Federal Budget 2022, just weeks out from a federal election, was always going to focus on easing cost-of-living concerns. It delivered with what has been described as “short-term quick fixes”, although the “quick fixes” will please many.
For older Australians, the key sweeteners are the much publicised cut to the fuel excise, a tax-exempt cost-of-living payment and an extension to the low- and middle-income tax offset (LMITO).
The finer details in a nutshell are:
The fuel excise. It will be cut from 44.2 to 22.1 cents per litre from today, with Treasurer Josh Frydenberg saying in his Budget address that he expected prices at the bowser to drop within two weeks. The excise will return to normal after six months and is estimated to cost $3 billion.
“A family with two cars who fill up once a week could save around $30 a week or around $700 over the next six months,” said Mr Frydenberg on Tuesday night.
“The competition watchdog will monitor retailers to make sure these savings are passed on in full.”
A $250 one-off, tax-exempt cost-of-living payment. Age pensioners, concession card holders, carers, veterans, job seekers and eligible self-funded retirees will receive this payment next month at an estimated cost of $1.5 billion. The funds will be deposited into bank accounts automatically.
The Treasurer said: “Together with existing indexation arrangements, this will see a single pensioner receive more than $500 in additional support over the next six months, just when they need it most.”
The LMITO will be maintained for this tax year. The temporary measure will be boosted to $1500 for eligible individuals and $3000 for eligible couples.
The Committee for Economic Development of Australia (CEDA) says the Budget has taken only modest steps – though calculated at $8.6 billon – to permanently help households navigate escalating costs.
The minimum superannuation drawdown rate will stay at 50 per cent until 30 June 2023. This affects about 1.8 million super accounts.
CEDA chief economist Jarrod Ball said the measures mostly benefit income earners and motorists, with many income support recipients receiving the least relief from cost-of-living pressures.
“With growing inflationary pressures and interest rate rises on the horizon, cost-of-living pressures will not dissipate any time soon and these measures do not provide a long-term solution.
“Better living standards for all Australians and insulating the economy and Budget from global shocks requires stronger productivity growth.”
Prime Minister Scott Morrison said the Budget was not the “last word” on what his government would do for Australians in the lead-up to the polls.
“A lot of noise happens between elections, but when you go from expressing an opinion or sharing a sentiment to casting a vote, only one of those things has consequences,” he said in Parliament.
He said the Budget was not a handout, but an opportunity for Australians to “redeem what they have worked for over the last three years”.
Opposition Leader Anthony Albanese said earlier on Tuesday that while Labor would not stand in the way of relief payments, the timing was “suspicious”.
“What we need is a plan for the economy, not a plan to get the Coalition a fourth term in office,” he said.
The Actuaries Institute welcomed the tax offsets, cost-of-living payments and limited changes to superannuation.
Actuaries Institute president Annette King said: “Specific policies designed to deliver better outcomes for women, low-income earners and retirees will improve equity for all Australians.
“But more needs to be done on climate change, and mitigation for those in flood and fire prone areas.”
She added that while the Budget was dominated by hip pocket measures “viewed through an electoral lens”, it did meet most of the fairness and equity objectives that the institute looked for when assessing major public policy announcements and programs.
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