2022/23 Federal Budget: What can we expect?

The 2022 Federal Budget will be delivered this week, and with a federal election not too far away, the government is hoping to recover some goodwill among Australians by tackling rising costs of living. 

In a speech, Treasurer Josh Frydenberg said the time for “large-scale economic stimulus” had passed and the government’s focus would now turn to rebuilding fiscal buffers.

“We are at the same time sticking to our economic plan, investing in our future, creating more jobs and guaranteeing the essential services that Australians rely on,” he said.

Details of the budget won’t be announced until 7:30pm on Tuesday, but the government has hinted at a number of policies it intends to roll out. We look at a few key ones below.

First Home Buyer scheme to be expanded

As challenges mount for Australians hoping to enter the property market, the government is expected to lift some of the pressure by expanding the First Home Guarantee Scheme.

Under the scheme, eligible first home buyers can purchase a home with a deposit of just 5 per cent, with the government guaranteeing the remaining 15 per cent. 

A total of 50,000 places will be made available, with 35,000 reserved for first homebuyers in major cities and 10,000 for those looking to buy in regional areas.

The remaining 5,000 places will be reserved for single parents, whether they are buying for the first time or re-entering the property market, who will be able to purchase a home with a deposit of as little as 2 per cent.

Tax offsets could be extended

There’s also the possibility that this year’s budget will see the low and middle-income tax offset (LMITO) extended for another 12 months. 

That would mean Australians with annual incomes below $126,000 can expect to receive up to $1,080 in their tax return this year.

Plans to bring forward tax cuts for higher income earners to this year’s federal budget are also expected to be sidelined until ​​2024/25.

The so-called stage three tax cuts, which would apply a tax rate of 30 per cent to those earning between $45,000 and $200,000, were initially expected to accompany the phase-out of LMITO.

Child care subsidies on the table

Childcare consistently ranks among the highest expenses for many Australian households, with advocacy group The Parenthood pointing out that out-of-pocket costs eat up a quarter of income for the average couple with two young children.

Cash-strapped parents will therefore be happy to hear that funding for child care is shaping up to be a big priority this year.

Changes to the Child Care Subsidy will be brought forward from July to March, giving families with two or more young children access to more financial support.

So long as your family is eligible for the Child Care Subsidy, has a combined income of less than $354,305, and has more than one child aged 5 or younger, the subsidy will increase by up to 30 per cent.