wage subsidy scheme in an attempt to further boost apprenticeship training.
The Federal Government is continuing its focus on boosting business productivity allowing a $120 tax deduction for every $100 spent on digital adoption technology, such as portable payment systems, cyber security measures and subscriptions to cloud based services.
A similar tax measure will be introduced for businesses providing external training courses to staff whether online or in-person, to increase productivity throughout the economy.
This will be supported by a raft of Government driven efficiencies such as digitalising trust income reporting, improved PAYG systems and the automatic reporting of taxable payments.
And a more efficient economy
The 2022-23 budget also includes a raft of infrastructure projects that will drive greater efficiencies and economic growth across Australia in the decade ahead. These projects include:
• $18 billion in priority road and rail infrastructure
• $7.1 billion to develop regional economies
• $6.9 billion in significant new water infrastructure
• $10 billion on the new East Coast submarine base
• $ 4.3 billion upgrade to the Henderson naval shipyard
• $ 2 billion for a Moderna mRNA vaccine plant in Victoria
In addition, the Government has announced steps to develop a circular waste economy, support low emission technologies including hydrogen, extended gas pipeline infrastructure and more efficient environment approval strategies.