This year's Budget announcement focused on the projected lowest unemployment rate in almost half a century. By September 2022, the Australian Financial Review estimates that 13.4 million Australians will be employed, representing an increase of 611,000 workers compared to pre-pandemic expectations.

Compared to the Coalition's Budget for 2020-21, the rate is also three percentage points lower.

Skills shortages and the war for talent still impact the economy, but the government hopes that the raft of initiatives it proposes will transform this prediction into a reality.

AHRI's CEO (Chief Executive Officer) Sarah McCann Bartlett commented, "The forecast of record-low unemployment leading to real wages growth is a mixed bag for employers,". 

Over the next few years, wage growth has been predicted to surpass inflation slightly. Wages are expected to stay the same until the middle of the decade.

"This means that initiatives to drive workforce participation – especially for under-represented groups – significant skills uplift and strong productivity initiatives are vital," added Sarah McCann Bartlett.

In the 2023-24 Federal Budget, Treasurer Jim Chalmers outlined several changes impacting employees and employers. 

6 Key Changes Impact that Employers

1. Personal income tax remains the same

The government did not announce changes to personal tax rates in the Budget. As previously legislated, the Stage 3 tax changes will begin on 1 July 2024.

The following table shows the proposed changes to tax rates, including the Stage 3 tax cuts announced in previous budgets. 

2022 – 2023 and 2023 - 2024
Taxable income	Tax Payable
$0 - $18,200	Nil
$18,201 - $45,000	19 cents for every $1 over $18,200
$45,001 - $120,000	$5,092 plus 32.5 cents for every $1 over $45,000
$120,001 - $180,000	$29,467 plus 37 cents for every $1 over $120,000
$180,001 and over	$51,667 plus 45 cents for every $1 over $180,000

 

2024 – 2025
Taxable income	Tax Payable
$0 - $18,200	Nil
$18,201 - $45,000	19 cents for every $1 over $18,200
$45,001 - $200,000	$5,092 plus 32.5 cents for every $1 over $45,000
$200,001 and over	$51,592 plus 45 cents for every $1 over $180,000

The Medicare Levy will not apply to lump sum payments made in arrears

As of 1 July 2024, lump sum payments in arrears will not be subject to Medicare Levy. This change is intended to ensure taxpayers receiving a lump sum income payment are not disadvantaged - for example, back pay.

Low-income thresholds for Medicare Levy

In 2022-23, Medicare levy low-income thresholds will be increased (by CPI) for singles, families, and seniors and pensioners.

• Single seniors and pensioners threshold increase to $38,365.
• The Family threshold for seniors and pensioners increases from $53,406.
• The singles threshold increases to $24,276.
• The family threshold increases to $40,939.
• An additional $3,760 is added to the family income threshold for each dependent child or student. 

2. Raising the salary threshold for skilled migrants

In the election campaign, there was a lot of talk about accessing the right skill level through Australia's migration programs and ensuring those workers were fairly paid.

The Budget has confirmed that from 1 July 2023, the Temporary Skilled Migration Income Threshold will increase to $70,000. 

• Employers with workers on a Temporary Skill Shortage visa need to conduct a salary review and ensure that from 1 July 2023, they comply with the new threshold.

There are ongoing reforms to Australia's migration program, and the government plans to release the final Migration Strategy by the end of 2023.

Raising wages for aged care workers

Aged care was a key promise of Labour's election campaign, pledging to raise standards within the sector and support some of Australia's most valuable workers. 

Aged care has suffered from understaffing for many years, which was only made worse during the pandemic by border closures. It is increasingly difficult for many aged care organisations to retain their current employees and attract new employees. 

The government has allocated $11.3 billion to support the Fair Work Commission's decision to increase minimum wages by 15% for many aged care workers. More than 250,000 workers will benefit from the increase.

This increase will apply to direct care and some senior food service employees within the aged care sector, and it will come into effect from 30 June 2023.

• Aged Care Award
• Nurses Award
• SCHADS Award

Employers in the sector must ensure the increase is applied to all impacted employees and that their payroll is updated to avoid underpayment. 

• The increase takes effect from the start of the employee's first full pay period on or after 30 June 2023.

4. Introducing Payday Super to align payments

By aligning the super payment date with wages, the ATO (Australian Taxation Office) can monitor complaints in real time and respond quickly instead of waiting until quarter-end to investigate them. The ATO will prosecute deliberate and systematic underpayments of super as wage theft to recover unpaid super.

Payday Super requires employers to pay the Superannuation Guarantee on the same date as an employee's wage, enabling workers to track their entitlements more easily. Payday Super is good for business as it streamlines payroll management with fewer liabilities for the company. 

• All employers must pay their employees' super contributions as part of their salaries from 1 July 2026.

The government has also pledged to give the ATO stronger powers to deal with unpaid super. In addition, the government recently introduced the Protecting Worker Entitlements Bill, under which employees not covered by a modern award or enterprise agreement with a right to superannuation may pursue legal action to recover unpaid benefits.

5. Relief for the rising cost of living 

During the next four years, $14.6 billion will be dedicated to cost-of-living relief, a key theme of the Budget. 

As part of the plan, power bills will be lowered, out-of-pocket health costs will be reduced, vulnerable Australians will be supported, more affordable housing will be created, and wages will be boosted.

For eligible individuals, income support payments such as JobSeeker, Austudy, and Youth Allowance will increase by $40 per fortnight.

In addition, the Treasurer announced the government is expanding eligibility for the existing higher rate of JobSeeker payments to recipients 55 and over (previously 60 and over).

The Treasurer explained, "Older Australians can face persistent barriers to work — like age discrimination — and can become stuck on JobSeeker for long periods. To recognise these challenges, the government is expanding eligibility."

The budget also includes the following items as part of its 'cost-of-living package':

• Fuel price cut: Fuel excise is being temporarily halved from 44.2 cents per litre to 22.1 cents per litre in the budget to combat skyrocketing fuel prices. There will be a cost of $3 billion for this.
• One-off cash payments. A one-time $250 payment will be made to pensioners, veterans, job seekers, self-funded retirees, and concession card holders.
• Income tax offset extended. A one-time $420 tax offset will benefit low- and middle-income earners (those earning up to $126,000 annually). At tax time, eligible Australians will receive between $675 and $1500. The low- and middle-income tax threshold will end with this year's financial year.

6. Childcare and Parental Leave changes

By 2026, Paid Parental Leave will be increased to 26 weeks, as outlined previously.

Additionally, this budget includes $72.4 million to build and support the skills of early childhood educators.

“The government will support early childhood educators to undertake professional development and provide financial assistance to educators and teachers to complete the required practical component of a bachelor's or master's degree in early childhood education,” the Treasurer said.

There was also a reminder of changes to the Paid Parental Leave scheme. As part of October's budget, $531.6 million was committed to delivering a more flexible and generous Paid Parental Leave scheme, with Dad and Partner Pay combined into one payment starting 1 July 2023.

With a new family income test of $350,000 annually, nearly 3,000 additional parents will be eligible for the entitlement.

2022 – 2023 Australian Federal Budget resources  

• The full Budget documents 
• The Treasury ministers' media releases   
• KPMG – Federal Budget 2023

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