Budget 2023: A surprise surplus
We are back in surplus. For the first time in 15 years, the Australian Government has announced it will collect more in revenue, predominantly taxes, than it will spend for the year. Revenue from personal income tax has soared. Driven in part by our terms of trade (that is, what we receive for our exported goods versus what we pay for our imported goods) at near record levels, company taxes have also risen strongly. Politically, a budget surplus, albeit a small one, is a big deal for Labour, which for years has been accused by their main political foes of being poor managers of the economy.
Looking through the budget there are certainty some hits and some misses.
As a women owned and run organisation, Iceni is particularly interested in what the budget means for women, and in some respects it provided some good news.
Expanding eligibility for Parenting Payment (Single) to single parents with dependent children aged 14 and under (up from 8 and under) is sensible, as is increasing the rate of payment given cost of living pressures. As we know the majority of single parents (>90%) are women. As a side note, this increase reverses the change in eligibility introduced by the previous Labor Government under Julia Gillard.
Scrapping the widely criticised ParentsNext program, whereby parenting payment recipients were subject to a range of obligations to maintain their parenting payments. The program was punitive and poorly designed, evidenced by the numerous changes to the scheme since introduction in 2018.
Increasing eligible working age and student income support payments, including the JobSeeker Payment and Youth Allowance is welcomed, however the amount of only $40 per fortnight is far lower than advocates, including the Australian Council of Social Service, were asking for, and for good reason given the cost of living pressures. However, the increase is bigger for those Jobseeker payment recipients aged between 55 to 59 who have been on payment for 9 or more continuous months, to match that applying to those over 60, recognising that women are the majority of JobSeeker Payment recipients 55 and over.
Funding allocated to support the Fair Work Commission’s decision to increase minimum wages by 15% for some employees working in aged care, specifically employees covered by the Aged Care Award, Social, Community, Home Care and Disability Services Industry Award and the Nurses Award. Around 90% of the aged care workforce are women and lowly paid, and they work in tough workplaces and conditions, as found through the Aged Care Royal Commission.
Targeted investment in programs to tackle violence against First Nations women, which we know is a significant issue needing urgent action.
Outside of women’s issues, the Government introduced a number of policies which are both economically sensible and fair, including additional taxation on superannuation balances over $3 million, introducing a domestic minimum tax for multinational groups with a global turnover of $1.2 billion, increasing bulk-billing incentives, energy bill relief and establishing a national Net Zero Authority to drive the country’s push towards net zero emissions. Changes to the Petroleum Resource Rent Tax to raise more tax revenue from large gas producers is also welcomed given the pitiful amounts of tax these large multinational producers are paying for what are essentially “our” resources they are given a right to extract.
While the budget is relatively benign – not too many losers, although notably the Pharmacy Guild are unhappy about the impact of changes to prescription requirements – the budget also missed an opportunity to address some long standing issues. The festering sore of capital gains tax and negative gearing continue to distort the Australian property market. There was very little new money for the environment and the Stage 3 tax cuts unfortunately are proceeding, despite the cuts being unfair and against our progressive system of personal income taxation. Lets hope some of these issues are tackled in the not too distant future.
Lastly, it is interesting to note that for the first time the Commonwealth is collecting the majority of its revenue via personal income taxes. This slow but steady shift in the tax burden to income taxes has come at the relative expense of corporate taxes. Without delving into this too deeply it does raise questions about whether our tax mix is right, that is whether we should be taxing capital more than labour. That’s a discussion for another day.