The new government’s Budget handed down on 25 October has implications for a range of existing programs and also introduces some new programs of interest to Ai Group members. The key changes are listed below together with some summary material on the economic and budgetary outlook.
Ai Group’s media release on the budget is available here.
The Government will create 180,000 fee-free TAFE places in 2023. This will be supported by a Commonwealth contribution of $550m to a $1b Skills Agreement jointly funded with States and Territories. It is part of a commitment to 480,000 TAFE places over 4 years.
It will make a supporting investment of $50m in a TAFE Technology Fund for facilities, workshops, laboratories, and telehealth simulators across the country are cutting edge and fit for purpose
The Government will invest $12.9m to establish Jobs and Skills Australia, a new statutory body that provides independent advice to government on Australia’s current, emerging skills and workforce needs.
A commitment of $62 million to deliver the Skilling the Clean Energy Workforce and fund a Clean Energy Capacity Study to ensure that Australia has the workforce we need to build our strong, green economy.
Funding of $2.6m for National Study on Adult Literacy, Numeracy and Digital Literacy Skills to increase participation in education, skills training, and employment opportunities
Delivery of the Australian Skills Guarantee to ensure one in ten workers on major, federally funded government projects are an apprentice, trainee, or paid cadet
The Government will expand higher education with:
The Government will remove the 10% HECS-HELP discount (given if students make upfront payments of their HECS-HELP loans) for a saving of $144m.
The Government has moved to establish the National Reconstruction Fund (NRF), which will invest $15 billion over seven years from 2023-24.
Support has been provided for nine manufacturing capabilities in regional areas - $113.6m over four years. These include:
The Government has established a Future Made in Australia Office to coordinate delivery of commitments under the Buy Australia Plan.
As part of its spending audit, the Government has terminated several prospective industry grants programs, for a saving of $500m over the forward estimates. These include:
The Government will provide $20.0 billion in funding to establish Rewiring the Nation to expand and modernise Australia’s electricity grids at lowest cost, unlocking new renewables and storage capacity and driving down power prices. Its initiatives will include:
A $1.9b Powering the Regions Fund will be established to support regional Australia with the transition to net zero emissions. This reallocated uncommitted funding from the Emissions Reduction Fund, the Climate Solutions Fund and the Safeguard Mechanism Crediting.
A green hydrogen hub in the Townsville region will be supported with $71.9 million over seven years from 2022–23.
The Government will provide $102.2 million over four years to establish a Community Solar Banks program for the deployment of community-scale solar and clean energy technologies.
$62.6 million will be provided over three years for Energy Efficiency Grants for Small and Medium Sized Enterprises, to support SMEs to fund energy efficient equipment upgrades.
The Government will provide $275.4 million over six years from 2022–23 to establish the Driving the Nation Fund to invest in cheaper and cleaner transport. Funding includes:
Additional resources will be provided for the Australian Competition and Consumer Commission (ACCC) to increase the frequency of gas supply assessments, and implement reforms to the Australian Domestic Gas Security Mechanism (ADGSM)
The government has allocated an additional $11.7m for the Export Market Development Grants scheme (or $169.7m total) in 2022-23. This will provide additional resources for to recover the costs of repairing markets damaged due to COVID interruptions and supply chain disruptions.
The Government has retained funding of $187.1 million over four years for the Simplified Trade System, a program of regulatory reform and process improvements to make cross-border trade easier for Australian business.
The Government will provide $134.1 million over four years from 2022–23 to bolster biosecurity capability in Australia and support neighbouring countries to address the risk of exotic animal diseases.
The Government has allocated $8b over four years for the Remade in Australia Scheme, and $2.5b over two years has been allocated to support small businesses to adopt the Australasian recycling label.
$100m has been allocated to an Australian Recycling Fund to support recycling or recycled content projects using clean energy technologies, with a particular focus on waste plastics, paper, glass and tyres. This will be administered by the Clean Energy Finance Corporation.
The Product Stewardship Investment Fund will finish operation during 2022-23
The Government will create a Strategic Fleet Taskforce to provide advice to the Government on the establishment of a strategic fleet of vessels to secure ongoing access to fuel and other essential imports.
The Government will invest $8.1 billion over 10 years from 2022–23 for priority rail and road infrastructure projects. Funding includes:
The Government will re-profile $6.5 billion of funding for existing projects within the Infrastructure Investment Program to beyond the forward estimates, to better align the investment with construction market conditions, while maintaining the Government’s overall funding commitment to the projects.
Several major projects announced by the previous Government will be cancelled (the $5.4 billion Hells Gates Dam) or deferred for reconsideration once business cases are developed ($899.5 million for water projects at Dungowan, Emu Swamp, Hughenden and Wyangala).
Defence spending ($48b in 2022-23) remains broadly similar to its long-term track, and will rise to over 2% of GDP over the budget forward estimates.
