What HR should know about this year’s budget

The federal budget has been handed down. Here are the biggest takeaways for HR professionals.

Treasurer Jim Chalmers delivered the 2023–24 budget at 7:30pm Tuesday, 9 May, which forecast a budget surplus of approximately $4 billion this financial year.

“This budget strikes the right balance between responding to immediate challenges, creating more opportunities for more Australians and laying the foundations for a stronger and more secure economy,” Mr Chalmers said.

“This budget delivers targeted cost-of-living relief that will directly reduce price pressures in 2023–24, makes investments in a stronger economy, and makes room for critical programs and services that were left unfunded by the previous government.”

Among the headline figures, arguably the most relevant to HR professionals are as follows.

Cost-of-living relief 

A key theme of this year’s budget, $14.6 billion has been dedicated towards a cost-of-living relief package over the next four years. 

The plan is set to provide help with power bills, bring down out‑of‑pocket health costs, support vulnerable Australians, create more affordable housing, and boost wages.

Income support payments such as JobSeeker, Austudy and Youth Allowance will increase by $40 per fortnight to eligible people.

Further, the Treasurer confirmed the government is expanding eligibility for the existing higher rate of JobSeeker payments worth $92.10 per fortnight to recipients 55 and over (previously 60 and over). 

“Older Australians can face persistent barriers to work — like age discrimination — and can become stuck on JobSeeker for long periods. To recognise these challenges, the government is expanding eligibility ...” the Treasurer explained.

Wage growth

The Treasurer allocated $11.3 billion to support the Fair Work Commission’s decision to provide an interim increase of 15 per cent to award wages for many aged-care workers, of which more than 250,000 workers benefit.

“The decision is the largest increase to award wages in a work value case under the Fair Work Act. Funding a pay rise for aged-care workers ensures their pay better reflects the value of the work they do,” the Treasurer said, noting that the government is consulting on further changes to workplace relations to improve fairness for workers.

“This includes standing up for casual workers, criminalising wage theft, minimum standards for gig economy workers and progressing same job, same pay reforms for labour hire workers,” he said.

Childcare and expanded parental leave

As previously reported, the government has committed to increase Paid Parental Leave to 26 weeks by 2026.

Further, this budget allocated $72.4 million to build and support the skills of the early childhood education and care workforce.

“The government will support early childhood educators to undertake professional development and provide financial assistance to educators and teachers to complete the required practical component of a bachelor or master’s degree in early childhood education,” the Treasurer said.

Changes to the Paid Parental Leave scheme were also reiterated. October’s budget committed $531.6 million to deliver a more flexible and generous Paid Parental Leave scheme, and from 1 July this year, Parental Leave Pay and Dad and Partner Pay will combine into a single 20‑week payment.

A new family income test of $350,000 per annum will see nearly 3,000 additional parents become eligible for the entitlement each year.

Support for small businesses

Mr Chalmers confirmed the introduction of the Small Business Energy Incentive, which aims to help SMEs save on their energy bills.

“This incentive will provide $310 million in tax relief and support up to 3.8 million businesses make investments like electrifying their heating and cooling systems, installing batteries and upgrading to high-efficiency electrical goods,” the Treasurer said.

“Businesses with annual turnover of less than $50 million will have access to a bonus 20 per cent tax deduction for eligible assets supporting electrification and more efficient use of energy, from 1 July 2023 until 30 June 2024. Up to $100,000 of total expenditure will be eligible for the incentive, with the maximum bonus tax deduction being $20,000 per business.

“This is in addition to $62.6 million towards energy efficiency grants for small and medium enterprises in the October budget.”

Further, the government has allocated $290 million in cash flow support through the $20,000 instant asset write-off. This means up to 3.8 million small businesses with an annual turnover of less than $10 million will be able to immediately deduct eligible assets costing less than $20,000 from 1 July 2023 until 30 June 2024.

Changes to super

The government is investing $27 million for the Australian Taxation Office (ATO) to improve data capabilities, including matching both employers and super fund data at scale. 

