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Cost-of-living front and centre in Australia's 2023 budget

The October budget is the first by the Labor government which has worked to ensure fiscal and monetary policies are aligned.

Treasurer Jim Chalmers in his budget speech told Australians that this was a responsible budget that readies the country for the future.

In his first budget speech, the Treasurer said it provided cost of living relief, targeted investments for a more modern economy and had begun the work of budget repair.

One of the budget losers however was the economy, with the government providing a bleak picture ahead. The budget papers show GDP growth falling by a quarter of a percentage point, to 3.25%, this financial year and then falling again to 1.5% in 2023-24.

The hit to growth is expected to have an effect on employment but the Labor government said jobs will continue to be created and unemployment is expected to stay low at 4.5% in 2023-24 and 2024-25.

The dreaded I word, inflation, is expected to peak at 7.75% later this year before moderating to 3.5% in 2023-24. This would bring it back to the RBA's target range in 2024-25.

But due to that inflation read, it seems real-time wages growth is still a ways off. In fact, wages is expected to continue to go backwards until 2024-25. Wages grew just 2.6% in the year to the end of the June quarer, while at the same time there was a 6.1% jump in the cost of living.

The government did say though that wages are growing faster now than they were before the election.

As always, people have eagerly awaited for the budgets winners and losers. As this is a mini-budget, before the full one next year, the list is short. Labor so far has revealed a five step plan to ease the cost of living centered on housing, parental leave, child care, healthcare and wage growth.

Budget Winners

Housing

The government plans to build one million new homes by the end of the decade. The Help to Buy Scheme will allow up to 40,000 eligible Australians to own their home with a lower deposit and smaller mortgage The Regional First Home Buyer Guarantee will support another 10,000 new homeowners per year

Child Care

The Labor government will gradually increase paid parental leave entitlements to give parents six months of paid leave by 2026.   Early childhood education and care will be more affordable from July 2023.

Healthcare

The government has slashed the PBS maximum general co-payments to $30 a script from January 1 2023. This will save up to $12.50 per script for around 3.6 million Aussies a year.

Students

$1b investment in fee free TAFE

$458m to create 20,000 new university places

Renewables

To establish a $20b fund for energy transmission

Infrastructure

$120b investment pipeline for transport infrastructure

Environment

$1.8b pledged for environmental and heritage protection

$204m to accelerate the defence and restoration of the Great Barrier Reef

For parents, the Labor government will introduce cheaper childcare from July 2023. Over 1.2 million eligible families will benefit from higher child care subsidies. The government has also made moves to increase paid parental leave of up to six months by 2026.

One of Labors landmark budget pieces is the plan to build one million homes by the end of the decade. Under the scheme, the Commonwealth would support an additional 10,000 affordable dwellings in that time frame, costing the budget $350m. The states and territories will be expected to deliver the same number of homes for low to moderate income households.

The government is also support a pay rise for around 2.7 million workers currently on minimum and award wages. It will also support a wage increase for aged care workers.

Students are the rare winners in this budget as well with Labor to invest $1b in fee free TAFE. This will provide 180,000 places next year, which Labor says is the first stage in the plan for nearly half a million fee free courses. Labor will also invest $485m to create 20,000 new unievrsity places over the next two years for students from disadvantaged backgrounds.

Finally Labor has outlined its plan to power Australia, by driving investment in renewable energy which it says will be cheaper and deliver thousands of new jobs in coming years. To that end, it will establish a $20b fund for energy transmission.


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