The Government has allocated $37.3 million over 3 years from 2022–23 to support the development of defence and fuel manufacturing industries. Funding includes:
The cap for permanent migration has been raised to 195,000 for 2022-23. Net overseas migration was 150,000 in 2021-22, and is forecast to rise to 235,000 for the 2022-23 and 2023-24 years.
The economic outlook presented by the Government is one of falling growth, slowing employment growth, an unemployment rate that heads up somewhat from current levels together with inflation that is still to peak and set to persist for longer than previously anticipated and slower growth of household consumption and business investment. The weight of this is driven by the challenging global environment as other advanced economies deal with inflationary pressures; as China is experiencing some fragility particularly in the housing sector and with its lockdown strategy in the face of COVID infections; and the war in Ukraine. Our own inflationary pressures driven by constrained supply, including in the labour market and the monetary response of the Reserve Bank add further to the near-term pressures.
| Actual | Forecasts | ||
| 2021-22 | 2022-23 | 2023-24 | |
| Real gross domestic product | 3.90 | 3.25 | 1.50 |
| Household consumption | 4.10 | 6.50 | 1.25 |
| Dwelling investment | 2.80 | -2.00 | -1.00 |
| Total business investment | 5.20 | 6.00 | 3.50 |
| By industry | |||
| Mining investment | -1.70 | 4.00 | 5.50 |
| Non-mining investment | 7.40 | 6.50 | 3.50 |
| Private final demand | 4.50 | 5.25 | 1.25 |
| Public final demand | 6.50 | 1.00 | 1.50 |
| Change in inventories | 0.10 | 0.00 | -0.25 |
| Gross national expenditure | 5.20 | 4.00 | 1.00 |
| Exports of goods and services | 0.00 | 7.00 | 5.00 |
| Imports of goods and services | 7.70 | 11.00 | 3.00 |
| Net exports | -1.50 | -0.75 | -0.25 |
| Nominal gross domestic product | 11.00 | 8.00 | -1.00 |
| Prices and wages | |||
| Consumer price index | 6.10 | 5.75 | 3.50 |
| Wage price index | 2.60 | 3.75 | 3.75 |
| GDP deflator | 6.90 | 4.75 | -2.25 |
| Labour market | |||
| Participation rate (per cent) | 66.60 | 66.75 | 66.50 |
| Employment(d) | 3.30 | 1.75 | 0.75 |
| Unemployment rate (per cent) | 3.80 | 3.75 | 4.50 |
| Balance of payments | |||
| Terms of trade | 12.20 | -2.50 | -20.00 |
| Current account balance (per cent of GDP) | 2.20 | 0.50 | -3.75 |
| Net Overseas Migration | 150,000 | 235,000 | 235,000 |
On the budget numbers themselves, the Government has honoured its election commitments in large part by trimming existing spending and by putting an end to a range of measures put in place by the former government. It has revealed a large boost to tax collections due to higher-than-anticipated commodity exports and company tax collections and to stronger employment growth. These impacts are seen as temporary with commodity prices assumed to return to lower levels fairly rapidly and with employment growth slowing.
The following table sets out the budget bottom line figures and its main components – revenue and payments and the gross debt figures. A good proportion of the lack of progress in reducing spending and debt as a share of GDP is the lower GDP growth outlook both in the near term as the economy slows and over time as productivity advances are lower than previously assumed.
Budget Numbers
| Actual | Estimates | Projection | |||||
| 2021-22 | 2022-23 | 2023-24 | 2024-25 | 2025-26 | Total | 2032-33 | |
| Underlying cash balance $b | -32 | -36.9 | -44.0 | -51.3 | -49.6 | -181.8 | |
| % of GDP | -1.4 | -1.5 | -1.8 | -2.0 | -1.8 | -1.9 | |
| Receipts $b | 584.4 | 607.2 | 621.4 | 642.8 | 679.0 | 2,550.5 | |
| % of GDP | 25.4 | 24.5 | 25.3 | 25.1 | 25.2 | 26 | |
| Payments $b | 616.3 | 644.1 | 665.5 | 694.2 | 728.6 | 2,732.3 | |
| % of GDP | 26.8 | 25.9 | 27.0 | 27.1 | 27.1 | 27.9 | |
| Gross debt $b | 895.3 | 927.0 | 1,004.0 | 1,091.0 | 1,159.0 | ||
| % of GDP | 39.0 | 37.3 | 40.8 | 42.5 | 43.1 | 46.9 | |
Budget treads water as global storms approach
Media Release – 25 October 2022
Federal Budget 2022-23: what does it mean for business?
Webinar – Friday 28 October, 11am
Ai Group – Employer ambitions for Federal Budget Mark II
Media Release – 19 October 2022
Ai Group analysis of the Federal Budget delivered by the previous Government in March 2022 is available here:
See details of the previous 2022/23 Federal Budget
With almost 300 staff and networks of relationships that extend beyond borders (domestic and international) we have the resources and expertise to meet the changing needs of our membership. We provide the practical information, advice and assistance you need to run your business.
