Budget overview

With a federal election now weeks away, the Federal Government delivered a budget focused on short-term measures in response to escalating cost of living pressures, rather than longer term economic reform and measures to address endemic low wages growth, job insecurity and spiralling food, fuel, medical, education and housing costs.

While the budget predicts Australia’s inflation to peak at 4.25 per cent in 2021-22, moderating to 3 per cent in 2022-23 and 2.75 per cent in 2023-24, the Federal Government’s projections show real wages will actually decline by 1.5 per cent in 2021-22. Further, real wages are only predicted to grow by 0.25 per cent in 2022-23, 0.5 per cent in 2023-24, 0.75 per cent in 2024-25 and 1 percent in 2025-26.

The short-term tax cut (up to $420 for low and middle-income earners) and one-off payments of $250 to pensioners and welfare recipients do not compensate for the full cost of living increases in Australia, which show little sign of abating over the next 6 to 12 months.

Although the employment statistics contained in the budget are positive, the growing problem of insecure employment has not been tackled and more working Australians continue to be engaged as independent contractors or casuals, with minimal employment protections or access to pay increases and core employment conditions.

After a decade of historically low wage growth, real wages continue to fall. Last year the average worker went backwards by $800 in real terms and the budget predicts that in the first six months of 2022, the average worker will go backwards by a further $500. In addition, in 2022-23 the low and middle-income tax offset will end, and taxes will actually increase by $1500 for workers on the average wage.