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@savings.com.au Coming at you from Parliament House in Canberra, here’s a quick run down of what we can expect to see in Treasurer Jim Chalmers first Labor budget! #federalbudget2022 #federalbudgetaustralia #budget #budgetpreview #fintok #ausfinance #homeownership #policy #pension ♬ original sound - Savings.com.au

Marking the first budget from a new Federal Government since 2014, the government is set to unveil a debt increase to $45 billion according to Westpac’s Chief Economist Bill Evans, yet this debt will be $32.9 billion less than April's pre-election forecasts. 

CommBank Chief Economist Stephen Halmarick said debt coming under forecasts is due to improvements to the budget bottom-line and stronger-than-expected nominal GDP growth.

“The improvement came from a combination of higher tax receipts thanks to higher commodity prices, the strength of the labour market and a reduction of outlays,” Mr Halmarick said.

ANZ economists note the new government will be keen to capitalise on its first budget, locking down pre-election commitments and finding some spending to re-prioritise. 

“This re-prioritisation will help fund some new commitments, but will be limited,” ANZ economists said.

Speaking to ABC News, Federal Treasurer Jim Chalmers said the budget will recognise the impact of cost of living pressures.

“This will be a family-friendly budget, which recognises that pressures on the economy come from around the world, but they are felt around the kitchen table,” Mr Chalmers said. 

“It will be solid, sensible and suited to the times, because when you’ve got all this uncertainty around the world, the best possible response is a responsible Budget at home.

Shore Financial CEO Theo Chambers said this budget will be a real litmus test for Treasurer Chalmers and the Labor Government as they battle a slowing economy and skyrocketing inflation. 

“From our perspective, we would like to see increased incentives for superannuation to help Aussies boost retirement savings,” Mr Chambers said. 

“We’d also hope to see a significant commitment to increased spending on infrastructure, as well as tax cuts for all income brackets.”

Pension, JobSeeker payments boost

The Treasurer has revealed one of the most important elements to Tuesday’s budget will be $33 billion in extra funding for pensions and social security payments. 

“Inflation is the primary influence on the Budget we’ve put together,” he said. 

“It guides out approach to trimming spending in wasteful areas and part of that means making room for what will be $33 billion in extra funding for pensions and payments.”

Mr Chalmers said in line with indexation, about a third of that $33 billion will be age pension and support for seniors and another third will be JobSeeker payments. 

Increase to Paid Parental Leave

Eligible working parents will be able to share up to 20 weeks of parental leave payments under the Federal Government’s new Enhanced Paid Parental Leave (PPL) scheme. 

This means a new mother could potentially receive payments for the full 20 week entitlement period, or a couple could divide 20 weeks of payments between them. 

The changes will also allow fathers and partners to receive payments under the scheme at the same time as they receive employer-funded leave.

Outlined in the 2022-23 Women’s Budget statement, the Government details that under these new arrangements, there will be a household income threshold of $350,000 per year from July 1, 2023. 

Currently, parents who earn over the individual threshold of $156,647 are ineligible for the PPL scheme.

Tax cuts 

Speaking to SBS World News, the Treasurer said stage three tax cuts have not been a focus of this budget for the Labor Government.

Under the legislated tax cuts:

    • The 37% tax bracket will be abolished.
    • The top 45% bracket will start from $200,000 instead of $180,000.
    • The 32.5% rate will be cut to 30% for all incomes between $45,000 and $200,000.

H&R Block Director of Tax Communications Mark Chapman said the legislated tax cuts aren’t affordable and should be canned or at the least heavily revised. 

“Regardless of the price paid in lost media support, the price to be paid in continuing with them is much greater,” Mr Chapman said.

“The tax cuts aren’t due to come into effect until 1 July 2024 so the Treasurer has time on his side.”

First published on October 2022

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