The Federal Government delivered the Federal Budget on Tuesday 9th May 2023.
The Budget Papers say the underlying cash balance is estimated to be in surplus by $4.2 billion (0.2 per cent of GDP) in 2022–23, the first surplus since 2007–08. This is an improvement of $41.1 billion compared to the October Budget and $82.1 billion since the Pre-election Economic and Fiscal Outlook.
The Budget Papers says that while the Australian economy “is expected to outperform all major advanced economies, global and domestic headwinds will be a drag on activity in 2023–24. High inflation and rising interest rates are squeezing households, and these cost-of-living pressures along with weaker global growth will contribute to real GDP growth slowing to 1½ per cent in 2023– 24.
“Inflation has peaked and begun to moderate. The factors that caused the current inflationary period are beginning to ease and inflation is expected to return to target in 2024–25. The Government’s measures to deliver cost-of-living relief will directly reduce the CPI in 2023–24, and are not expected to add to broader inflationary pressures in the economy. These measures are expected to reduce inflation by ¾ of a percentage point in 2023–24.”
Wages growth is forecast to pick up to 4 per cent in 2023–24, its fastest pace since 2009, supported by the Government’s actions to boost wages for lower paid employees. Wages are forecast to grow by 3¼ per cent in 2024–25.
The Budget Papers say that business Investment is expected to grow by 3 per cent in 2022–23. “As overall demand in the domestic and global economy softens, momentum is expected to ease in 2023–24 and 2024–25, growing by 2½ per cent and 2 per cent, respectively. Non-mining investment is expected to be the main driver of growth in business investment over the coming years, increasing by 4 per cent in 2022–23, 2½ per cent in 2023–24 and 2 per cent in 2024–25.
The Small Business Energy Incentive will give businesses with a turnover of less than $50 million a 20 per cent tax deduction for eligible assets supporting electrification and more efficient use of energy, from 1 July 2023 until 30 June 2024.
Small business instant asset write-off provides $290 million in cash flow support for small businesses with a $20,000 instant asset write-off.
A new $392.4 million Industry Growth Program will help support small to medium-sized businesses and start-ups develop new products and services to grow their operations.