The government’s five-point plan to reduce cost-of-living pressures looks to be a boon for working parents, but real wages and soaring energy prices paint a far less rosy picture.
It was said that the 2022-2023 Federal budget would be modest and unsurprising, and Treasurer Jim Chalmers has kept that promise.
As Assistant Treasurer Stephen Jones told Sky News, if people are looking for “firecrackers and razz-a-matazz” in this budget, they’ll be disappointed as this will be the “responsible, steady budget” that Australia needs.
The government’s lack of cash splashing has resulted in $22 billion in savings due to pausing, ending or delaying certain programs.
While critics have questioned why more of this money wasn’t put forward to ease critical pressure points, such as the looming energy challenge (experts are predicting a 56 per cent energy price hike in the next 18 months), Chalmers says when you’re scaling a mountain of debt, you’ve got to make some “tough decisions”. In this instance, that has meant tightening the purse strings.
However, the money that has been spent is set to make a difference to some groups, such as working parents, TAFE students and those working in industries facing critical resourcing and skills issues, such as teachers and healthcare workers.
Chalmers says this is just phase one in the government’s plan to respond to Australia’s current economic challenges, and people are already turning their attention to what the May 2023 budget could entail. For now though, here are some of the key takeaways from the night.
No real wages growth until 2024
Despite wage growth being part of Labor’s $7.5 billion five-point cost-of-living relief plan – alongside cheaper childcare, expanded parental leave, cheaper medicines and more affordable housing – the takeaway on wages wasn’t a positive one.
Chalmers delivered a hard truth to Australians regarding real wages, which are lower today than they were ten years ago.
“Wages are growing faster [by 2.6 per cent] now than they were before the election, but that news is tempered by rising electricity prices and grocery bills eating into pay packets,” says Chalmers.
The little wage growth we are experiencing is all but swallowed by rising inflation rates.
Public versus private wages from 2012-2022
In terms of actionable steps to make improvements in this space, Chalmers pointed to what the government has already done – increasing the minimum wage by 5.2 per cent earlier this year and giving aged care workers a pay bump. But he was a little fuzzy on the details of future plans to address wage growth.
The message here seems to be: it’s going to be a tough few years ahead, so we simply need to grin and bear it.
Chalmers says investments into more affordable childcare (details below) and reforms to enterprise bargaining agreements (which was discussed in last month’s Jobs Summit) would go some way in helping to boost workforce participation rates.
AHRI’s CEO, Sarah McCann-Bartlett, says that the decade-long stagnation in wages should be of concern and now is the time for HR leaders to help organisations rethink the employee value proposition (EVP).
“If we’re not expecting to see improvements in real wages for the next 18 months then we need to think about how else we’re supporting our employees and making work feel ‘worth it’,” she says.
“HR leaders have an opportunity to rethink what their EVP looks like, and help the C-suite support employees in other ways. Are you offering compelling training opportunities? What about career progression? Do you support employees effectively to manage their wellbeing? And how are you enhancing their personal lives through arrangements such as flexible work?
“Of course, none of these things are replacements for real wages growth, but they can make a difference in terms of how people show up to work and the value they add.”
Childcare and parental leave
The government is committing $4.7 billion over a four-year period to make childcare and early education more affordable.
As of July next year, childcare subsidy rates are set to increase up to 90 per cent for families with a combined income of less than $530,000. Families with more than one child under five will continue to receive higher subsidy rates of up to 95 per cent.
“Cheaper childcare is a game-changing investment in families, in our workforce and in our economy,” said Chalmers. “It will increase the paid hours worked by women with young children by up to 1.4 million hours a week in the first year alone. That’s the equivalent of 37,000 extra full-time workers.”
As HRM reported earlier this week, the government has also committed $531.6 million to fund an extra 6 weeks’ paid parental leave, taking it to 26 weeks by 2026. A portion of this leave can be split between parents as they see fit. An extra fortnight of leave is set to be added to Australia’s current 20-week period each year until 2026.
“[Childcare subsidies] will increase the paid hours worked by women with young children by up to 1.4 million hours a week in the first year alone. That’s the equivalent of 37,000 extra full-time workers.” – Jim Chalmers, Treasurer
The leave can also be taken flexibly (i.e. one day at a time with periods of work in between) to allow for a slow transition back to work for parents or to give secondary parents the opportunity to work reduced hours during those crucial first months of a child’s life.
“This is about greater equality and greater security for Australian women, and more dads doing their bit,” said Chalmers.
This is the biggest boost to Australia’s paid parental leave scheme since it was first introduced by the Labor government in 2011.
“I’m delighted to see Australia taking proactive steps to better support working families,” says McCann-Bartlett. “These changes are a step in the right direction, and as well as supporting people with children, it will support employers by increasing workforce participation.”
The proposed new scheme will now go to the Women’s Economic Equality Taskforce, chaired by Sam Mostyn AO, for further assessment. The taskforce will examine how a ‘use it or lose it’ structure would work and the amount of leave both parents can access at the same time.
Read the official fact sheet on the expanded parental leave scheme and childcare subsidies.
