Key initiatives impacting MTA Queensland members and MTA Institute

Background

The federal Labor Government elected in May 2022 announced its 2022-23 Budget on 25 October 2022. This follows the previous Coalition Government’s budget that was announced in March 2022, ahead of the May federal election.

This October Budget seeks to respond to the Government’s election commitments and priorities, but also to respond to the current economic circumstances. As has been flagged in the lead-up to the Budget, there are considerable fiscal pressures arising from rapid cost increases in disability, aged and health care, defence and servicing the national debt.

While these cost pressures will build over the forward estimates, the current financial year (2022-23) is expected to record a deficit of $36.9 billion, an improvement of some $41.1 billion over that previously projected. This improvement is due in large part to windfall tax receipts as a result of record natural resource prices and to five-decade low levels of unemployment (and the associated reduced welfare payments).

While economic growth is expected to remain relatively strong in 2022-23 at 3.25 per cent, it will soften to 1.5 per cent in the following year, partly in response to global circumstances and domestic (especially monetary) policies aimed at reducing inflation, that is expected to peak at 7.75 per cent later in 2022. Unemployment is expected to edge up slightly from 3.5 per cent now to 4.5 per cent in 2023-24.

On the back of widespread concern with chronic skill shortages the Budget moves to implement the Government’s skills election commitments articulated in its Future Made in Australia Skills Plan. The key focus is a boost to free training in skill shortage areas and regions.

The Budget also provides incentives (announced before the Budget) to boost the uptake of electric vehicles.

Issues

Fee-free Vocational Education Places

To meet its election commitment, the Budget provides $1 billion over five years to support 480,000 fee-free learning in vocational education places in industries and regions experiencing skill shortages. In 2023, 180,000 of these fee-free places (120,000 existing and 60,000 additional places) will be delivered through a National Skills Agreement with states and territories. This commitment is in the context that in 2021 4.3 million students enrolled in nationally recognised VET, of which 1.4 million were government funded.

It is worth noting that the recent Skills Priority List published by the National Skills Commission includes several automotive occupations.

Apprenticeship incentives

The Budget did not contain any other new or adjusted initiatives to support the uptake of apprenticeships. The cessation of the Boosting Apprenticeship Commencements initiative in June 2022 (a COVID-19 initiative that provided up to a 50 per cent wage subsidy) means the much more modest incentive arrangements through the Australian Apprenticeships Incentive System remain (up to 10 per cent wage subsidies for first and second-year apprentices). Changes to employer incentives have traditionally had a significant impact on apprenticeship commencements. Any impact of this change is likely to be partially offset by the significant skills shortages across the industry.

Cheaper electric vehicles

As was announced well before the Budget, the government has introduced a $345 million package of tax reforms that will reduce the cost of electric vehicles. Changes to Fringe Benefits Tax will see savings of $9,000 on a $50,000 EV or $4,700 for persons using salary sacrifice arrangements. The elimination of the five per cent import tariff is expected to see savings of around $2,500. In view of the price differential for electric vehicles, this level of subsidy is unlikely to have a major impact for some time.

Driving the Nation Fund

The Budget responds to the government’s Driving the Nation policy commitment with $275.4 million over six years.  This includes $146.1 million over five years to support projects that reduce road transport emissions, $89.5 million over six years for the Hydrogen Highway initiative (hydrogen refueling stations) and $39.8 million over five years for the National Electric Vehicle Charging Network of 117 fast charging stations on major highways.

On-road emissions testing

$14 million will be provided to the Australian Automobile Association over four years from 2022-23 to conduct on-road emissions and fuel consumption testing of light vehicles sold in Australia.

Diesel Exhaust Fluid Market

In response to the recent concerns about the shortages of diesel exhaust fluid, the Government will invest $45 million over four years from 2022-23 to ensure a five-week supply stockpile.

26 October 2022