Published June 2023
This article provides a snapshot on the major announcements of the 2023-2024 Federal Budget and related implications for employers. Against the high-inflation, low unemployment and rising interest rates, the Labor government attempted to provide a sensible budget that seeks supporting the high cost of living pressures without adding to inflation.
Below is a summary of the key changes:
- Help with cost of living: $14.6 billion package includes a range of payments for low- and middle-income families including energy bill savings, cheaper medicines, bulk billing for consultations for concession card holders and patients under 16, mental health prevention programs, modest increases to JobSeeker and rent assistance;
- Emphasis on the women’s budget statement: Explores factors influencing women’s economic equality and outlines key measures to advance gender equality in Australia – focusing on achieving economic equality, ending violence against women, increasing women’s representation in leadership and decision-making and improving women’s health and wellbeing;
Also, this budget seeks to provide cheaper childcare bringing in more parents to participate in the workforce, efforts to close the gender pay gap, and culturally diverse participation in foundation and apprenticeship skilling.
- Substantial funds towards the climate transition: More financial resources were allocated towards climate action than originally expected to accelerate the green energy transition. This includes the establishment of a new Hydrogen Headstart Program and funding to establish the Household Energy Upgrades Fund to support home upgrades that improve energy performance and save energy;
- Increase on the Defence funding: The cost of the Defence Strategic Review means an increase in spending over the medium term, with the forecast to rise the GDP above 2.3% in 2032-33;
- Effective budget position: The structural budget deficit is expected to be much lower of GDP in 2032-33, compared to the last years’ budget. Lower interest costs indicate a very substantial improvement in the budget outcome over the next decade;
While this Budget focused on incremental improvements to existing policies and prioritised support for those currently outside the workforce, this comes at the cost of truly modernising the workforce to prepare for the new digital economy.
Some new investments in education and skill shortage such as major reviews into the early childhood education sector, boost technology and AI investments, and provide skilled migrants pathways to permanent residence will also assist the Australian economy.
Edwards HR: So How Are Employers Impacted?
- Help with cost of living: with the government changing the landscape across the cost of living, this may ease the pressure on employers to increase salaries to keep up with livings costs. However, in saying that, the inflation and annual wage increase this year could impose a huge pressure on employers.
Apart from the reform of the Pharmaceutical Benefits Scheme to allow employees to purchase 60 days’ worth of medicine from a single script compared to 30 days currently, the government will also invest on the strengthening the Australia’s mental health and suicide prevention.
Employers will be able to leverage from mental health programs for employees (such as Psychosocial health and safety programs) which could positively impact on employees’ productivity and engagement.
- Emphasis on the women’s budget statement: while the gender equality remuneration orders will assist closing the financial gender gap between the genders, these increases could affect wage costs for employers. Recently, the age care industry had a huge 15% increase supposedly placing pressure on the age care industry.
Next in line could be the childcare care industry which is a female dominated and could potentially have a significant wage review also given the current modest hourly rates.
As announced in November, Child Care Subsidy rates lift to 90% for families on a combined income of $80,000 or less from 1 July 2023. This will provide cheaper childcare for around 1.2 million families.
At least the government is increasing the subsidy which could potentially relax the wage increase on the childcare sector.
- Substantial funds towards the climate transition: this could present investment options to employers. Given the super increase to 11%, meaning more investments available to superannuation funds in this sector.
While this offers a positive change to the environment, it could also present the industry with more environmental jobs. Also, small and medium businesses will benefit from an additional deductions for spending on more efficient use of energy.
- Increase on the Defence funding: this shift in budget spending always generates new projects within the defence industry which translates to more jobs and increase of the GDP.
- Effective budget position: the government is confident that with these new measureswill place the Australian economy in a better position and control current inflation and wage increase pressures in the coming years.
In addition, it will assist employers to deal with skill gaps and skilled shortage in some industries.
WHERE CAN I GET HELP?
While a fairly balanced budget has been developed, it may present some challenges for employers this year, especially the wage compliance space which is a significant area of focus for the Fair Work Ombudsman. Please reach out to find out how the Edwards HR team can support you in assessing your remuneration practices, to ensure compliance and increase your teams’ productivity.
For more guidance about this update, or to find out how Edwards HR can support your business, contact our team today on 07 3568 0866.
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