Budget 2022/23: What you need to know

As part of the federal Budget released Tuesday evening (25 October), the Treasurer Jim Chalmers has announced a new housing accord that sets a "ambitious" target of one million new homes to be delivered over five years, by bringing together the superannuation, construction and local government sectors.

Alongside the new housing initiatives, the government has announced a range of promises to boost funding towards health, aged care, the National Disability Insurance Scheme (NDIS), defence and disaster payments.

This Budget has been heavily weighed down by Australia’s inflation that is projected to hit 7.75 per cent, with the Treasurer adding the flood damage will contribute to inflation this quarter. 

At a time when Australia’s deficit is "forecast to be $36.9 billion", Mr Chalmers said this Budget is about “building that stronger, more modern, more resilient economy, and it’s about beginning the hard yards of Budget repair”.

“In a time of extreme global uncertainty our best defence is a responsible Budget at home,” Mr Chalmers said. 

He identified around $22 billion in savings over the next four years, by reducing spending on "external contractors, consultancies, advertising, travel and legal services" – expecting to save the Budget $3.6 billion.

A boost to housing  

Despite some programs coming under fire, the government is bringing states and territories, investors, and representatives from the construction sector together under a new national Housing Accord. 

The Accord sets an “aspirational target” of one million new, well-located homes to be delivered over five years from mid‑2024 as capacity constraints are expected to ease.

“One of the big challenges that we have in our economy is we’ve got these jobs and opportunities being created, but it’s becoming harder and harder to live near where those job opportunities are,” Mr Chalmers said.

Under the Accord, the Government will provide $350 million over five years, with ongoing availability payments over the longer term, to deliver an additional 10,000 affordable dwellings. 

States and territories will also support up to an additional 10,000 affordable homes, increasing the dwellings that can be delivered under the Accord to 20,000.

“Institutional investors, including superannuation funds, have endorsed the Accord and will work with us to leverage more investment that delivers for their investors’ and members’ interests, and for the national interest,” Mr Chalmer said.

He added, peak organisations for the construction sector support building these homes at a high energy efficiency rating – and training more apprentices under an extended Skills Guarantee.

“We don’t pretend that this Accord solves every issue, nor do we pretend we can solve this problem overnight,” Mr Chalmers said. 

It comes as the country faces high property prices and low rental stocks, sending rents skyrocketing.

The plan follows months of consultation with state governments, the building industry and the superannuation industry.

“I have been working really closely and really hard with superannuation and other institutional investors, with the states and territories, with the building and construction industry as well and with the union movement to see what we can do to shift the needle on affordable housing,” he said. 

Super funds and other institutional investors are already investing billions of dollars in commercial real estate, but have relatively little exposure to the residential housing sector, he said. 

"The ambition of this Accord is big and it’s bold – an aspiration to build one million new, well located homes over five years from 2024," he said.

As part of the boost to housing supply, the government will deliver on its promise to unlock $575 million from the National Housing Infrastructure Facility that would be used to lure the super sector into social housing investment. 

But it added, it would expand the program to allow it to more flexibly to “help unlock a projected 5,500 new dwellings”.

The policy makes it possible for $575 million dollars in the National Housing Infrastructure Facility to invest in affordable housing by attracting financing from super funds and other sources of private capital.

The government’s housing accord also builds on the government’s $10 billion Housing Australia Future Fund commitment, which will build 30,000 new social and affordable dwellings within its first five years.

He added, the creation of the National Housing Supply and Affordability Council had already seen benefits with the creation of the National Housing and Homelessness Plan, which will “continue” to tackle Australia’s growing homelessness crisis

Further, as local planning rules can be an inhibitor to housing investment, Mr Chalmers has also pledged to remove some red tape to help expedite approvals for social and affordable housing.

Disaster relief and payment

As the country continues to grapple with a flood disaster, Mr Chalmers committed $3 billion in the ‘Contingency Reserve’ for additional Commonwealth spending for disaster response.

“There are Australians in flood‑affected communities who are doing it especially tough today, and they are in our thoughts and in the thoughts of all Australians as they deal with these natural disasters which come with alarming regularity,” Mr Chalmers said.

"We will fund Disaster Relief Australia to help deploy more than 5,000 extra volunteers when future disasters strike.

"And this Budget also invests up to $200 million a year in disaster prevention and resilience through the Disaster Ready Fund."

Already, about $1.5 billion has been spent on payments to those who were impacted by previous floods and disasters. 

“The additional money in the Contingency Reserve will go towards government payments and other kinds of support," Mr Chalmer added.

Incentives to encourage retirees to downsize 

As previously promised the government will introduce to Parliament new legislation to incentivize pensioners to downsize, to free up housing stock for young families, but added it will lower the access to people aged 55.

The Social Services and Other Legislation Amendment (Incentivising Pensioners to Downsize) Bill 2022 gives pensioners an additional 12-month asset test exemption on their home sale proceedings.

The legislation will provide older Australians more time to “purchase, build, rebuild, repair or renovate” a new principal home before their pensions are affected.

Government guarantees

The government reforms such as the Help to Buy scheme, Regional First Home Guarantee and the First Home Guarantee were discussed, but with the latter two already on the market, no changes were flagged.

The Budget revealed the election promise Help to Buy, will allow up to 40,000 eligible Australians to own their own home with a lower deposit and smaller mortgage.

The $329 million scheme will enable eligible home buyers to purchase a property with a minimum deposit of 2 per cent, with the federal government’s equity contribution of up to a maximum of 40 per cent of the purchase price of a new home and up to a maximum of 30 per cent of the purchase price for an existing home.

Home buyers will not be required to pay rent on the stake of the home held by the federal government as well as be exempt from lenders mortgage insurance.

Other major pre-budget announcements including the Regional First Home Guarantee and the First Home Guarantee will continue but no changes to these schemes were flagged. 

The new Regional First Home Buyer Guarantee opened in October, set to help up to 10,000 regional Australians get into their first home with a deposit of as little as 5 per cent, with the government guaranteeing up to 15 per cent of the purchase price for eligible first home buyers.

In addition, the First Home Guarantee (FHBG) launched in July offering up to 35,000 guarantees each financial year, offering first home buyers the opportunity to purchase a home with a deposit as little as 5 per cent. Plus 5,000 Family Home Guarantees will be made available each year over three financial years.