Federal Budget 2023

This year’s Federal Budget for the fiscal year 2023-2024 aims to stimulate economic growth through significant investments in infrastructure projects, including roads, railways and ports. This will not only create jobs and skilled workers but will also improve connectivity and efficiency, especially for those looking to live or invest in new housing developments.

The budget announced its commitment to providing more supply from 2023 and the continuation of home Guarantee Schemes. New initiatives were also announced around adjustments to the Commonwealth Rent Assistance (CRA) and Build to Rent (BTR) development incentives.

The national median rent has increased to $113 per fortnight in the year to April, advertised rents have soared 11% year-on-year, and vacancy rates are at historic lows. In turn, the additional CRA support allows renters to afford leases within areas they may not have been able to afford previously and provides investors with a sigh of relief, knowing that the market will remain strong when obtaining tenants.

For investors, the budget outlines a reduction in the withholding tax rate for eligible fund payments from managed investment trusts attributed to newly constructed build-to-rent developments from 30% to 15%.

Another key standout is Labor's effort to foster a skilled workforce, including significant funding for job training programs and apprenticeships. The housing sector has been screaming out for skilled workers mainly due to the aftereffects of the pandemic. This new information comes with welcomed arms for many involved within the building industry.

It’s clear that Labour continues to look after the country's backbone, the working class and those that, in Albanese’s words, “every Australian deserves the right to a fair go”. Backing this promise is very evident within this year’s budget, as shown in our summary.

Those that came out on top

The Build-To-Rent Sector: The managed investment trust withholding tax will be reduced from 30 to 15 per cent for newly constructed build-to-rent developments, and the capital works tax deduction rate will be increased from 2.5 per cent to 4 per cent at a cost of $30 million. The dwellings need to be held under single ownership for at least 10 years, and landlords must offer a term of at least three years for each dwelling. The government expects the scheme will deliver 150,000 rental properties over 10 years.

Renters: Renters won with $2.7 billion funnelled towards increasing the maximum payment rates of Commonwealth Rent Assistance by 15 per cent, up to $31.36. That takes the maximum fortnightly payment from $208.74 to $240. However, it comes against record-breaking rent hikes across Australia’s capital cities, which – in the year to May – soared 11.7 per cent. An additional $2 billion will be directed to the National Housing Finance and Investment Corporation, which has an investment mandate to deliver at least 1200 social and affordable housing homes to each state and territory within five years.

First Home Buyers: From July 1, access to the Home Guarantee Scheme will be expanded to allow any two people, including siblings and friends, to purchase an eligible home with a 5 per cent deposit! Non-first-home buyers who have not owned a property for 10 years will also be able to access the scheme. Housing Minister Julie Collins said, “this measure was designed to support older women who may have lost their property in a divorce or relationship breakdown”.

Small Businesses: As many as 3.8 million small businesses with a turnover of up to $10 million will be able to write off the value of new equipment worth up to $20,000. Small businesses investing in energy-efficient equipment and facilities could be eligible for further tax deductions of up to $20,000. Businesses with a turnover of up to $50 million will get a one-off payment of $650 off their power bills and a 20 per cent deduction to electrify cooling and heating systems, install new batteries and heat pumps, and replace ageing tools. They will also be able to deduct the cost of these assets from their tax bills for the first year in which it is installed or used.

Those that fared poorly

Super millionaires: Earnings on superannuation balances greater than $3 million will be taxed at 30 per cent from July 2025, up from the current concessional tax rate of 15 per cent. Treasury expects the measure to impact 80,000 people, or 0.5 per cent of superannuation members, but this will grow as the cap is not indexed. It will bring in $2.3 billion in revenue in its first full year of receipts.

Consultants: A new Treasury evaluation unit, costing $10 million over the next four years, is expected to recoup up to $200 million in consultant savings as the federal government targets waste and ineffective programs. Increases to the public service headcount are also geared at shifting away from using consultants for government work.

Scammers: $86.5 million over four years will be directed to fighting scams and online fraud. That includes $58 million for the creation of a National Anti-Scam Centre within the consumer watchdog within the next three years and $17.6 million for the Australian Securities and Investments Commission to take down phishing websites.

In summary, the 2023-24 Federal Budget mainly emphasises on economic growth, job creation, national infrastructure, upskilling workers, supporting renters and creating social welfare at its core. This budget demonstrates this government's commitment to building a stronger, more resilient and inclusive Australia.