Your governance and risk guide to the federal budget
In this special report, we put the recent federal budget under the microscope, outlining what you need to know about the major governance and risk management announcements.
We drill down on the Treasurer’s first budget, examining the announcements on the economy, infrastructure, spending on aged care, climate change as well as the proposed new National Anti-Corruption Commission and funding for workplace culture and diversity.
Budget 2022: overview
Federal Treasurer Jim Chalmers has handed down his first budget, which he labelled “solid, sensible and suited for the times”.
According to Dr Chalmers, the budget had three objectives – responsible cost of living relief, strengthening the economy and the beginning of budget repair.
The centrepiece of the budget is an ambitious plan to build one million, well-located homes in five years from 2024, as part of a national housing accord with states and territories.
Most of the spending in the budget reflects election promises. Over the forward estimates, the government will spend $5 billion to improve access to childcare subsidies for 1.2 million families. The government also extended Commonwealth funded paid parental leave from 18 to 26 weeks.
The National Disability Insurance Scheme will cost an extra $8.8 billion, including money to establish a “fraud fusion taskforce” to deal with fraud in the NDIS.
There is nearly $10 billion more for infrastructure projects around the country, most of which were announced before the budget.
The biggest spending items are interest on debt, the NDIS, health and aged care, and defence. But higher commodity prices and a strong jobs market has delivered an additional $142 billion in revenue this financial year.
The government has identified savings of $22 billion through either cancelling the previous government’s spending commitments, including parts of the Building Better Regions Fund, or delaying the start of others, many of which are transport related.
As expected, there was no mention of Stage 3 tax cuts, currently legislated to take effect on 1 July 2024. But the government expects to net an extra $4.7 billion over four years by cracking down on tax avoidance by individuals, small business and multinational firms.
Treasury has sharply downgraded its economic forecast. While this financial year is expected to expand by 3.25 per cent, the 2024 financial year is forecast to grow by only 1.5 per cent.
Inflation is expected to peak at 7.75 per cent later this year before falling back to 3.5 per cent through the next financial year. The unemployment rate, currently at 3.5 per cent, is expected to rise to 4.5 per cent next financial year.
The budget deficit this financial year is expected to come in at $37 billion, down from the $78 billion in the March budget. But in following years the deficit remains large.
Budget 2022: Key governance and risk management funding
Climate change and disaster funding
The federal government will establish a $20 billion fund for energy transmission (“Rewiring the Nation Plan”), a major pain point in establishing renewables across the country. It is the centrepiece in $25 billion in climate-related spending in the budget.
Dr Chalmers said the Budget begins to implement the government’s Powering Australia Plan, investing more than $800 million in:
- Reducing taxes on electric cars. Battery, hydrogen fuel cell and plug-in hybrid cars will be exempt from taxes if their retail price is below the luxury car tax threshold
- Building a national electric vehicle charging network and hydrogen refuelling stations
- Providing solar battery storage for up to 100,000 homes
- Ensuring renters and apartment owners can benefit from cheaper energy.
As part of the program, there’s $275 million to encourage the use of electric vehicles, $225 million for community batteries and household solar, and a $345 million cut to fringe benefits tax that will save employers who provide cars to their employees $9000 per year, or individuals $4700 per year.
Disaster Relief Australia will be funded so more than 5000 volunteers will be ready when disasters strike, while $200 million will be put into a disaster-ready fund for prevention and resilience.
Given the rush of cyber breaches in recent months, there was relatively little in the budget on cyber security. The Office of the Australian Information Commissions will get $5.5 million to investigate and respond to the Optus data breach.
There’s $12.6 million over four years to combat scams and online fraud to protect Australians from financial harm. The bulk of that will go to the Australian Competition and Consumer Commission for initial work on the establishment of a National Anti-Scam Centre. There’s also a small amount of money to raise public awareness of the risk of scams.
National Anti-Corruption Commission
The budget has earmarked close to $270 million to establish and run the proposed new independent National Anti-Corruption Commission.
The commission has broad jurisdiction to investigate corrupt conduct and reaches beyond the public sector to any person who could adversely affect the honest exercise of a public official’s functions. The new commission will subsume the Australian Commission for Law Enforcement Integrity and include preventative, education and intelligence sharing to support anti-corruption best practice across the federal public sector.
Workplace culture and diversity
The government will spend $42.5 million over four years implementing the recommendations of the Respect@Work Report.
This will fund Working Women’s Centres to advise on gender-based workplace issues like sexual harassment, as well as education and compliance for the new positive duty on employers to take reasonable measures to eliminate sex discrimination and sexual harassment.
The government will also fund a process to hear and confidentially document the experiences of victims of historical workplace sexual harassment and establish a one-stop shop for workplace sexual harassment information about victims’ rights, complaint options, support service referrals and employer responsibilities.
The government will spend $2.5 billion over four years to meet its promise of requiring all aged care facilities to have a registered nurse onsite 24/7 from next July and increasing care minutes to 215 minutes per resident per day from October 2024.
Aged care providers will be required to preference direct employment for their staff and regulation will be strengthened with new civil penalties to protect whistle blowers and orders to compensate people for loss or damage due to neglect.
An additional $540 million over four years will be spent to respond to the findings of the Royal Commission into Aged Care Quality and Safety.
And $845 million will be spent helping aged care facilities manage the impact of COVID-19.
National Reconstruction Fund
The budget establishes the previously announced $15 billion National Reconstruction Fund with the aim of helping finance projects that expand Australia’s industrial base, diversify the economy, create sustainable, well-paid jobs, and grow regional centres.
- Extending full fibre access to 1.5 million more homes and businesses, and improving mobile coverage in regional, remote and natural disaster-prone areas, at a cost of $2.4 billion
- Providing small business with new energy efficiency grants and extending tailored mental health and financial counselling programs
- More funding and more staff to cut visa backlog
- Money for biosecurity defences
- And $1.8 billion for environmental and heritage protection, including an extra $204 million to accelerate the defence and restoration of our Great Barrier Reef.
The Attorney-General’s department will scope options to establish an Anti-Slavery Commissioner. If established, the Anti-Slavery Commissioner is to work with business to address modern slavery in supply chains.
The tax effectiveness of off-market share buybacks – where companies could stream franked dividends to shareholders as part of the buyback price – has ended. Off-market share buybacks will now be taxed the same as on-market buybacks.
The measure is effective immediately and will raise $550.0 million over four years.
Competition law fines
Penalties for breaches of competition and consumer law are being lifted. Maximum penalties for corporations will increase from $10 million to $50 million per breach, and from 10 per cent of annual turnover to 30 per cent of turnover during the period the breach took place.