Taxes
The controversial stage-three tax cuts – first introduced by the Coalition and since passed into law by the Albanese government – are set to stay in place, despite pressures from the likes of the Greens party and other industry groups.
Instead, Chalmers pledged more resources to the Australian Tax Office to come down on tax dodging, particularly from multinationals, by extending “successful tax compliance programs”.
“These initiatives [will] save a further $4.7 billion over four years,” said Chalmers.
Funding for future careers and skills
Federal and state governments have entered a $1 billion-agreement for 180,000 fee-free TAFE places to be created next year. Over a four-year period, we can expect 480,000 spots (including the 180,000 places) which will prioritise people who face barriers to entry, such as women.
The government will also fund a one-off 20,000 boost of university places over the coming four years. These positions will be targeted to students from lower-socio-economic backgrounds, regional/remote students, First Nations students and those who are the first in their family to attend university.
This money is set to subsidise thousands of teaching, IT, nursing and engineering positions in Australia. The National Skills Commission recently cited a 133 increase to the number of industries facing skills shortages in 2022 compared to last year. Teachers and nurses were at the top of that list.
“These sectors have been hit hard over the pandemic years, so it’s encouraging to see that the government is taking the future of these industries seriously,” says McCann-Bartlett.
Skilled migrants and accelerated visa processing
Australia’s permanent migration program will be expanded to 95,000 (a 35,00 increase) for this financial year in a bid to plug critical skills gaps in our jobs market.
“AHRI is supportive of this temporary boost to skilled migration,” says McCann-Bartlett. “We need more skilled workers in Australia – that’s just a fact. But the added benefit organisations gain is more diverse perspectives and expertise added to their ranks, which results in a richer and more effective organisational culture and improved performance.”
On top of this, $42.2 million will help to fund more employees to accelerate visa processing and reduce back-logs, and raise awareness of highly skilled work opportunities for global talent.
Other notable announcements
Managing the NDIS
- $158.2 million has been put into 380 more permanent staff positions within the National Disability Insurance Scheme (NDIS). In his post-budget commentary on ABC’s 7:30, Chalmers noted that a review into the NDIS was front of mind, as the current scheme is set to end up costing “hundreds of billions of dollars” in the coming decade.
Reducing the use of fixed-contracts
- It’s not new, but the government has also reinforced its previous decision to make Australian jobs more secure by limiting the use of fixed-term contracts.
This was a push from the Australian Council of Trade Unions, which said fixed-term contracts were being improperly used to extend workers’ probationary periods.
First Nations voices
- $75.1 million has been allocated for preparation for the delivery of a referendum to enshrine a First Nations Voice to Parliament in the Constitution.As promised during the election, $27.7 million has been set aside to fund the Makarrata Commission “to supervise a process of ‘agreement-making’ and ‘truth-telling’ between governments and Aboriginal and Torres Strait Islander peoples.”
Giving women access to expert advice
- After already moving forward with all 55 recommendations of the Australian Human Rights Commission’s Respect@Work report, the government has pledged a further $32 million to fund Working Women’s Centres across the country to provide free information on issues such as discrimination and pay equity.
Improving the gender gap
- As first announced in September, the Government will require large companies to publicly report their gender pay gap to the Workplace Gender Equality Agency. Companies with over 500 staff will need to make this information publicly available.
Small business support
- Over $15 million will go towards supporting small businesses with tailored mental health and financial counselling programs.
Tackling domestic violence
- $1.7 billion is being invested into ending domestic and family violence against women and children. This includes money to fund 500 additional frontline community workers to support women fleeing from violence and $65 million will go towards education programs on consent and respect, to prevent violent behaviours from arising in the first instance.
You can view the full 2022-2023 Federal budget announcements here.
In the 1990’S the federal government introduced Enterprise Based Vocational Training which was extremely effective. TAFE often developed the knowledge component but organisations managed the capacity to deliver outcomes. This self paced learning and development and organisational management of capacity to deliver (competence) increased productivity in work place and fast tracked the “apprenticeship” if the employee was capable and dedicated.
I would like to see AHRI involved in trying to improve the current broken TAFE system.
Improving the gender gap We have had the ILO Ch 100 on equal pay for equal work since 1950 but still talking about it. Until we are able to value firstly positions and secondly the incumbents we will not be able to make and report meaningful comparisons. While the old point factor systems only looked at jobs in a subjective way, competency based systems were developed in the 1990’s but there seems to be reluctance to use these quantifiable tools. Is it easier not to have a quantifiable measure- certainly easier to manipulate. I hope AHRI moves quickly to encourage… Read more »
I find it fascinating the level of budget allocation of $4.2 bn in 2022-2023 for the response to the pandemic including $1bn for the further rollout of vaccines and $2.6 to replenish stockpile of personal protective equipment. All on the basis of ” we will continue to experience intermittent , localised waves of omicron or other new covid variants”. How they know this is beyond me. Yet to support small businesses impacted by the lockdowns, to support families impacted by rising inflation and increasing interest rates and slower wage growth is absent. hmm wonder why??