What the federal budget means for you

10 May 2023

How will this year's federal budget impact your super and future?

From cheaper, more accessible healthcare to reduced energy bills, if you’re on a low or middle-income there could be cost-of-living relief headed your way, following new measures outlined in the budget released by the federal government last night.

For superannuation, employers will be forced to pay their contributions at the same time your salary is paid (not all already do that) and earnings on very high balances will be taxed at a greater rate. But no other substantial changes were made.

While Treasurer Jim Chalmers declared the 2022-23 budget would be $4.2 billion in surplus, he outlined a gloomy global economic outlook and expects to return to budget deficits from next financial year onward.

Last night’s budget comes almost a year after the Labor government was elected and follows its out-of-cycle October 2022 budget, introduced to implement its election promises. Here we’ll round up the key initiatives more likely to be relevant to our members.

• Super contributions to match pay cycles: previously employers could pay it once a quarter
• High balance tax increase: 30% tax on earnings for the portion of balances above $3 million

There will be a few changes to superannuation, as the federal government looks to tighten up the system.

Employers will have to pay super contributions every pay cycle from July 1, 2026, whether you get paid weekly, fortnightly, monthly or on some other schedule. While some employers already do this, they’re currently only required to pay it every quarter to super funds on behalf of their employees.

By matching your pay cycle, you can more easily track your super contributions. This change should also make it harder for any employers to avoid paying or underpaying super – a problem estimated to be in the billions of dollars annually.

People with more than $3 million in superannuation will have to pay an additional 15% tax on the earnings of the portion of their balance above $3 million. This high-balance tax increase will affect less than 1% of account holders when it begins from July 1, 2025 – but that figure is expected to increase over time.

• Power price relief: funding to reduce energy bills for low/medium-income households
• Health funding boost: cheaper and easier to see a doctor and get essential prescriptions
• Greater welfare spending: the single parenting payment extended and JobSeeker increased

Measures to the value of $14.6 billion over four years were introduced last night to help Australians with their increasing living costs. These policies focus on low and middle-income households, particularly those receiving welfare and in need of healthcare services.

Up to $3 billion (from federal and state governments) will be used to reduce energy bills for 5 million low or middle-income households. The government says in the next financial year these households will have up to $500 deducted from their energy bills.

Quite a significant boost in welfare payments will benefit recipients. This includes Jobseeker increasing by $40 a fortnight (as will other income-support payments), helping 1.1 million Australians. And the single parenting payment will extend to parents of children up to 14 years of age (from its current cut off at eight years of age).

A significant increase in healthcare funding over five years will primarily benefit lower-income Australians. Prescriptions for more than 300 medicines will become cheaper and easier with patients able to buy two months’ worth for the cost of one prescription from September. And, in an announcement that earned the loudest applause in Parliament, bulk-billing payments to GPs will triple for the most common consultations, encouraging them to provide free consultation for concession cardholders, families with young children and pensioners. Several billion dollars will be spent on other Medicare measures including setting up new urgent care clinics and encouraging GP clinics to employ more staff and stay open longer.

• Budget surplus: big increase in government revenue won't stop return to deficit next year
• 'Renewable energy superpower': $4 billion in new initiatives, including a hydrogen program
• Defence jobs over time: AUKUS agreement to support 20,000 new jobs over 30 years
• Free education: spending of $3.7 billion in national skills agreement includes TAFE positions

The Treasurer described the global economy as “slowing due to persistent inflation, higher interest rates and financial sector strains”. He said the next two years are expected to be the weakest for global growth in over two decades, which would reduce Australia’s economic growth to 1.5% next year.

To continue to improve the budget bottom line, from this financial year’s expected small surplus, the government has saved more than 80% of its windfall tax gains from the past year. Additionally, several tax increases were introduced on business, the wealthy and smokers last night. These include the high super balance tax (outlined above), an increase in the petroleum resource rent tax, 15% minimum tax on multinationals and 5% higher tobacco excise (making a packet of 25 cigarettes cost about $50).

The Treasurer outlined a number of initiatives to “modernise our economy”, focusing on the energy sector, small business and skills and education.

Positioning this budget as one that embraces clean energy and positions Australia as a “renewable energy superpower” the Treasurer listed a number of large and small-scale initiatives to support that amounting to a $4 billion plan. The flagship program of this plan is $2 billion set aside to subsidise the production of hydrogen power to help develop a commercially viable industry in Australia. For small business, they can receive tax deductions of up to $20,000 for investments in energy-efficient equipment. And those keen on buying an electric car may get some hope from Australia’s first national electric vehicle strategy to “ensure consumers have a better choice of electric vehicles and encourage greater use of cleaner, cheaper‑to‑run vehicles”.

To address need in “critical and emerging sectors” the government will fund more education and skills courses. The Treasurer announced that 300,000 TAFE and vocational education fee-free places would be created. There’s also improved access to foundation skills training “so that all Australians aged over 15 can develop the language, numeracy, and digital skills that they need”.

Quite a number of other measures were announced from a revamped approach to skilled migration, funding for next decade’s Olympic Games in Brisbane, to expectation the AUKUS agreement will lead to 20,000 new jobs in advanced manufacturing over the next 30 years.

As it pushes ahead with these plans the pressure remains on the government to not add fuel to our high inflation and play its part to guide the Australian economy through the darkening global environment of the next few years.


Byron Smith