MEMBERS UPDATE - SPECIAL EDITION
2023 Federal Budget Outline
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Dear [[FIRSTNAME]]
Delivering a surplus for the first time in 15 years, Treasurer Jim Chalmers unveiled the first major budget since the government’s election victory in May 2022, and it aims to tackle the cost-of-living crisis, deliver the energy transition and strengthen national defence. With sensibility, reprioritisation and impact driving the budget, will all of the new government’s commitments be realised in the year to come – which is almost certain to be plagued by economic uncertainty and global unrest?
Growth is expected to decline to 1.5%, but then rebound next financial year up to 3.5%. Inflation is also expected to reduce from a high of 6% to 3.25%, according to Treasurer Chalmers.
Economic uncertainty will undoubtedly continue to impact Australian infrastructure, but the Federal Budget aims to reduce the frequency and impact of contingencies. The Treasurer argued that Australia is well-placed to navigate global economic deterioration. Termed the ‘growth agenda’, the Budget invests in growing the economy by converting existing strengths into broad and lasting growth drivers. Together with investments in skills, digital adoption and supply chains, the ‘growth agenda’ aims to ensure that the Australian economy will take advantage of existing and new economic opportunities.
For Queenslanders, there was a Federal commitment to provide up to $3.4b over the next 10 years for the 2032 Olympic and Paralympic Games venue infrastructure. This includes a $2.5b capped investment to the development of the Federally funded Brisbane Arena, and up to $935m towards 16 new and upgraded venues. The Government aims to deliver on its promise to create a lasting ‘legacy’ from the Games.
On the national level, an independent strategic review of the Infrastructure Investment Program (IIP) to ensure the $120b pipeline over 10 years is fit for purpose and the Government’s investment is focused on projects which improve long-term productivity, supply chains and economic growth in our cities and regions. Updated IIP project schedules will be finalised following the review, with the Government working with states and territories to determine priorities.
However, the principal takeaway from the Budget is that the Government intends to uphold its bold commitments to cost-of-living relief, clean energy and the net-zero transition.
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The Energy Transition, Environment and Water
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The Energy portfolio received a healthy injection in the budget. The Government has doubled down on creating a renewable energy superpower, committing $4b to the renewable energy superpower plan, $2b to make Australia a world-leading hydrogen producer and $1.3b to support more than 170,000 energy-saving home upgrades.
The establishment of a national Net Zero Authority and investment in strategic industries of $500m to modernise and grow Australia’s industrial capabilities are also key initiatives. As part of the Powering the Regions Fund, the $400m Industrial Transformation Stream will support the growth of new clean energy industries in regional areas, as well as innovative efforts to decarbonise existing industrial activities securing critical inputs for the net zero transition of the $400m. The Fund will provide grant funding to support the development of clean energy industries by investing in sovereign manufacturing capability of critical inputs, such as steel, cement, lime and aluminium.
Further to this, the government will establish the Capacity Investment Scheme to underwrite new investment in clean energy and improve the delivery of new investments with around $9.9m for the Australian Energy Market Operator, $6.4m for the Department of Climate Change, Energy, the Environment and Water and underwriting costs for clean energy projects in South Australia and Victoria. Importantly this investment will also be supplemented by an additional $21.8m over three years to enhance Australia’s National Greenhouse Accounts to improve emissions data.
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Other key announcements include:
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- $113.1m funding over 8 years has been reprioritised across Climate Change, Energy, the Environment and Water portfolios to deliver a range of new investments in clean energy technology.
- $1.3b in funding to establish the Household Energy Upgrades Fund to support home upgrades that improve energy performance across households.
- $2b to accelerate the development of Australia’s hydrogen industry and connect them to world markets. Funding includes:
- $2b for the establishment of a new Hydrogen Headstart program, providing support to investment in renewable hydrogen production
- $5.6m to assess the implications for intensifying global competition for the clean energy industry
- $2m over two years to establish a fund to support First Nations communities to engage with hydrogen project proponents and planning processes.
- Importantly, $28m will be provided over two years to develop Australia's first National Climate Risk Assessment and a National Adaptation Plan to understand the risks to Australia from climate change.
