Federal Budget 2022 live: Tax cuts, cash payments, fuel excise changes expected

Federal Budget 2022 live: Tax cuts, cash payments, fuel excise changes expected

A $1500 tax cut is coming to help millions of Aussies battling cost of living pressures – but here’s exactly who is eligible for the saving.

It’s budget day and early details have revealed a “remarkable” prediction for unemployment figures that could see Centrelink spending slashed and wages boosted.

Easing the cost of living for Australians is also expected to be a major focus of the federal budget delivered tonight at 7.30pm, with reports there could cash payments for those earning under $126,000.

Treasurer Josh Frydenberg told reporters this morning the unemployment rate was expected to fall to 3.75 per cent, and it would be the first time the figure had a three in front of it in 50 years.

“This is a remarkable achievement that belongs to 26 million Australians,” he said.

Fewer jobless also means a big drop in unemployment payments.

The Australian reports the government is expected to slash its costs for JobSeeker and youth allowance payments, saving taxpayers about $11 billion over the next four years.

Tax cuts, cash payments and fuel excise changes are also expected to be announced within hours.

More information about what we already know about the budget is available here.

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Who can claim new $1500 tax cut

Australian workers earning under $126,000 a year will score a one-off “Lamington” tax bonus in tonight’s budget that will deliver a bumper tax cut of up to $1500 in July.

Tonight, news.com.au can reveal Treasurer Josh Frydenberg will confirm a one-off $420 ‘Cost of Living Tax Offset’.

It will be delivered to 10 million working Australians in the form of a more generous low- and middle-income tax offset (LMITO) also known as the Lamington.

The election sweetener will bump up the low- and middle-income tax offset from $1080 to up to $1500.

The bad news is the existing $1080 Lamington tax cut will be scrapped for the 2022 financial year, as foreshadowed in previous budgets.

The one-off $1500 tax cut will be available from July 1 this year when you lodge your tax return for the 2021/22 financial year.

– by Samantha Maiden

Big problem with new budget

We still don’t know all the details, but one thing’s for sure – the Morrison government will be hoping tonight’s budget is the sweetener it needs to secure votes come election time.

But that comes with a huge risk, according to Deloitte Access Economics partner Chris Richardson, who told the ABC splashing the cash could ultimately make life harder for many Aussies.

“If you have a pulse and a vote, you’re going to get something out of this budget,” Mr Richardson told the network on Tuesday.

“But what you won’t notice is that extra money poured atop a strong economy will result in higher inflation and more dollars chasing the same things.

“That higher inflation will annoy the Reserve Bank which is starting to think about raising interest rates so they will raise them earlier and more than they otherwise would have.”

The one question PM won’t answer

Prime Minister Scott Morrison refused to question one crucial question close to most Aussies’ hearts just hours before the release of the hotly-anticipated budget.

The PM copped a grilling from Labor leader Anthony Albanese about the lack of wage growth which has been impacting the standards of living of countless families during Question Time on Tuesday afternoon.

But the PM ignored the question completely, instead speaking at length about tax rates.

When Mr Albanese and Manager of Opposition Business Tony Burke objected to the non-answer, it was overruled by the Speaker.

Instead, Mr Morrison simply spruiked the importance of a healthy economy.

“The best remedy for higher wages is a stronger economy, and the way that you get that stronger economy is through responsible economic management,” he said.

$1.3b for Aussie flood victims

Question Time is underway, with the PM confirming $1.3 billion had already been paid out to those affected by the ongoing flood crisis in NSW and Queensland.

He said the total government flood package was worth $2.4 billion, including $291 million for mental health support, business recovery and financial counselling, in addition to the $1.3 billion paid directly to those impacted.

Mr Morrison added that more than 40,000 requests had been made for help and that 22 local government areas in Queensland and 45 in NSW were included in the government’s disaster response.

“Even in these events, the devastation that has occurred … too much support can ever be enough,” Mr Morrison said.

“For those right now, there is a long 48 hours ahead for flood-affected communities.”

“It has just been unrelenting. Already this year we have seen huge swathes of our landscape transformed into a brown sea,” Labor Leader Anthony Albanese said, adding that “extraordinary stories” of Aussies helping each other through had emerged.

