The Federal Government’s Budget handed down on 9 May 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.
National Skills Agreement: The Government has committed an additional $3.7 billion to implement the National Skills Agreement, when agreed between the Commonwealth and states. It will prioritise new skills initiatives and partnerships in the net zero, priority sectors, essential care, women’s economic participation and closing the gap domains.
Fee-free TAFE places: The Government will fund an additional 300,000 fee-free TAFE places.
Expanding access to foundational skills: The Government will introduce a redesigned Commonwealth foundation skills program to improve access to training. The costs of this measure is $436 million over the forward estimates.
Apprenticeship support: The Government will introduce a new non-financial support model for Australian Apprenticeships, which will redesign and refocus key support services to increase completion rates and improve diversity. This measure will cost $54.3 million over five years.
Australian Skills Guarantee: The Government has committed $8.6 million over the forward estimates to implement the Australian Skills Guarantee, which will introduce targets for apprentices, trainees and cadets on government-funded major projects.
Early childhood education: The Government has committed $72.4 million over five years to support the skills and training of workers in the early childhood education and care sector.
Industry Growth Program and Entrepreneur’s Programme: The Government will grandfather the Entrepreneur’s Programme and replace it with a new Industry Growth Program (IGP). Administered by the Department of Industry, Science and Resources, it will employ commercialisation advisers to support the growth of small and medium business in areas of strategic policy focus. Grants will be available to IGP participating businesses. This measure is expected to cost $392 million over the forward estimates.
National Reconstruction Fund: The NRF special account has been capitalised with $550 million, equivalent to 3.7% of its target $15 billion of funds.
Powering Australia Industry Growth Centre: The PAIGC will provide advanced technology and skills development to businesses looking to locally manufacture renewable energy technologies, with a focus on the battery value chain. This measure is expected to cost $14.8 million over the forward estimates.
Quantum & AI: The Government will invest $75.7 million in various artificial intelligence initiatives. It will also establish an Australian Centre for Quantum Growth, at a cost of $18.5 million over the forward estimates.
Critical minerals: The Government will support the development of the Australian critical minerals sector through a package of international commercial engagement and project facilitation. The measure is estimated to cost $80.5 million over the forward estimates, and will be offset through redirecting funds from other DISER portfolio programs.
National Construction Industry Forum: The Government will establish a National Construction Industry Forum including representatives from key employer groups, unions and government to provide advice on major challenges facing the building and construction industry. This measure will cost $4.4 million over the forward estimates.
Energy bill price relief. The Government will extend energy price rebates to 5 million households and 1 million small businesses. Rebates will be administered by states governments and capped at $500, depending on specific pricing arrangements in each state. This measure is expected to cost $1.5 billion in 2023-24.
Petroleum Resource Rent Tax: The Government will make changes to deduction rules under the PRRT, which will limit project cost deductions to 90% of project revenue after seven years of operation. This measure is expected to generate $2.4 billion over the forward estimates.
Household energy upgrades fund: The Government will establish a fund to provide concessional finance to households for energy efficiency upgrades. 170,000 homes are expected to qualify, and will be financed through the Clean Energy Finance Corporation. This measure will cost $1 billion. An additional social housing upgrade fund will contribute a further $300 million.
Small business energy incentive: The Government will allow small businesses a tax deduction for upgrading to more energy-efficient equipment and assets. Businesses with a turnover of less than $50 million will be eligible for deductions of up to $20,000. This measure is expected to cost $310 million and is uncapped.
Hydrogen Headstart: A program which will provide revenue support contracts for renewable hydrogen projects through a competitive process. This measure is expected to cost $2 billion, though is an off-budget fund held in the Contingency Reserve.
Capacity investment scheme: The Government’s previously announced Capacity Investment Scheme will underwrite new investment in dispatchable clean energy in SA and Victoria. This cost for this measure is not for publication.
DFAT resourcing: The Government will commit $80 million over four years to enhance the strategic capability of the Department of Foreign Affairs and Trade.
Biosecurity: The Government will commit $1 billion over the forward estimates to strengthen Australia’s biosecurity system, including sustainable funding for technical functions and digital cargo systems. This will be offset by cost recovery arrangements for low value cargo which will raise $81.3 million; and a biosecurity protection levy on producers of agricultural, forestry and fishery products which will raise $153.0 million.
National Centre for Asia Capability: Funding will be extended for the National Centre for Asia Capability (AsiaLink Business), to grow business Asia capability. This measure will cost $14.7 million over the forward estimates.
Export Markets Development Grants: The Export Markets Development Grants Scheme has been cut by $61 million to $554 million over the forward estimates.
Simplified Trade System: The Government will provide an additional $23.8 million in 2023-24 to continue initiatives to improve trade systems through the Simplified Trade System reforms.
