Hi Allegra,

Last night Treasurer Jim Chalmers delivered the federal budget.

With inflation still too high and many households really struggling with cost-of-living pressures, it was always going to be a hard one to balance.

I’m disappointed with the high growth in spending, especially in the near term. And I don’t think there’s enough being done to make it easier to start and grow a business or address the structural deficit.

But there were some really positive steps to support young people, housing, women, and future green industries.

My team and I have been pouring over the budget papers and below is our first take on the budget “hits” and “misses”. You can read my full media release here.

Join me on Zoom tonight at 6pm to dissect the budget with former Grattan Institute CEO, John Daley AM.

The Big Picture

There’s some good economic news – with a second budget surplus and inflation expected to fall.

The government benefited from strong revenue growth and has banked some of this – but they could have gone further when it comes to things like reining in infrastructure spending.

Growth is set to slow and we’re facing budget deficits far into the future. And we’ll have to wait and see whether measures to take the heat off inflation actually work.

Hits:

• Inflation expected to fall below 3% later this year.
• Second budget surplus in a row.
• Lower deficits and debt than under some earlier estimates.
• Support for people who need it most, for housing and for the arts.

Misses:

• Slowing economic growth and large deficits into the future.
• Missed opportunities to reduce or delay spending on blown-out infrastructure projects.
• No meaningful tax reform or enough initiatives to make it easier to build business.
• No new work to ensure government spending is targeted to what makes the most difference.

Cost of living

The budget provides vital cost-of-living relief in several areas.

But the government has splashed the cash on energy bill rebates, including to the highest earners in our country. These rebates aren’t targeted, cost the budget $3.5 billion, and don’t address the underlying problem – our reliance on expensive fossil fuels.

While the subsidy might mechanically drive down our main measure of inflation, it’s a gamble that could stimulate spending in other areas. And it’s a missed opportunity to provide permanent bill relief by helping households electrify and get solar.

Hits:

• Tax cuts for every taxpaying Australian.
• Modest 10% increase in Commonwealth Rent Assistance (CRA).
• Cheaper medicines, particularly for those who need it – pensioners and concession card holders.

Misses:

• No means-testing for $300 energy bill relief payments and no support for households to electrify.
• Small tweaks to Jobseeker that don’t go far enough.
• Even with the increase in CRA, the cumulative increase is below what has been asked.

Housing

The housing crisis is the number one economic issue facing people in Wentworth – and the budget needed to provide more support.

It did – with $6.2 billion in new housing investment, including funding for social housing and infrastructure around new developments.

But the budget didn’t go far enough on incentivising renters’ rights, or zoning reforms by state governments.

Hits:

• $1.9 billion in finance for social and affordable homes.
• $1 billion for critical infrastructure required for new housing developments.
• New measures to attract and train construction workers.

Misses:

• No action to support renters’ rights or zoning reforms.
• No tax changes to increase supply in the short term.
• No push for stamp duty reform – which could increase home ownership in NSW by around 7%.

Climate and Environment

A signature piece of the budget is the $22.7 billion Future Made in Australia package, which provides substantial support to critical minerals, hydrogen, and clean energy.

Australia has a huge opportunity to become a clean energy superpower – but it’s critical we do this responsibly. The devil will be in the detail. If we get it right our economy can move forward, but if we get it wrong, it could waste significant amounts of public money.

The big missing piece in the Future Made In Australia is support to help households get rooftop solar and electrify – which was such a key piece of the Inflation Reduction Act in the US.

Hits:

• Exciting direction of travel set out in the Future Made in Australia Package.
• Funding to improve environmental approvals process and community consultation for renewable projects.
• Setup for the Net Zero Economic Authority, Environment Protection Australia, and Environment Information Australia.
• New active transport program.
• A big increase in funding for ARENA.

Misses:

• No funding for home electrification to help households permanently reduce their power bills.
• Lack of detail on how Future Made in Australia will run, be executed and deliver value-for-money.
• Limited support to help address the extinction crisis.
• Lack of enabling environment to make it easier to build green businesses.

Young People

Young people have been among the hardest hit from the housing and cost-of-living crisis – and this budget provides important changes to HECS, paid placements, and fee-free university-ready courses.

Hits:

• Changes to HECS indexation rates that wipe $3 billion off student debt.
• Paid placements and a new program providing fee-free university-ready courses.
• Funding for a National Student Ombudsman to investigate student complaints, including on sexual violence.

Misses:

• No changes to timing of HECS indexation.
• No reform of the failed Job Ready Graduates system.

Women

There was some good news for women – with super now paid on parental leave, more support for survivors of domestic violence and investment in women’s health and economic security. The biggest miss here was the lack of investment in frontline services for domestic violence.

Hits:

• $1.1 billion to pay superannuation on paid parental leave and help for women to get into male-dominated industries.
• Additional housing investment for women fleeing domestic violence and more funding for legal services.
• Age-assurance pilot to prevent people accessing harmful content such as porn.
• $56 million for sexual and reproductive healthcare.
• Support for pay increases in feminised industries especially aged care and childcare.

Misses:

• No additional support for front-line domestic violence services.
• $925 million Leaving Violence program will not be fully rolled-out until mid-2025.
• Punitive activity test for accessing childcare remains.

Business

I want Australia to be the best place to start and grow a business – but we didn’t see nearly enough in this budget. Business drives productivity, and drives our ability to pay for the services we need.

There are a few new measures that are welcome – but much more is needed.

Hits:

• Extension of instant asset write-off for small business.
• Removal nuisance tariffs and new digital trade accelerator.
• Improvements to processes for Foreign Direct Investment.

Misses:

• No meaningful reform to make it simpler and easier to start and grow a business.
• No investment to simplify and streamline industrial awards.
• No broader tax reform to increase business investment.
• Not enough action on the tens of recommendations coming out of bodies such as the Productivity Commission.

Health and The Care Economy

The budget gave a boost to Medicare and provided funding to implement further recommendations from the Aged Care Royal Commission.

There was also funding provided to support important wage increases in areas like childcare and aged care, and further steps to implement reforms to the NDIS.

Hits:

• 29 more Medicare urgent care clinics and $3.4 billion to add new and amended medicines to the PBS.
• New low intensity digital mental health service and expanded access to adult Head to Health Services.
• $2.2 billion to Aged Care including support for more home care packages.

Misses:

• Significant road to run on NDIS and Aged Care reforms.
• No significant investment for GP's.

The Arts and Wentworth Focus

While my team and I are still reviewing the details, it looks like we’ve had several wins on some of Wentworth’s top priorities. Here’s a quick run-down:

• $117 million in long-term financial support for NIDA and other performing arts institutions.
• Good news for our independent screen sector, with further positive changes to the producer tax offset and new funding for children's TV.
• $1.5 million for Sydney’s Qtopia museum.
• Extension of funding for the Community Refugee Integration and Settlement Pilot (CRISP) program, in which the Wentworth community participates in eight groups to date.

Join me on Zoom tonight to discuss the Budget

Find out more about the Budget. Join me at 6pm on Zoom tonight with John Daley AM, one of the country's leading economists.

We will be debriefing on the budget, and there will be a chance to have your questions answered. RSVP below for the Zoom link.

For those who can't join us, the Zoom will be recorded and posted here.

Thanks for your support,

Allegra Spender MP