Government’s $11 billion saving

Treasurer Josh Frydenberg told reporters this morning the unemployment rate was expected to fall to 3.75 per cent, and it would be the first time the figure had a three in front of it in 50 years.

“This is a remarkable achievement that belongs to 26 million Australians,” he said.

Fewer jobless also means a big drop in unemployment payments.

The Australian reports the government is expected to slash its costs for JobSeeker and youth allowance payments, saving taxpayers about $11 billion over the next four years.

Tax cuts, cash payments and fuel excise changes are also expected to be announced within hours.

With unemployment so low, there are also hopes wages will rise.

Deloitte Access Economics partner Chris Richardson said the low unemployment rate should be enough to trigger faster wage growth, but warned that it would be a slow rise.

“I am absolutely not expecting that to be a sprint,” he told ABC RN Breakfast.

Labor leader Anthony Albanese was sceptical about any boost saying there was massive underemployment.

“The figures hide the fact that people can be working just a few hours a week to get by to get some money. But that’s not a sustainable income,” Mr Albanese told ABC RN Breakfast.

Mr Albanese has said Labor will wait to look at the detail before making its position clear on budget measures but said ‘we’re unlikely to say, ‘no, don’t give people a one-off payment’.

“But I’ll tell you what. We’ll point out that it’s probably timed for the election.

“What we need is a plan for the economy, not a plan to get the coalition a fourth term in office. And that’s all we’re seeing from this government.”

Cash payments for those earning under $126k

This morning Mr Frydenberg confirmed there would be a temporary cut to the fuel excise to ease pressure on motorists at the bowser, with drivers to see a drop in prices within days.

Other measures flagged include one-off cash payments of at least $250 for pensioners and other welfare recipients, as well as a childcare subsidy boost.

The Daily Telegraph is also reporting a temporary modest cash payment is expected to be provided for people earning under $126,000, as an alternative to extending the $1080 low and middle income tax offset (LMITO), known as the “lamington”.

According to 7 News, the one-off cash bonus could provide between $200 and $400 to help with skyrocketing costs of petrol and food. It’s thought providing a higher amount would risk stimulating the economy and pushing inflation higher. The payment is due to reach people’s bank accounts prior to the federal election expected in May.

However, the ”lamington” sweetener, worth up to $1080 for singles earning under $126,000, is also due to be paid over the coming months, starting from July 1, Finance Minister Simon Birmingham confirmed on ABC News Breakfast this morning.

“So Australians are going to receive that tax offset and that support and that’s going to provide yet more assistance in terms of cost of living pressures,” Mr Birmingham said.

The LMITO is provided once people lodge their tax returns and was originally introduced as a temporary measure in a package of tax reforms that was extended a number of times during the pandemic. There has been speculation it would not be extended again but the impact of this won’t be felt until next year.

‘Don’t make savings on my catheter bags’

Labor has warned against any cost cutting within the National Disability Insurance Scheme (NDIS), saying it was “playing Russian roulette with people’s lives”.

Mr Albanese held a press conference with shadow minister for the scheme Bill Shorten and NDIS participant Elly Demarchelier in Canberra, and was asked about previous underspending in the scheme that had helped improve the budget bottom line.

“Those cost savings were made at the expense of my catheter bags,” Ms Demarchelier said.

She said if she got a bladder infection, she had previously ended up in intensive care.

“I just think the tiny amount of money that they’ve saved on my catheter bags is going to be far outweighed when I have to make a trip to the ICU.”

Mr Shorten said if the government tried to “dodgy up its budget on the backs of cuts to people with profound and severe impairment — shame on them.

“If they want to save money, perhaps they shouldn’t have wasted so much on their dodgy rorts and dodgy deals. People with disabilities should not pay for the Morrison Government’s incompetence.”

Extra money could be ‘eaten up’ by inflation

Mr Richardson noted the government’s cost of living cash splash would pressure the Reserve Bank of Australia to lift rates sooner, something that Commonwealth Bank economists have also predicted.

Today host Karl Stefanovic pushed Mr Birmingham on the question of whether the government’s cost of living package — potentially worth $2.5 billion — would just be eaten up by higher inflation and interest rates.

