A halving of the tax paid on fuel and a one-off cost of living payment headline a big spending pre-election budget the Coalition hopes will secure it a fourth term in power.
Drivers will save 22 cents a litre for the next six months, a move that seeks to counter surging petrol prices but comes at a cost of $3 billion to government coffers.
It will likely take two weeks for drivers to see lower prices, even though the excise cut took effect at midnight on budget night.
Treasurer Josh Frydenberg's budget also includes a one-off, $250 tax-free payment that will automatically be paid to 6 million people in April. Pensioners, welfare recipients, veterans and concession cardholders will receive the payment.
The budget is forecasting real wages will remain largely stagnant, with wage growth tipped to only just outpace inflation in the coming years. The budget papers estimated that real wages went backwards this financial year, thanks to a 4.25 per cent jump in the cost of living.
"Tonight, as we gather, war rages in Europe. The global pandemic is not over," Mr Frydenberg said.
"Devastating floods have battered our communities. We live in uncertain times."
Budget measures announced ahead of an election
Prime Minister Scott Morrison is slated to call a federal election for May in the coming days.
The Coalition — privately conceding it's behind coming into the election — hopes the budget will reignite its political fortunes, which have tumbled since the peak of the pandemic in 2020.
On Tuesday night, the Coalition reduced the budget to four key priorities: offering cost-of-living relief, a long-term plan to create jobs, investment in essential services and stronger defence and national security.
Among the budget policies the Coalition will campaign on are an expansion of a tax offset for low- and middle-income earners, which goes to people earning up to $126,000.
The offset, paid to about 10 million people in their tax returns after July 1, will increase up to $1,500 — up $420 from $1,080 — but will end after this financial year.
And the budget simplifies paid parental leave, allowing couples to share 20 weeks, regardless of their gender. Single parents will also receive an additional two weeks.
Australians on a mental health plan will again receive an additional 10, partially-Medicare subsidised visits to a psychologist, a measure first announced during the earlier stage of the COVID-19 pandemic.
The threshold that triggers access to free medicines on the Pharmaceutical Benefits Scheme will be lowered, meaning patients will get access to no-cost medicines sooner.
Mr Frydenberg said the budget also included more than $669 million for an additional 16,500 humanitarian visas for Afghan nationals over the next four years — with Australia having faced pressure to do more to settle the interpreters who helped Australian soldiers in the two-decades-long war.
Included in the budget are about $400 million worth of announcements for this financial year and next year that are yet to be announced.
This line item is typically viewed as an election war chest but is well down from the $16 billion included in last year's mid-year budget update.
Competition watchdog to ensure fuel prices are lower
The government forecasts the cut to the fuel excise will save the owner of a mid-sized car about $14 when filling it up, while businesses with fleet vehicles will likely save thousands.
It was 2001 when a government last changed the fuel excise and it took 13 years to reinstate it.
"The competition watchdog will monitor retailers to make sure these savings are passed on in full," Mr Frydenberg said. "This temporary reduction in fuel excise will not come at a cost to road funding, which will see more than $12 billion spent in the coming year."
Ahead of the budget's release, Labor dubbed the prospect of one-off payments and cost-of-living support as vote-buying on the eve of an election.
But Labor looks likely to back in all the short-term relief measures.
Shadow Treasurer Jim Chalmers, speaking after the budget was released, said wage growth was the biggest economic challenge for the government. He accussed the Coalition of having no plan to address wage growth.
"The big risk of another three years of this government is that real wages are falling," he said.
Deficits for more than a decade
The last time Mr Frydenberg released a pre-election budget in 2019, he championed the budget was "back in black" and on the path to paying off the national debt.
The 2022-23 budget forecasts more than a decade of deficits and net debt set to peak at $864.7 billion in 2026.
The budget forecasts deficits of just under $80 billion this financial year and in 2022-23.
Those deficits are smaller than forecast in last year's mid-year budget update, thanks to surging prices in the commodities that Australia exports and falls in unemployment and welfare payments.
Currently, unemployment is at 4 per cent and the budget forecasts this will fall to an almost 50-year low of 3.75 per cent in September this year.
"There are nearly two million more Australians in work today than when we came to government," Mr Frydenberg said. "[There are] more women in work than ever before."
Apprentice incentives, funds for cybersecurity
The Coalition's budget again offers incentives to get people into trades.
There will be $5,000 payments to new apprentices and $15,000 in wage subsidies for the businesses who hire them.
Small businesses will also be eligible for a tax deduction on money spent on training staff. For every $100 spent, the company will get a $120 deduction.
The Coalition is also pledging about $10 billion in the next decade for improved cyber capabilities, a plan that forecasts to create about 2,000 jobs for data analysts, programmers and software engineers.
