Labor’s first budget is fiscally responsible amid severe domestic and global challenges

Annette King

The Federal Government’s revised 2022-23 Budget, delivered tonight by Treasurer Jim Chalmers, contains fiscally responsible measures which are essential at a time when the nation’s growth trajectory confronts severe domestic and global challenges, the Actuaries Institute said.

The Institute believes the Budget acknowledges myriad challenges including rising prices due to inflation, an extremely large public debt burden and significant funding demands across the domestic economy including the NDIS, aged care, infrastructure, education and healthcare.

“Standout features we commend in this budget are the further strengthening of commitment to address climate change to improve resilience, support for greater access to housing, and setting the stage for the move to well-being budgets in future,” said Annette King, Actuaries Institute President.

“While possible reassessment of tax cuts has been deferred, overall, the Budget has a commitment to fairness and equity that are guiding principles for the Institute when we assess major public policy developments,” Ms King said. “It is especially pleasing to see the broadening of focus beyond economic and fiscal outcomes to also consider outcomes in housing, education, social programs, the environment, and health and disability.”

Amid forecasts of a nearing global recession, the Budget papers show that Australia’s economic performance remains impressive, with growth of 3¼% expected this financial year before slowing to 1½% next year. Unemployment remains low at 4½% through to 2023/24.

Treasurer Chalmers said government debt has risen sharply, with further pressure on the domestic economy due to high domestic and global interest rates. Inflation is expected to peak at 7¾% later this year and then gradually ease to 3½% through 2023-2024.

Referring to longer term structural issues, Actuaries Institute Chief Executive Elayne Grace, said: “The Government will need to tackle economic and social pressures arising from the ageing population, demands on the health, disability and education systems, and concerns about intergenerational wealth distribution including from superannuation and retirement benefits now available from the tax system.”

“The Institute strongly welcomes the Government’s increased statements of commitment to reducing greenhouse gas emissions and investment to help achieve that goal,” Ms Grace said. “In particular, the Institute commends the support for greater take up of electric vehicles, the Powering Australia Plan, and infrastructure around the Climate Change Authority, Safeguard Mechanism and Annual Climate Change Statement to Parliament.

“She said these Budget measures set Australia on a solid path to achieving its global commitments and help reduce the worst risks of a changing climate. “We know that vulnerable Australians are especially exposed to these risks through, for example, the most affordable housing being in the most climate exposed areas,” Ms Grace said.

“The frequency of extreme weather events and natural disasters across the country in recent years highlights the need for collaborative and urgent action to improve resilience.”

The Institute also welcomes the Government’s policies around housing, and in particular to further encourage downsizing through changes to the assets and income tests and super fund investment in affordable housing. Importantly, these measures will help address housing supply issues. The Institute notes because super funds must act in members’ best financial interests, it is a high bar for funds to invest in affordable housing. However, with the continued projected growth of the superannuation sector and economic role it plays as sophisticated investors, it is important to find win-win solutions to address Australia’s most pressing challenges. The Institute looks forward to seeing the policy details as they develop and strongly supports the foreshadowed consultation with industry stakeholders.