The Wellbeing Budget Part Two: Hard Decisions for Hard Times
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When treasurer Chalmers announced his plan to introduce Australia’s first wellbeing budget, he was met with both commendation and condemnation. While his predecessor, Josh Frydenberg, dismissed the idea as “laughable,” others praised Chalmers for his multifaceted approach to macroeconomics, heralding him as the leader who would not only strengthen the economy, but would bring positive change to the lives of Australians.
Now that the budget has been released, we can all weigh in as to how far it goes in achieving just that.
The Budget’s big tickets
If there was a word du jour for the 2022 Budget, it would be ‘responsible’. Responsible spending, responsible measures, responsible government.
Personal circumstance, however, will likely dictate how ‘responsible’ Australians consider the outcomes of the Budget to actually be.
A $7.5bn cost of living relief package: Labor’s “five-point plan” to alleviate cost of living pressures on Australians
So, who are the heavy hitters in this year’s Budget?
- Childcare – an allocation of $4.7bn over the next four years to deliver cheaper childcare to families.
- Paid parental leave (PPL) – a $531m investment to increase access to PPL. The changes will increase PPL from 18 weeks to 26 weeks by 2026, with changes to the legislation allowing either parent to be the primary claimant. Changes to means testing will allow parents with a combined income of up to $350,000 access to the Commonwealth PPL scheme.
- Cheaper medicine – funding of $787m to list additional drugs on the Pharmaceutical Benefits Scheme and reduce patient contributions.
- Housing – $350m in funding to build one million affordable homes within the decade.
- Infrastructure – a $9.6bn commitment to provide infrastructure across Australia.
The budget outlined massive funding for education and skills training, with a $1bn investment in vocational education (a large portion of which will support 480,000 fee-free TAFE places), $770m in funding for better schools, and a boost of $485m to create 20,000 new university places for students from disadvantaged backgrounds. Labor’s education measures largely target underrepresented students – students with disabilities, First Nations students, and those living outside of major cities.
Community organisations will receive an extra $560m over four years. However, organisations will need to apply to receive funding from the half-billion-dollar pool, with ministers across social services, housing, Indigenous affairs and health allocating spending based on merit.
Labor has committed to investing close to $25bn in clean energy, comprising 20bn in ‘Rewiring the Nation’ energy transmission, $800m in cutting taxes relating to electric cars, and building the electric car network. Those measures will not only move Australia toward a more sustainable future, but will deliver thousands of new jobs across the country.
A “budget of restraint” for households, workers and low and middle income earners
With the budget deficit to halve this financial year, the federal purse is now “awash with billions of dollars in federal revenue,” says ABC’s Chief Political Correspondent, Laura Tingle. According to Tingle, the real losers in the 2022 Budget are households and workers, with cost of living and inflation rising while wages continue to go backward.
With inflation underpinning the entire budget, it is no surprise that low and middle income earners are hit hardest. As floods continue to drive up the price of food, the war in Ukraine is projected to increase the cost of electricity by up to 30% over the next few years – leaving the burden of inflation and cost of living disproportionately falling on the poor. Though wages are growing, they are not matching inflation, which is expected to reach 7.75% by December 2022 – the highest in over 30 years. Meanwhile, unemployment is expected to rise to 4.5% by next year, with 150,000 people set to lose their jobs.
Another point of contention is tax reform. Favouring high earners, Labor’s commitment to stage-three tax cuts (coupled with an inevitable tax bracket creep resulting from inflation) leaves young people to the wayside.
During his post-election interview with ABC’s Sarah Ferguson, Chalmers hinted that future tax reforms and energy regulations could be on the cards, though did not commit to anything firm in the way of urgent government relief.
“We’ve said it’s important that people get some tax relief when the budget can afford it,” Chalmers said. “One of the hardest things to do is exercise spending restraint.”
How likely is it that the Budget will improve wellbeing?
The Budget Paper comprises five statements, the fourth of which relates to the Budget’s wellbeing measures.
‘Statement 4: Measuring What Matters’ is the “foundation of a conversation about how to measure what matters to Australians” which will be built on over the next year. A stand-alone Measuring What Matters Statement is set to be released in 2023.
Using the OECD framework, Australia “is making progress in some areas, like life expectancy and wealth,” but needs improvement in others, for example “gender parity in politics, women’s safety and household debt.” However, Australia is yet to establish its own framework for measuring wellbeing outcomes and indicators. Presumably, this is something the Treasury will work on over the course of the next year.
Though aspects of the Budget are indeed ‘responsible’, the Budget falls well short of the ‘wellbeing hype’ foreshadowed earlier this year. Not only does the Budget fail to include any explicit wellbeing goals or frameworks, its allocated spending places poor people at a considerable disadvantage, where cost of living relief, like rental assistance and increased Centrelink payments (Youth Allowance is presently a meagre $38.00 a day), have been omitted. Further, measures aimed at targeting mental health are limited.
What has been made clear by Chalmers is that things for Australians are likely to get worse before they get better. By halving Australia’s deficit, Chalmers has prioritised fiscal responsibility over promises of sunshine and rainbows. At least for now.
With the promise of better things to come, the message for Australians is very much to stay the course. This is just the beginning of the journey when it comes to setting measurable targets across wellbeing. It will be interesting to see how the government introduces metrics that measure progress across a variety of wellbeing indicators, such as renewable targets, climate action, mental health and poverty when it releases its next budget in May 2023. What is clear is that whatever markers put in place will need to be inclusive and representative of all Australians. It is then that we will achieve a happier and stronger Australia.
