A modest increase in unemployment benefits and cheaper health care are the centrepieces of a federal budget tasked with helping the nation's most vulnerable as living costs continue to hurt households.
Treasurer Jim Chalmers's second budget, which forecasts a surplus this year, seeks to tackle women's inequality, reduce inflation and lay the foundations for growth as the global economy slows.
The budget sees the JobSeeker unemployment rate rise $2.80 a day, rent assistance increase up to $15 a week and single parents will be $380 a month better off.
Surging commodity prices and low unemployment have bolstered the bottom line but the treasurer is warning that tougher days are still on the horizon.
Cost-of-living measures
The headline of the budget is the government's $15 billion cost-of-living package, which the treasurer insists will help lower inflation.
Treasury is forecasting electricity prices will increase 10 per cent and gas prices 4 per cent in the next financial year, which the government says is lower than was forecast in October thanks to its intervention in gas and coal markets.
As was previously announced, the federal government will spend $1.5 billion on energy bill relief, teaming up with states and territories to offer one-off bill deductions of up to $500 for 5 million households.
That support will go to people who receive government welfare payments and about 1 million small businesses.
Children under 16 years old, pensioners and other concession holders will gain greater access to free GP visits in what the government is calling the largest-ever expansion to bulk billing.
The measure will cost $3.5 billion and be available to about 11.6 million Australians.
The budget also included a shake-up of the Pharmaceutical Benefits Scheme, which will effectively halve the cost of medicines for people with chronic illness.
Support for the nation's most vulnerable
More than 900,000 Australians on JobSeeker will get an extra $40 a fortnight.
That will take the fortnightly payment for a single person with no children to more than $730 a fortnight.
The extra $40 a fortnight will also go to people on Youth Allowance, Austudy and other government payments.
That increase falls short of recommendations by unions, business and social services experts who wanted the JobSeeker rate to be raised to 90 per cent of the aged pension.
People aged over 60 receive a higher JobSeeker payment, in recognition of the fact it is harder for these people to find work.
That age limit will be lowered, offering more help to the biggest group of people on JobSeeker, people aged 55 years and older.
"The majority of people aged 55 and over on JobSeeker are women, many with little to no savings or superannuation, and who are at risk of homelessness," the treasurer said.
"So tonight, we’re extending the extra support for those aged 60 and over to include Australians aged 55 and over — more help for some of the most vulnerable in our community."
Ahead of the release of the budget, the government had already announced an expansion of the single-parent payment. More than 90 per cent of the recipients of this payment are mothers.
Under the change, single parents will continue to receive the payment until their youngest dependent child turns 14, up from the current cut-off of 8 years.
This will move some parents from JobSeeker onto the single-parent payment, netting them an extra $176 a fortnight.
Renters on government support will also gain a boost, with the government increasing the maximum rate of Commonwealth Rent Assistance by 15 per cent.
"This will provide up to $31 extra a fortnight for people renting in the private market and community housing — the largest increase in more than 30 years," Mr Chalmers said.
The budget also details the $250 million Central Australia support package announced earlier this year. The funding will go towards infrastructure projects, improving school attendance, crime prevention and domestic violence services.
The government has pledged to end violence against women within a generation. The women's safety sector say that requires about $1 billion a year in additional funding.
The budget falls short of that but includes more than $500 million in new measures, about $200 million of which will be targeted towards First Nations women.
Real wage growth a year away
The unemployment rate is tipped to be 3.5 per cent at the end of this financial year.
Unemployment is tipped to stay lower for longer than previously thought, but is expected to reach 4.5 per cent in June 2025. If realised, that equates to about 150,000 more people out of work.
After years of declining real wages, workers will have to wait another year to see an increase.
The government is tipping a 0.75 per cent increase in real wages in the first half of next year, which is earlier than was forecast in October.
As expected, the government has made no change to the contentious stage-3 tax cuts, which are slated to come into force next July.
Budget bottom line improving
The budget bottom line has surged on the back of low unemployment and high commodity prices, particularly for iron ore, coal and gas.
Low unemployment helps the budget bottom line in two ways — with more people paying personal income tax and fewer people receiving unemployment benefits.
