The federal budget 2022-23 is set to be tabled in parliament by Treasurer Josh Frydenberg on 29th March, just weeks before the federal election. This is one of the biggest annual events for all government departments, since it reveals funding and budget priorities for the next three years.
The budget usually focuses on areas such as health, social security, infrastructure and foreign aid. This year it will provide an indication of where the government sees Australia in its next term, if re-elected.
Given that we are coming out at the other side of the pandemic – and now watching nervously as the conflict in Ukraine unfolds – how will the fact that this is an election budget affect the announcements? What budget priorities could we expect to see put forward, and how relevant will they be in the context of an election a few weeks later?
Last year’s federal budget saw around $480 million in new funding for the environment, in a total package of almost $2 billion. Some commentators disliked the focus on climate adaptation rather than climate change mitigation and prevention.
With the Labor party expected to challenge their opponents hard on climate change policies and commitments to reducing greenhouse gas emissions, $2 billion may not be enough this year, and the focus may need to change. However, the Morrison government has agreed with its Coalition partners, the Nationals, to stick with its current emissions target of only a 26-28% emissions reduction by 2030, so they don’t have much room to move.
The federal government’s last budget before the advent of the coronavirus pandemic, unveiled in April 2019, forecast a return to surplus for the first time in more than a decade. COVID quickly scuttled that plan, thanks to an abruptly contracting economy and the need to prop up jobs, businesses and the suddenly unemployed. The following two budgets were also in deficit, and saw national debt surge.
As we move into an era of living with COVID and an end to direct government economic support, the extra stimulus of the election may motivate the PM and Treasurer to at least slow the pace of mounting debt with an already signalled tightening of the purse strings in some areas. They will get some help from increased tax revenue from a business and jobs rebound, and be spurred on by the threat of an interest rate rise designed to curb inflationary pressures
COVID has brought health care to the front of likely election budget priorities, with daily warnings about the state of crisis in hospitals, aged care, mental health and the disability sector. The focus of voters may have shifted slightly from their economic to their physical well-being, and this year is unlikely to be the one where the growth in health care funding is reduced.
The 2021-22 budget committed significant extra funding to aged care reform, the NDIS, mental health and suicide prevention for the following 4-5 years, and the upcoming budget has to deliver on what is only the second year of those promises.
The last federal budget’s $15.2 billion commitment to new infrastructure projects was only part of a $110 billion rolling infrastructure pipeline designed to spread over 10 years, so there’s definitely more spending to come in this area.
The government’s Infrastructure Market Capacity Report, released in October 2021, says that more than $218 billion will be spent on public infrastructure in the next five years, peaking at $52 billion in 2023, although this presumably includes state and territory government financial contributions.
However, given the already evident success in terms of job creation, plus forecast skills, labour and materials shortages, 2022-23 may not be the year for expensive new federal government projects to be launched. Steady continued funding of existing projects seems more likely.
The 2021-22 federal budget provided $867 billion to be spent over four years to support local agribusiness – ‘a shining light in the Australian economy throughout the COVID-19 pandemic’ according to the Agriculture 2030 2021-22 budget factsheet. Biosecurity accounted for almost half of this planned expenditure, with the next biggest chunk going to soils and stewardship, so those two areas should not expect much in the way of additional commitment in the upcoming budget.
With higher prices and volumes forecast for almost every major agricultural export commodity, but especially crops, we should probably expect a budget focus on international trade facilitation and supply chain resilience, with perhaps some added funding for AgATTRACT, AgUp and AgFAIR in order to ease ongoing labour and skills shortages.
Need more detail?
Would you like to have a more detailed discussion about what the budget may hold for your organisation? Bentleys Business Advisory has experts in the health care, construction and agricultural sectors, and many other fields of business including yours.
Keep watching this space, and if you’d like to discuss what the federal budget implications might be for your business, don’t hesitate to contact your local Bentleys advisor for a chat. We can help you get where you want to be.
Disclaimer: This information is general in nature and should not be relied on as advice. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs and seek professional advice before making any decisions based on this information.