Morrison’s government electoral budget halves gasoline taxes for six months and gives alms to taxpayers, retirees and benefit recipients in a cash splash to win back votes.
Treasurer Josh Frydenberg, who unveiled the giveaway budget in Parliament House on Tuesday evening, has managed to combine high spending with a reduced deficit thanks to high raw material prices and strong employment.
The midpoint of the budget focuses on the rising cost of living for families with a package that Frydenberg describes as “responsible and purposeful, delivering cheaper fuel, cheaper medicines and putting more money in the pockets of millions of Australians”.
The excise tax on gasoline and diesel will be immediately reduced from 44.2 cents to 22.1 cents per liter, at a cost of $2.65 billion.
But the government has given assurances that the loss of revenue will not come at the expense of road financing, which has worried some nationals, including Deputy Prime Minister Barnaby Joyce.
Frydenberg said a two-car family fueling up once a week could save about $30 a week or $700 over the six months.
The Australian Competition and Consumer Commission, which monitors fuel prices, said in a statement it expected fuel retailers to pass on the discount “as soon as possible as existing petrol supplies have been exhausted”.
Criticizing economists over a fuel tax cut, Frydenberg said during the budget at a press conference: “Australian families will say it’s a good idea to pay less at the bow. He added that economists always have “a variety of opinions”.
More than ten million taxpayers will receive a $420 supplement to the low- and middle-income tax offset (LMITO) after July 1. This would mean that a taxpayer who gets the full LMITO will now receive up to $1500.
But after that, the LMITO will not be extended.
Six million retirees and people on various benefits will receive $250 within weeks.
On the health front, people will need fewer scripts to qualify for free or otherwise discounted drugs.
The budget deficit for 2022-23 is expected to reach $78 billion, 3.4% of GDP. In the December budget update, it was nearly $99 billion.
The cumulative deficit relative to future estimates is expected to be $224.7 billion.
Frydenberg said net debt as a percentage of the economy is expected to peak at 33.1% of GDP on June 30, 2026.
The budget predicts that unemployment will fall from the current 4% to 3.75% in the September quarter.
An economic growth of 3.5% is forecast for the coming financial year. Inflation is expected to rise to 4.25% in June and then fall back to 3% in 2022-23, when wages are expected to increase by 3.25%.
The budget includes more than $2 billion in measures for women, including $1.3 billion for women’s safety.
The right to paid parental leave will be extended and for the first time single parents will be entitled to the full 20 weeks of leave.
With the government’s emphasis on national security in its election campaigns and deep concern over China’s increasingly aggressive stance, the budget is budgeting for a 10-year investment of $9.9 billion in offensive and defensive cyber capabilities.
Defense Secretary Peter Dutton said: “Project REDSPICE – Resilience, Effects, Defense, Space, Intelligence, Cyber and Enablers – is the largest investment ever in the capabilities” of the Australian Signals Directorate.
This acknowledged “deteriorating strategic conditions in our region, characterized by rapid military expansion, increasing coercive behavior and increased cyber-attacks”.
As a new round of floods hit northern NSW and Queensland, the budget says the government has already allocated $3.6 billion to households, businesses and communities to deal with the previous devastation. In total, it expects to spend more than $6 billion on flood relief and recovery.