Deciphering the 2022/23 Federal Budget
The newly-ushered Labor party revealed their first budget in office in October 2022, and with it came a good insight into how Labor believes the next few years will move economically. As budgets do, there was a lot of discussion on the national and global economy, predictions for inflation, debt, GDP and interest. As predicted, the budget confirmed that inflation is still high- expected to reach 7.75% in December, whilst wage growth across the nation lags behind. For those hoping for national wage hikes, it is more likely that these will happen in 2024 than 2023.
So with wage hikes off the board, where is Labour putting their money? And who will be affected? Read on for some high level insights into some of the new budget’s focus areas for spending, where you could potentially benefit.
Disclaimer: Before we dive into this article it is important to note that the below information contains general advice only, not personal financial advice. Before you take any action it is important to consult with a qualified financial adviser or mortgage broker who can appropriately assess your unique situation. For a discussion personalised to your needs, reach out to us here!
Budget Impacts: Families
The good news is that significant cash has been set aside for both existing and future parents, the less great is that it won’t be made available until July 2023. However, some of these initiatives could be a great benefit to you and your family! The three initiatives are:
- From July 2023, the Child Care Subsidy rates will increase all the way up to 90% for eligible families. Eligible families are those who class as earning a combined total of less than $530,000 per financial year.
- In addition, Australian families will also receive higher subsidies rates for children in care who are 5 or younger. The subsidy here will be up to 95%.
- The government has also expanded their paid parental leave. The expansion will be phased in over the next 4 years, until 2026 when parents will be eligible for a total of 26 weeks of paid leave to care for their newborns.
If you have a family, or are thinking about starting one and aren’t sure how this may impact your personal financial situation, reach out to the team (simply click here) – we’ll be hapy to discuss!
Budget Impacts: Potential Homeowners
A number of initiatives on the property side of things definitely caught our attention as well. The first initiative of interest is the “Help to Buy” scheme, which has been developed to assist up to 40,000 low to moderate income Australians, to purchase a home. Without going into the specifics of the policy, this means that eligible Aussies need a lower deposit and can take on a smaller mortgage.
In addition, the Government has launched the “Regional First Home Buyer Guarantee”. Under this initiative those who have lived in a regional location for more than a year will have Labor’s support in purchasing their first home, in that regional location, with only a 5% deposit required. There are up to 10,000 spots available for application each year until June 2026.
Living in a regional area and wanting to know how this could benefit you? Book in a call with us here!
Budget Impacts: Senior Citizens and Pensioners
Kids flown the coop, and wondering if it’s the right time to downsize? It may be!
To both support senior citizens as they downsize, and encourage more houses to be freed up for the market, the Government has lowered the minimum age for downsizer contributions to from 60 to 55. This means that anyone above 55 years old who is selling their home is able to make a one-off post-tax contribution to their superannuation of up to $300,000. This is per person, so eligible couples looking to sell should seek financial advice on how to maximise their benefits from this initiative.
In addition, the income limits for what pensioners can earn before their pensions are reduced has been increased from $7,800 up to $11.800. In addition, the income threshold for the Seniors Health Card has been increased from $61,284 to $90,000 for singles and from $98,054 to $144,000 (combined) for couples. If you are close to retiring and have a plan that includes a pension and a budget that includes health expenses, this is a great time to reach out to your financial planner and update your strategy. Book in with us here!
Budget Impacts: Women
It was great to see that the budget dedicated nearly 100 pages purely to women, and how they plan to support them grow through the next few years. The Government focused on three really great, and much needed key areas: women’s economic equality, ending violence against women, and gender equality, health and wellbeing. Numerous initiatives have been outlined, including:
- $1.7 billion to find women’s safety initiatives, such as:
- Legislation to provide 10 days of paid family and domestic violence leave,
- $100million dedicated to housing options for women and children fleeing domestic or family violence, and older women on lower incomes at risk of homelessness.
- The full implementation of the recommendations of the Australian Human Rights Commission’s Respect@Work report, and
- funding for respectful relationships education.
- $5.8 million over five years to support women in science, technology, engineering and math careers (STEM) through the Women in STEM and Entrepreneurship program, and
- Numerous other initiatives to support female health and economic security.
If you’re wondering how this may impact you, reach out to us here.
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We hope you found this article helpful! Still got questions? All good! The team at Pursue Wealth are on hand to answer any questions you may have about how this latest budget may impact your financial plans. Book in a 15 minute consultation with our dedicated team here.