The Federal Budget: A Preview of Expectations
With the Federal Budget just two days away, it may not immediately grab your attention, but understanding its significance is crucial.
The annual budget serves as an update on the government’s activities, providing us with an opportunity to scrutinize and evaluate their actions.
Given the new government in place and the prevailing cost of living crisis, this year’s budget holds immense importance.
Let’s take a sneak peek into what we can expect.
To comprehend the budget, we can divide it into two halves.
The first half focuses on spending – how much the government is allocating and where it is being allocated.
There are numerous areas of interest within the spending half, ranging from funding for new medicines and art galleries to substantial investments like nuclear-powered submarines.
The second half pertains to revenue generation and how the government plans to finance its expenditures.
The interaction between these two halves is essential.
If the government raises more money than it spends, we say the budget is in surplus.
Conversely, if more money is spent than generated, the budget is in deficit.
In the case of a deficit, the government must borrow money to bridge the gap, with the promise of repayment in the future, along with interest.
Examining the current state of the budget, in the fiscal year 2022-23, the government plans to spend a staggering $650 billion.
The largest category of spending is Social Security, encompassing welfare, aged care, and disability care, accounting for approximately one-third of the budget.
Health follows as the second-largest category, constituting about one-sixth of the budget.
Education ranks third, and defense comes fourth.
Simultaneously, the government aims to raise $607 billion in revenue.
Roughly half of this amount comes from individuals, around one-fifth from companies, and the remainder from other sources.
As you may have noticed, $607 billion is less than $650 billion, indicating that the budget is in deficit.
In fact, this has been the case for the past 15 years and is projected to persist in the future.
Consequently, the government has accumulated a total debt of approximately one trillion dollars.
However, the sheer magnitude of this number fails to reveal the complete picture.
What truly matters is the interest payments on this debt, which currently amount to around $14 billion per year, with a significant upward trajectory.
This context sets the stage for this year’s budget.
For 15 years, successive Australian governments have spent more than they have collected in taxes, steadily accumulating more debt.
Simultaneously, the pressure to spend further intensifies.
Health and aged care expenses increase as the population ages, and new initiatives such as the National Disability Insurance Scheme (NDIS) and expanded childcare services require substantial funding.
While these expenditures align with public priorities, it is crucial to ensure value for money amidst mounting costs.
To what extent the government aims to reduce the deficit will be revealed on Tuesday.
However, there are calls for immediate spending to alleviate the cost of living crisis.
For instance, demands have emerged to increase the JobSeeker unemployment payment, which currently falls below $50 per day for a single person without dependents.
Even the government’s own expert panel recommended a significant increase.
While the government has expressed reluctance to implement such a raise, it is speculated to consider a smaller increase for older Australians.
Additionally, the budget may contain measures to alleviate the cost of living, such as relief on energy bills, cheaper medicines, and possible support for renters.
We will have to wait for the budget release to ascertain the specifics.
Rest assured, The Daily Aus will be there to guide you through it all.
Keep an eye on our Instagram account on Tuesday night for a comprehensive breakdown of the budget, and tune in to the TDA podcast on Wednesday morning for a detailed deb