On the evening of 9 May 2023, Australian Federal Treasurer Jim Chalmers announced the 2023-2024 Federal Budget! This is a heavyweight document, outlining the Australian Federal Government’s economic plan for the years ahead. Australia’s economy currently faces a range of challenges, including high inflation, high interest rates, rising cost of living, and severe labour shortages. On the other hand, Australia is also seeing post-pandemic economic recovery and the return of migration. The 2023-2024 Budget has therefore been highly anticipated, covering essential matters that affect everyone in Australia — including cost of living, education, health, immigration, taxation, defence and insurance — and representing the Federal Government’s policy direction for the 2023-2024 financial year. With a total value of AUD 650 billion, this Budget has attracted particular public attention. In this article we walk you through who will be affected by this year’s Budget.

The first and most important part of the Budget is aimed at easing the cost-of-living pressure on Australians as much as possible. To that end, the Federal Government has put forward a AUD 14.6 billion cost-of-living relief package.

1. Wage increases for Aged Care

Australia’s aged care sector has been struggling with labour shortages, having long found it difficult to attract carers due to low wages. The Federal Government will therefore invest AUD 11.3 billion to fund wage increases for aged care workers, taking effect from July 2023. Registered nurses in aged care will see their pay rise by more than AUD 10,000 per year, and enrolled nurses by more than AUD 7,500 per year.

2. Cost of Living

The Government forecasts inflation will remain above the desired level for at least the next year, returning to the 2%-3% range from the middle of 2024. In response to inflation, the Federal Government says it will take steps to help offset rising cost-of-living pressures, as follows:

• AUD 14.6 billion in relief payments, including AUD 500 energy rebates for 5.5 million households and 1 million businesses.
• For one-child families, the Family Tax Benefit cuts out at an income of AUD 108,000.
• A 15% pay rise for aged care workers.
• AUD 9 billion for extra childcare subsidies.
• AUD 2.2 billion for primary health care.

3. Child Care

• Australia will invest AUD 55.31 billion over the next 4 years to make child care more affordable.
• AUD 72.4 million over 5 years to support training for early childhood education and care workers.
• From 1 July 2023, 1.2 million families will benefit from higher subsidy rates. This is good news for families with children in early childhood education and household income below AUD 53,000. For families earning under AUD 80,000, the subsidy for the first child will rise to 90%; for families earning above AUD 80,000, the subsidy will taper off based on their income.
• AUD 2.8 million over 4 years to simplify the delivery of additional childcare subsidies.

4. Housing

• Commonwealth Rent Assistance will increase by 15% (an extra AUD 31 per fortnight).
• The first-home guarantee scheme will be expanded to allow co-purchasing with family or friends on a 5% deposit.
• New tax concessions for build-to-rent projects will cut the managed investment trust withholding tax from 30% to 15%.

5. Superannuation

• From July 2026, employers will be required to pay super at the same time as wages, rather than quarterly. This fundamental change to super payments will make it harder for businesses to avoid paying super, ensure more people receive the super they are owed, and boost younger employees’ retirement incomes by thousands of dollars. The Federal Government estimates that, based on this change, a 25-year-old on the average wage will retire with around AUD 6,000 more in super.
• AUD 40 million will fund an ATO compliance program targeting unpaid super.
• From 2026, a higher tax rate will apply to super balances above AUD 3 million.

6. Health Care

• The Federal Government will invest AUD 3.5 billion in GPs, providing bulk-billed consultations for 11.6 million people.
• From September 2023, patients with chronic conditions will be able to obtain 60 days’ worth of medication per script.
• AUD 50 million for the Medical Research Future Fund, including long Covid research.

7. JobSeeker

• JobSeeker payments will permanently increase by AUD 40 per fortnight.
• Australians aged 55 and over but under 60 will receive additional JobSeeker support, getting AUD 92.10 more per fortnight than they do now.
• Austudy and Youth Allowance payments will also rise by AUD 40 per fortnight, with a total of 1.1 million people receiving income support.

8. Education

• AUD 4.9 billion in additional support for 1.1 million people looking for work, study or apprenticeships.
• AUD 32 million to upgrade facilities and equipment at 1,300 schools.
• AUD 18.7 million over 4 years to expand the Higher Education Student Support Program.

9. Single Parents

The allowance available to single parents will now continue until their youngest child turns 14, up from age 8 previously. This means single parents will receive an extra AUD 176.90 per fortnight, for a total of AUD 922.10 per fortnight.

10. Immigration and Visas

• From 1 July 2023, Australian investment visa fees will rise by 40%, fees for Australian visitor visas and certain temporary visas (such as working holiday, training and temporary activity visas) will rise by 15%, and fees for other visa categories will rise by 6%. This clearly means a significant increase in the fees and costs of temporary and permanent residence applications. The Australian Government expects to raise AUD 665 million over the next 5 years, which will be used to shorten visa processing times and reduce the migration processing backlog.
• The total PR places for the next financial year (2023-24) have been announced at 190,000, 5,000 fewer than this financial year (2022-23). The total skilled migration cap is 137,100, within which employer-sponsored places rise from 35,000 to 36,825, an increase of 1,825. Investment migration places are cut sharply, from 5,000 down to 1,900. The family migration cap stays at 52,500, neither increasing nor decreasing.

11. International Students

• As part of immigration reform, policies relating to international students may become more restrictive.
• From 1 July 2023, student visa holders will be limited to working a maximum of 48 hours per fortnight, with the work-hour cap having been lifted during the pandemic. However, student visa holders who were working in aged care on 9 May will be allowed to work full-time until 31 December 2023.

12. Smokers

• The Federal Government will further discourage smoking. The tobacco excise will increase by an additional 5% per year over three years. The excise on a pack of 20 cigarettes is currently around AUD 23.29 and is usually adjusted twice a year. The excise increase will raise an additional AUD 3.3 billion from smokers over four years, some of which will be reinvested in health, including public health campaigns targeting tobacco.
• In addition, disposable vapes will be banned, and other vapes will be strictly regulated, available only through pharmacies with a prescription.

13. Safety for Women and Children

To further reduce cases of violence against women and children across Australia and strengthen protections for them, the Budget adds a further AUD 589.3 million in support, including AUD 38 million to provide financial support for migrant women affected by family violence.

Final Thoughts

The points above cover many of the key items in the Budget, and readers should already be able to tell which measures are positive and which may cause inconvenience. In short, for aged care workers, the wage increases are very good news. Single-parent families and lower-income families will receive more subsidies for raising children, easing financial pressure. On the superannuation front, companies will need to pay employee super more frequently, giving workers better protection. JobSeeker payments have also risen, as have subsidies in education.

Some people, however, may be less pleased — for example, smokers will pay a higher tobacco excise as tobacco prices rise. International students now face a cap on legal working hours of 48 hours per fortnight, and visa application fees have gone up. Overall, there is still plenty to look forward to in the new financial year. If you have legal questions in any area — including property, family, immigration and visas, family violence, employment, or litigation — please feel free to consult our experienced lawyers at any time.