Mr Birmingham said “we’re responding here to spikes in oil prices, to other inflationary impacts, and we’re doing it the same way we did through Covid — by being targeted, by making sure that things are temporary to respond to temporary shocks, and by being responsible in how much we spend but trying to help Australians.”

The minister said the budget forecast of 3.75 per cent unemployment would see it reach levels not seen since 1974.

“That’s involving investment in skills, investment in manufacture, investment in digital economy, support for small businesses, all of that will be detailed in the budget.”

Infrastructure cash splash targeted to must-win voters

Analysis suggests the Morrison Government’s massive infrastructure spending is targeted at crucial voters ahead of the federal election.

The Australian Financial Review has looked at the $17.9 billion in spending for new and existing infrastructure projects announced on Monday.

It found in New South Wales for example, that five of the seven $100 million-plus funding promises, were in marginal electorates. One was in a safe Nationals seat and the last remaining commitment was funding road safety barriers in regional areas.

Grattan Institute transport and cities project director Marion Terrill told the AFR it continued a “pattern” of the past 18 years in which Queensland “consistently does better out of federal spending” while Victoria is “consistently under done”.

Analysis from Guardian Australia also found just 21 of the 144 projects had been endorsed as priorities by Infrastructure Australia in its current list of priority projects, with the coalition instead funnelling billions into must-win marginal seats.

‘Spending like drunken sailors’

Today host Karl Stefanovic didn’t hold back in his interview with the Finance Minister, describing him as the “Imelda Marcos of Australian politics”.

Stefanovic pulled up Mr Birmingham on his comments the government was planning lower levels of government spending.

“Where do you get low levels of spending from? You’re spending like drunken sailors before this election?” Stefanovic said.

But Mr Birmingham defended his remarks saying: “No Karl what we’ll see here is the fact that there is a real reduction and a nominal reduction in the amount of spending by government.

“We’ve been very careful here to make sure that we actually squirrelled away and save some of the dividend to the stronger economy, to make sure Australia is better positioned for the future.”

We’ll see evidence of budget repair

Mr Birmingham defended the government spending, telling Sunrise earlier there were real pressures in Australian households from petrol prices, from inflationary pressures and from overseas.

“It’s only appropriate that with the strong economy we’ve got we give Australians that bit of a helping hand to deal with these temporary pressures we’re seeing, and there’ll be very targeted and very responsible measures,” Mr Birmingham said.

He said people would also see proof of the government moving towards budget repair now it had secured the economic recovery from Covid-19.

“We’re bringing down the rate of government payments by the largest levels in close to 50 years, we’re banking savings to repair the budget bottom line.”

Help for first home buyers

The government will also deliver relief to first home buyers with the expansion of the deposit guarantee scheme.

Changes were announced on Monday that will see another 25,000 guarantees available from July 1 to support buyers purchasing a new or existing home with a deposit as low as 5 per cent. Previously just 10,000 guarantees were available each year.

A new Regional Home Guarantee will also be introduced, which will also help non-first home buyers, once legislation is passed.

The Family Home Guarantee will also be expanded to 5000 a year from July 1 this year until June 30, 2025. It supports eligible single parents to buy their first home or to re-enter the housing market with a deposit of as little as 2 per cent.

Training and jobs also a focus

Extra training places for skilled jobs across in-demand industries is expected to be provided for hundreds of thousands of Aussies, including in the aged care sector.

This will be on top of plans to subsidise apprentices and trainees already unveiled by the federal government.

On the weekend the government announced it would extend the Boosting Apprenticeship Commencements and Completing Apprenticeship Commencements program, which subsidises the wages of apprentices including future tradies, plumbers, tilers and chefs.

The $365.3 million investment will support an extra 35,000 apprentices and trainees to get into a job.

Prime Minister Scott Morrison has said the budget is all about a plan to deal with cost of living pressures now.

“That immediate relief that is required to deal with the very real cost of living pressures that are on Australian families and are on Australian businesses, particularly small businesses right now,” he told reporters on Monday.

“The impacts on fuel prices and things like that is really causing some great concern to people. And the budget on Tuesday night, the Treasurer will hand down, will provide that immediate relief, but that’s part of a balanced and responsible plan.”

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