Budget 2023–24 released: What you need to know

Investment in the “clean energy transformation”, a cost-of-living package targeted at the most vulnerable, and additional measures to tackle housing affordability have formed the cornerstone of the 2023–24 federal budget. 

The federal Treasurer Jim Chalmers has delivered his second budget on Tuesday (9 May), revealing “the first budget surplus in 15 years”.

A combination of reining in spending and a savings target has tipped the budget into a “small surplus” in 2022–23 of $4.2 billion, followed by a “deficit of $13.9 billion in 2023–24”, Mr Chalmers said.

This comes after his first budget speech (25 October 2022), where Chalmers announced a $36.9 billion deficit.

The surplus will lead to a $125.9 billion improvement over five years, he said.

Noting the cost pressures faced by Australians, on the back of the 11th interest rate rise on 2 May and persistent inflation at 7 per cent, Mr Chalmers said the budget strives to “strike a considered, methodical balance” but not contribute to inflation.

The government’s $14 billion cost-of-living package, paid for in part by savings of $17.8 billion, is expected to create more affordable housing, a boost to wages and lower power bills, with Mr Chalmers announcing “$3 billion in direct energy bill relief for eligible households and small businesses, co‑funded with the states”.

“More than 5 million households will have up to $500 deducted from their power bills in the next financial year,” Mr Chalmers said.

“Because of our policies, electricity price increases are expected to be around 25 percentage points less than what was projected and 16 percentage points less for gas.”

He added that the government was “investing $1 billion to help provide low‑cost loans for double‑glazing, solar panels and other improvements that will make homes easier — and cheaper — to keep cool in summer and warm in winter”.

The government’s energy transformation forms part of its $15 billion National Reconstruction Fund, to support the development of green industries, manufacturing, and more, bringing the government’s total investment to more than $40 billion.

Housing affordability

Alongside energy rebates, the country’s escalating housing crisis, and, in particular, the “pain of rising rents”, were discussed, but few new policies were announced. 

“Tonight, to help ease the pressure on people feeling the pain of rising rents, we are increasing the maximum rates of Commonwealth Rent Assistance by 15 per cent,” Mr Chalmers said.

“This will provide up to $31 extra a fortnight for people renting in the private market and community housing — the largest increase in more than 30 years.”

In addition, given Australia is expected to have a housing shortfall of more than 100,000 over the next five years, the government has pledged “new tax breaks for investment in build-to-rent [housing]” to tackle low vacancy rates and high rents by increasing supply.

This includes changes to the withholding and depreciation rates for build-to-rent housing projects, as previously announced.

Under the changes, the depreciation rate will increase from 2.5 per cent to 4 per cent per year for eligible new build-to-rent projects where construction commences after 9 May 2023 and the government will reduce the withholding tax rate for eligible fund payments from newly constructed residential build-to-rent properties after 1 July 2024 from 30 to 15 per cent.

It comes as the first jointly funded build-to-rent-to-buy pilot is underway in Canberra, with 22 affordable rental dwellings expected to support vulnerable women.

The government has also pledged to invest $350 million in additional federal funding to deliver 10,000 affordable rental homes over five years from 2024 as part of the National Housing Accord.

NHFIC to build more homes

As previously promised, the government has lifted National Housing Finance and Investment Corporation’s (NHFIC) liability cap from $5.5 billion to $7.5 billion from 1 July 2023.

The move will enable the NHFIC to support more social and affordable rental homes through lower costs and longer-term finance to community housing providers.

“We want more Australians to know the security of a roof over their head — which is why we’re also working with the states and territories to improve planning, build more houses and deliver a better deal for renters,” Mr Chalmers said.

“For this same reason, implementation of the $10 billion Housing Australia Future Fund is critical — to build more of the social and affordable houses that our people need.”

Indeed, the government’s National Housing Accord to build 1 million new homes, announced in its previous budget, is heavily weighed on the feasibility of the $10 billion Housing Australia Future Fund that will build 30,000 new social and affordable homes.

However, it is yet to have the full support of the Parliament, with the Coalition and the Greens dragging their feet, while senator Jacqui Lambie has thrown in her support.

[Related: Budget 2022-23: What you need to know]