The budget forecasts a surplus in this financial year of $4.2 billion, a $41.1 billion improvement on the October budget.
The wafer-thin forecast isn't tipped to last long, with Treasury expecting the budget to remain in deficit for the next decade.
The budget forecasts a $14 billion deficit next year, which economists think could easily become a surplus if the war in Ukraine keeps commodity prices high.
Despite the looming deficits, the budget bottom line will be $114 billion better off than previously forecast over the next five years.
The largest deficit over the forward estimates, $36.6 billion, is forecast for the 2025-26 financial year.
Shadow Treasurer Angus Taylor said the budget didn't do enough to address inflation.
"Labor cannot spent its way out of its cost of living crisis," he said.
"Its budget does nothing to help you or your family get ahead."
NDIS growth down
Treasury says the improved bottom line is also thanks to lower debt levels and interest rates and "moderation in the growth of NDIS costs".
Last October, the budget was forecasting the National Disability Insurance Scheme (NDIS) would grow at 13.8 per cent each year, second only to interest repayments as the fastest-growing government payment over the next decade.
The budget now tips the NDIS to grow at 10.4 per cent each year for the next decade, making it the highest-growing government payment. Interest repayments are forecast to grow 8.8 per cent each year over the next decade.
The reduction in NDIS spending will save the government about $74.3 billion over the next decade.
Net debt has fallen to pre-pandemic levels and is now tipped to hit $702 billion in 2027.
"Because we are returning most of the welcome improvement in revenue to the budget, debt will be almost $300 billion lower by the end of the medium term, saving $83 billion in interest costs over the next 12 years," Mr Chalmers said.
The outlook for growth is tipped to fall from 3.25 per cent this financial year to 1.5 per cent next year. That comes as Treasury forecasts the weakest global growth in more than two decades in 2023 and 2024.
Spending on defence, aged care and political staffers
Defence spending will grow at the fourth-fastest rate over the next decade — behind the NDIS, interest repayments and hospitals.
The government expects spending on defence will increase by $30 billion on earlier forecasts over the next decade.
That comes after last month's release of the Defence Strategic Review, in which the government announced it would spend $19 billion implementing new proposals, with $7.8 billion being recouped from downgraded and scrapped projects.
The budget forecasts a lower-than-expected spend on the aged care sector, which the government says is the product of keeping more people in their homes, and out of aged-care homes, for longer.
The budget also takes a $2 billion punt to "accelerate" the development of a green hydrogen industry, amid fears Australia is falling behind in the global race towards renewable energy.
Low-cost loans will be available for double-glazing windows, solar panels and other improvements that make houses more energy efficient — and cheaper to heat and cool — will also be offered, costing $1 billion.
Soon after he became prime minister, Anthony Albanese cut staff allocations for crossbenchers.
The budget reverses that, with the government committing about $40 million a year to provide extra staff and travel for all politicians.
The budget says this will enable politicians to "be engaged and responsive to the increased needs of the community".
The budget also includes a one-off $127 million bailout for the Department of Agriculture Fisheries and Forestry, as it contends with cost cutting, staff travel bans and sacking contractors.
Taxes and charges increasing
On the revenue-raising side, the budget includes a change to the Petroleum Resource Rent Tax, paid by oil and gas companies on their offshore liquefied natural gas projects, which will bring in $2.4 billion over the next four years.
The government already announced a 5 per cent a year increase for the next three years on the tax on tobacco, which will bring in an additional $3.3 billion over four years.
Along with a suite of regulations on vapes, the budget includes a $234 million package, including $63 million for a public health campaign to discourage vaping, and $30 million towards support programs to help Australians quit.
The government will also lift the fee charged to people leaving Australia, irrespective of if they plan to return.
From July 2024, the passenger movement charge will increase from $60 to $70 per person — the first increase since 2017.
Importers will also face an increase to their fees to help fund biosecurity projects to keep Australia pest- and virus-free. Farmers will also get slugged a new levy on the crops they export to also help fund biosecurity.
The cost to apply for a visa will increase 6 per cent, netting the government $660 million in coming years. The increase for short-stay and working holiday visas will increase 21 per cent.
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