- $872.5m has been saved over 11 years for not proceeding with Dungowan Dam, Emu Swamp Dam and Pipeline, and Southern Forests Irrigation Scheme. Fingal Irrigation Scheme, $40.3m for various cancelled projects, and $197.1m has been reallocated to fund the construction of three water projects, Northern Midlands Irrigation Scheme, Sassafra-Wesley Vale Irrigation Scheme and Wannon Project.
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In April, the Albanese government announced it is prepared to invest an additional $3.7b for a five-year national skills agreement to be negotiated with states and territories, in addition to $400m to support another 300,000 Tafe and vocational education and training fee-free places.
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The Government will continue investing in a pipeline of new social and affordable dwellings. This includes delivering the Housing Australia Future Fund and expanding the capacity of the Affordable Housing Bond Aggregator by increasing the liability cap by $2b to $7.5b and offering tax incentives for build-to-rent projects. The aim is to generate a more reliable supply of housing to meet the high demand.
The government will provide an additional $67.5m to boost homelessness funding to the states and territories. Funding will be used to support the provision of homelessness services through the National Housing and Homelessness Agreement in 2023-24. The government will also introduce several housing measures to improve access to new home buyers including:
- Increasing the government-guaranteed liability cap of the National Housing and Finance Investment Corporation by $2b to $7.5b
- Amending NHFIC’s investment mandate to require NHFIC to take reasonable steps to allocate a minimum of 1200 homes to be delivered in each state
- Expanding the eligibility of the Home Guarantee Scheme
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The government has estimated the cost of implementing the recommendations handed down by the defence strategic review will be about $19b over the initial four-year budget period. This includes $4.5b towards the initial steps of Australia’s acquisition of a new conventionally-armed, nuclear-powered submarine capability.
This includes $127m over the next 4 years for 4,000 additional Commonwealth-supported places at universities and other higher education providers for courses that support the skill requirements of the nuclear-submarine program, predominantly in STEM and management sectors. Over 800 of these will be for South Australian institutions, which is where the submarine construction yard will be located.
The Government will also provide Australian Naval Infrastructure Pty Ltd with an equity injection over 5 years from 2023-24 to commence early construction and design works for a submarine construction yard and to design the Skill Sand Training Academy in South Australia. The financial implications of this component are not for publication due to commercial sensitivities. This measure will be offset through a broader reprioritisation within the Defence Integrated Investment Program.
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Infrastructure, Transport, Regional Development, Communications and the Arts
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- The Government will provide $20.9m over 5 years from 2022–23 for initiatives to decarbonise the transport and infrastructure sectors and support achieving our net zero by 2050 target
- $1.1b in 2032–33 to continue existing road maintenance and safety programs, with:
- $500m for the Roads to Recovery Program
- $350m for national road network maintenance
- $110m for the Black Spot Program
- $85m for the Bridges Renewal Program
- $65m for the Heavy Vehicle Safety and Productivity Program
- $18.9m for transport research organisations and innovation projects
- $200m over two years from 2023–24 for the Major Projects Business Case Fund to support the planning of land transport infrastructure projects
- $3.0m in 2023–24 to undertake a feasibility study for an intermodal terminal in Parkes, New South Wales to support the Inland Rail program, with funding to be redirected from existing National Intermodal Corporation equity
- Equity funding to WSA Co Limited for the construction of facilities to support border services and law enforcement operations at the Western Sydney International Airport
- An increase in the Heavy Vehicle Road User Charge rate from 27.2 c/L of diesel by 6% per year over 3 years from 2023–24 to 32.4 c/L in 2025–26. This will decrease expenditure on the fuel tax credit by $1.1b over 4 years from 2023–24 and the change will contribute to road maintenance and repair
- The Government will provide $267.4m over 7 years from 2022–23 to support land, maritime and aviation transport priorities, including increasing productivity and maintaining safety across the sectors.
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The Government will provide $492.7m over 5 years from 2022–23 for a range of measures to support critical investment in infrastructure, employment, justice, education and housing initiatives for First Nations peoples.
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