The 2022-23 Federal Budget has been delivered in one of the most uncertain and volatile environments in decades, according to Australia’s leading professional accounting organisation, CPA Australia.
“A complex array of factors, including geo-political tensions, the pandemic, rising inflation and low unemployment have left their mark on the budget,” said General Manager External Affairs, Dr Jane Rennie.
“All budgets are balancing acts. The main challenge for government with this budget was maintaining sufficient flexibility to respond to once-in-a-lifetime economic crises, while setting the nation on a path towards sustainable economic transformation.
“There are important announcements in the budget which will promote longer-term economic transformation. However, what’s missing are announcements to better support businesses to build their resilience to manage future uncertainty and shocks.”
Fiscal policy approach
- Some expansionary elements but overall a consolidation approach
- $715 billion net debt (31.1 per cent to GDP) is moderate and manageable
“There are elements of this budget which can be categorised as expansionary, and more generous than we expected, however many of the announcements are focused and temporary. On balance, the fiscal policy approach is one of slight consolidation.
“The government is seeking the sweet spot between supporting economic transformation and not stimulating inflation. It will be interesting to see how the Reserve Bank responds to this budget next Tuesday, when it meets to consider interest rates.
“Given the circumstances, we’re not overly concerned about Australia’s level of net debt. As high as the headline figures sound, they’re relatively low by international standards. It’s worth noting too, that this debt was racked up in the name of supporting millions of Australians and Australian businesses, which it did successfully. We should not be too critical of this debt or those who incurred it.”
Cost of living
Low and middle-income tax offset
- LMITO increased by $420 (up to a maximum of $1500) for 2021-22
“The increased LMITO will bring relief to many Australians within months. Temporary support measures have a way of outstaying their welcome; we’re pleased the government is signalling that this is the final year for the LMITO.”
- One-off cash payments of $250 to social security recipients
“One-off cash payments, aimed at easing cost of living pressures, are likely to be popular with many Australians. Given these payments are temporary and targeted at lower income earners, they will help those households most in need. However, the combination of the increased LMITO and direct cash payments may contribute to inflationary pressures.”
- Fuel excise cut by half for six months, at a cost of $5.6 billion
“Temporarily cutting fuel excise will provide relief at the bowser and will hopefully reduce cost of living pressures, however it’s an expensive measure. We hope the impact of this cut is not wiped out by large increases in international oil markets.”
Support for small business
- $1 billion towards improving small business digitalisation
“CPA Australia research shows that Australian small businesses have some of the lowest levels of digital capability in the Asia-Pacific region. The technology investment boost and the skills and training boost are welcome. These two programs go hand in hand and will help establish Australia as a top 10 digital economy. To have a bigger impact, the technology investment boost needs to go beyond 2023. The skills and training boost should be extended to sole traders and the range of training providers be expanded.
“What’s missing from this budget are measures to make it easier for small businesses to access professional advice. CPA Australia research shows that high growth businesses are much more likely to seek advice. The Government has missed an important opportunity to help businesses build resilience to manage future shocks and improve their profitability.”
“Cybersecurity is a national security issue. Russia’s invasion of the Ukraine has increased the likelihood of cyberattacks on Australian businesses. The government is making a significant investment in bolstering its own cyber-defences. CPA Australia research shows that Australian small businesses are among the least prepared in the Asia-Pacific region to withstand a cyber-attack. It’s extremely disappointing that more isn’t being done to help small businesses manage their cyber risk. After all, when it comes to cybersecurity, your defences are only as good as your weakest link.”
Labour and skills shortages
“While Australia needs more tradies, the government’s narrow focus on a ‘high viz, hard-hat’ solutions to plugging workforce shortages is disappointing. The professions, including accounting, are suffering significant skills shortages. Underinvesting in employment opportunities for professionals and pathways for graduates is short-sighted.”
Dr Jane Rennie, General Manager External Affairs on +61 425 869 017 or email: [email protected]
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