Federal Budget 2022-23 Superannuation

Below is a summary of the changes to superannuation from the 2022-23 federal budget published on 25 October 2022.

Other measures

Regional First Home Buyers Guarantee Scheme; Housing Australia Future Fund; other housing measures

To encourage home ownership in regional locations, the Government has announced the establishment of the “Regional First Home Buyers Guarantee”. Eligible citizens and permanent residents who have lived in a regional location for over 12 months can purchase their first home in that location with a minimum 5% deposit. The goal is to reach 10,000 places per year until 30 June 2026. Funding for this initiative will be redirected from the Regional Home Guarantee component of the 2022-23 March Budget measure titled Affordable Housing and Home Ownership.

In addition to this, the Government will invest $10 billion in the newly created “Housing Australia Future Fund”. This fund, to be managed by the Future Fund Management Agency, aims to generate returns to deliver 30,000 social and affordable homes over five years. Furthermore, $330 million will be allocated for acute housing needs.

To directly support new social and affordable housing, the Government will also “broaden the remit” of the National Housing Infrastructure Facility, in addition to financing critical housing infrastructure.

New Housing Accord endorsed by super funds: $350m in Government funding

The Government announced that it has struck a new national Housing Accord between State and Territory governments, investors and other key stakeholders. The new Housing Accord sets an initial, aspirational target of 1 million new homes over 5 years from 2024.

Under the Accord, the Government will commit $350 million over 5 years to deliver 10,000 affordable dwellings at an energy efficiency rating of 7 stars or greater (or a State or Territory’s minimum standard). This commitment is in addition to the 30,000 new social and affordable dwellings delivered through the Housing Australia Future Fund. The States and Territories will also build on this commitment by providing in-kind or financial contributions that enable delivery of up to an additional 20,000 homes in total.

By delivering an ongoing funding stream to help cover the gap between market rents and subsidised rents, the Government believes it will make more projects commercially viable to attract much-needed investor capital to the sector.

The Government said it has secured endorsement from institutional investors, including superannuation funds, for the Accord. Investors will work constructively with Accord parties to optimise policy settings that facilitate institutional investment in affordable housing.

Paid parental leave to be expanded

The Government will expand the Paid Parental Leave (PPL) scheme from 1 July 2023 so that either parent is able to claim the payment and both birth parents and non-birth parents are allowed to receive the payment if they meet the eligibility criteria. Parents will also be able to claim weeks of the payment concurrently so they can take leave at the same time.

From 1 July 2024, the Government will start expanding the scheme by two additional weeks a year until it reaches a full 26 weeks from 1 July 2026. Both parents will be able to share the leave entitlement, with a proportion maintained on a “use it or lose it” basis, to encourage and facilitate both parents to access the scheme and to share the caring responsibilities more equally. Sole parents will be able to access the full 26 weeks.

The amount of PPL available for families will increase up to a total of 26 weeks from July 2026, benefiting over 180,000 families each year. An additional two weeks will be added each year from July 2024 to July 2026, increasing the overall length of PPL by six weeks.

To further increase flexibility, from July 2023 parents will be able to take Government-paid leave in blocks as small as a day at a time, with periods of work in between, so parents can use their weeks in a way that works best for them.

Further changes to legislation will also support more parents to access the PPL scheme. Eligibility will be expanded through the introduction of a $350,000 family income test, which families can be assessed under if they do not meet the individual income test. Single parents will be able to access the full entitlement each year. This will increase support to help single parents juggle care and work.

Child care measures: increased CCS rate for household income up to $530,000

The Government will provide $4.7 billion over four years from 2022-23 (and $1.7 billion per year ongoing) to deliver cheaper child care and reduce barriers to workforce participation. This includes $4.6 billion over four years from 2022-23 to:
•      increase the maximum Child Care Subsidy (CCS) rate from 85 per cent to 90 per cent for families for the first child in care and increase the CCS rate for all families earning less than $530,000 in household income. From July 2023, CCS rates will lift from 85 per cent to 90 per cent for families earning less than $80,000. Subsidy rates will then taper down one percentage point for each additional $5,000 in income until it reaches 0% for families earning $530,000. Families will continue to receive existing higher subsidy rates for their second and subsequent children aged five and under in care, up to 95%
•     maintain current higher CCS rates for families with multiple children aged five or under in child care, with higher CCS rates to cease 26 weeks after the older child’s last session of care, or when the child turns six years old
•     task the ACCC to undertake a 12-month inquiry into the cost of child care and the Productivity Commission to conduct a comprehensive review of the child care sector to improve the transparency of the child care sector by requiring large providers to publicly report CCS-related revenue and profits.

The Government will also provide $43.9 million over four years from 2022-23 for measures to improve early childhood outcomes for First Nations children.

Example
Gita and Matt have a combined income of $120,000. Their two-year-old child attends centre-based day care 3 days a week, costing $4,700 a year in out-of-pocket child care fees. From July 2023, Gita and Matt will receive a Child Care Subsidy of 82 per cent, an increase from the current 71 per cent. This will save them $1,780 in out-of-pocket child care fees in 2023-24.

Pension supplement changes for departures overseas will not proceed

The Government will not proceed with the Pension Supplement changes announced by the previous Government in the 2016-17 MYEFO to the payment of the Pension Supplement for permanent departures overseas and temporary absences.

Source: CPA Australia