On 9 May 2023, Treasurer Jim Chalmers delivered the highly anticipated 2023-24 Federal Budget. The modest $4.2 billion surplus – the first in 15 years – is a much-needed windfall, which has become possible due to tailwinds such as favourable commodity prices, a robust labour market, and increased short-term migration. The long-term forecast looks promising, with experts predicting huge savings on interest costs.
The Payroll Industry’s largest announcement in the budget is “PayDay Super,” set to roll out in July 2026. While it will result in significant changes to payroll processes, it will also have a negative impact on business’s working capital. It is essential for the ATO to allocate significant resources to help businesses adapt.
The Australian Tax Office (ATO) has received considerable funding towards their data matching and compliance programs. Ensuring businesses meet their compliance requirements is critical. This Budget did not see the government submitting to the pressure from the Greens or some independents to wind back the Stage 3 tax cuts, nor was there a mention of increasing superannuation rates.
A central theme was wage growth, highlighted by the major announcement of a 15% wage hike for Aged Care Industry workers. It sets a precedent for Fair Work, and it will be interesting to see the size of the annual minimum wage increase.
Here we summarise the key highlights that you need to know about the budget announcements as they relate to employers and their staff and the impact on payroll:
- The global economic outlook is slowing due to inflation, higher interest rates and financial sector strains.
- Lower than expected inflation combined with higher wages is forecasted leading to real wage growth.
- People are being supported with $3.7 billion for a 5-year national skills agreement, 300,000 fee-free TAFE places and more language, numeracy, and digital skills opportunities.
- Small businesses are being backed with an instant asset write-off and help to adopt digital technology.
- Women’s economic equality is being addressed with action to close the gender pay gap and 10 days of paid Family and Domestic Violence Leave among other initiatives.
- The Government is investing in infrastructure and regional development to unlock potential and create jobs.
- Responsible and affordable cost-of-living relief to those most in need is provided.
- Foundations are being laid for growth by embracing clean energy and investing in people, skills, technology, small businesses and value-adding industries.
- A surplus is forecasted with less debt than prior budgets.
- Inflationary pressures are being relieved while supporting those struggling to make ends meet.
- Addressing disadvantage in communities is supported with an additional $7.8 billion to close the gap between Indigenous and non-Indigenous Australians.
- Strengthening the Budget includes fiscal responsibility returning 82% of extra revenue windfall so far, savings from expenditure control, forecasted small surplus in 2022-23 along with revenue measures like tightening superannuation tax concessions.
Overall, the 2023-24 Australian Federal Budget is a comprehensive plan that tackles difficult economic conditions, invests in healthcare, and modernisation initiatives, supports people through skills development initiatives, small business funding opportunities, and gender pay gap measures, while strengthening the budget’s fiscal responsibility.