“The ATO will also receive $13.2 million to consult and co-design with stakeholders on a new ATO compliance system which will proactively identify instances of under or unpaid super in near-real time,” the Treasurer said.

“From 1 July 2026, employers will be required to pay their employees’ super at the same time they pay their wages. This will enable employees to track their entitlements to ensure they are being paid on time and in full. Around 8.9 million Australians will benefit from higher retirement savings from receiving their superannuation guarantee contributions earlier and more frequently throughout their working life.”

Addressing skills shortage

A five-year National Skills Agreement is set to commence on 1 January 2024, with the government funding a further 300,000 TAFE and vocational education training places to become fee-free. 

The government has also committed to a redesign of Australian Apprenticeship Support Services in order to improve apprenticeship career pathways and provide more support for completions. 

“A redesigned program model will assess the needs of every apprentice to support their success, help remove barriers for women in male-dominated trades and strengthen support for First Nations apprentices, apprentices with disability and those in remote areas,” the Treasurer said.

Further, the government has committed to reinvigorating foundation skills programs and facilitating greater support for community-based and culturally safe pathways to training.

“More Australians will be able to develop the language, literacy, numeracy and digital skills they need to participate successfully in work, education and the community.

“The Australian Skills Guarantee will ensure more Australians can gain a high-quality apprenticeship and help address long-term gender inequality issues in apprenticeships. The guarantee will set national targets for apprentices plus specific targets for women apprentices and trainees on major government-funded construction and ICT projects.

“These targets will aim to double women in apprenticeship and traineeship roles in construction projects, and triple trade apprenticeships roles by 2030,” the Treasurer said. 

Responses so far

Various organisations and bodies were quick to make their opinion known on this year’s budget.

On the training and education front, the Independent Tertiary Education Council Australia (ITECA) said investment in vocational training is a “welcome step” towards addressing the nation’s skills shortage. That being said, the council said to make the investment more effective, the government should’ve put students “at the centre of the system”.

“Framed amidst a challenging business environment, this budget needed to put students at the centre of skills funding decisions. In failing to do so, an opportunity was missed,” said Troy Williams, chief executive of the ITECA.

The budget’s funding commitments that preference public providers are limiting, Mr Williams noted, “as they do not offer students the full range of courses needed to address the skills shortage”.

“The taxpayer’s investment in skills training should allow students to choose the training organisation that is best able to help them achieve their life and career goals. The budget didn’t deliver this ambition,” he said.

“Students want government to back their decision to study with the provider of their choice. ITECA believes that this is necessary to maximise the impact of the budget’s investment in skills and support the growth of Australia’s workforce.

Committee for Economic Development of Australia (CEDA) chief economist Jarrod Ball also offered his thoughts, noting the budget “strikes the right balance between delivering targeted support to vulnerable Australians amid the cost-of-living crunch, while taking modest steps on fiscal repair”.

“The government has delivered budget restraint in line with the current economic challenges of high inflation and an uncertain economic outlook,” he said.

“Targeted measures such as increasing eligibility for the single parenting payment, modest JobSeeker increases, housing support, enhanced healthcare support and energy price relief are sensible and proportionate in the current environment. Stronger increases in income support for vulnerable Australians will be critical as economic and fiscal circumstances permit. 

“The government is to be commended for continuing to bank the spoils of a temporary tax windfall thanks to high commodity prices, the strong jobs market and healthy company profits. This budget returns 82 per cent of these windfalls while maintaining real spending growth at just 0.6 per cent a year. 

“It is encouraging to see debt will peak lower and earlier. But there’s much more work to do to ensure that the budget is brought back into balance over the medium term — despite this year’s blink-and-you-miss-it surplus.”

Looking ahead, Mr Ball noted this budget’s projected shrinking fiscal gap over the medium term “is predicated on continuing strength in the labour market, delivering higher tax receipts and lower expenditure growth”.

“Serious tax reform remains critical to shoring up the medium-term position by strengthening our capacity to afford growing demand for critical services and supports while driving greater investment and workforce participation,” he flagged.