Defence funding: Defence spending over the forward estimates (through to 2026-27) remains broadly in line with its long-term track of 2.0% of GDP. Additional spending to implement the Defence Strategic Review will raise this to 2.3% by 2032-33.
Defence Strategic Review: The Government plans to spend $19 billion over four years to implement immediate recommendations from the Defence Strategic Review (DSR). This spending will be offset by $11 billion from existing Defence budget and $7.8 billion from deprioritised programs. DSR implementation commitments include:
Specific defence and defence industry projects announced in the budget also include:
Advanced Strategic Capabilities Accelerator: The Government will establish an Advanced Strategic Capabilities Accelerator to translate new technologies into defence capability. This measure will cost $3.4 billion over ten years.
Shipbuilding skills: The Government will provide $11.4 million over 3 years from 2023–24 to extend the Defence Industry Pathways Program within the Western Australian shipbuilding sector.
Defence vocational skills taskforce: The Government will contribute $3.9 million over two years to establish a defence vocational skills taskforce.
Nuclear submarine program initial steps: The Government will commit $4.5 billion over the next ten years to support the initial steps in the acquisition of nuclear-powered submarines. This includes funding to establish an Australian Submarine Agency and several other regulatory reforms, and forms part of the whole-of-program cost over the decade.
Defence personnel: The Government will provide $397.4 million over two years from 2023–24 to support the retention of Defence personnel.
See also: Defence industry in the 2023-24 Budget (Ai Group Defence Council briefing)
A global minimum tax and a domestic minimum tax will be applied to large multinational enterprises with annual global revenue of approximately $1.2 billion. They will be based on OECD Model Rules.
Small business asset write-off: Businesses with a turnover of less than $10 million will be able to immediately deduct eligible assets costing less than $20,000 from 1 July 2023 to 30 June 2024.
Reducing rate of growth of quarterly tax instalments in the 2023-24 year: The adjustment to Pay-As-You-Go (PAYG) instalments will be reduced from 12% to 6% for businesses with consolidated turnover of less than $50 million. The same adjustment of GST instalments will be available for businesses with turnover of less than $10 million. These changes will only apply in the 2023-24 year.
Permanent migration cap: The planning level for permanent migration has been set at a long-term level of 190,000, of which roughly 70% will be allocated to skills streams.
Budget forecasts: Net overseas migration is estimated to be 400,000 in 2022-23, largely driven by catchup following the pandemic. Net overseas migration is forecast to fall to 315,000 in 2023-24 and 260,000 in 2024-25.
Social housing: The Government has raised the National Housing Finance and Investment Corporation’s (NHFIC) liability cap by $2 billion from $5.5 billion to $7.5 billion. This will enable the NHFIC to support additional social and affordable rental housing.
Built-to-rent (BtR) tax arrangements: The Government will increase the depreciation rate for new BtR projects where construction starts after 9 May 2023 from 2.5% to 4.0%.
National Disability Insurance Scheme: The Government has announced a cap of 8% annual growth in NDIS costs. The government has also committed a further $732.9 million over the forward estimates to support NDIS staffing increases and reforms.
Parenting payment eligibility: The Government has raised the child cut-off age for the Parenting Payment (Single) from 8 to 14 years. This will allow 57,000 individuals currently on Jobseeker payments to move into Parenting Payment. This measure is expected to cost $1.9 billion over five years.
Other welfare payments: The Government will increase by $40 the rates of Jobseeker, Austudy and Youth Allowance. It will also lower the eligibility age for the higher rate of Jobseeker from 60 to 55. These measures will cost $4.9 billion over 5 years.
Child care subsidies: Child care subsidy rates will be increased to 90% for families on a combined income of $80,000 or less, tapering by 1% for every $5000 of additional combined income. This will reduce childcare costs for an estimated 1.2 million families.
Rent assistance: The Government will increase Commonwealth Rent Assistance by 15%, or $31 per fortnight. This measure will cost $2.7 billion over five years.
Aged-care wages: The Government has committed to raising aged care workers’ wages by 15%. This measure is expected to cost $11.3 billion over the forward estimates.
A modest Budget misses the mark
Media Release – 9 May, 2023
Federal Budget 2023-24: what does it mean for business?
Webinar recording – 12 May, 2023
Federal Budget 2023-24: Skills, Education and Training
Ai Group Centre for Education & Training – 10 May, 2023
Defence industry in the 2023-24 Budget
Ai Group Defence Council Briefing – 22 May, 2023
Federal Budget needs to balance current priorities with building for the future
Media Release – 4 May, 2023
2023-24 Budget: Pre-Budget Submission
Submission – 31 January, 2023
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