Federal Budget Announcement – What Employers Need to Know

The Treasurer announced the Australian Federal Budget for 2023-2024 earlier this month on the 9^th of May 2023. This financial year’s Budget focuses on providing targeted cost-of-living relief for individuals and families, investing significantly into Medicare and the care economy to improve the health outcomes of Australians, and fostering economic growth and recovery through technology, clean energy and small business.

With the new Budget announcement comes a number of changes to the industrial relations landscape in Australia. Here are the key changes and implementations of the Budget that all Australian employers need to be aware of in order to navigate the evolving landscape effectively.

Reforms to paid parental leave

As first announced in October 2022, the Labor Government is increasing Australia’s paid parental leave scheme to 26 weeks by 2026 to enhance support for working parents by allowing them to spend more time with their newborns free of financial strain. This reform recognises the importance of work-life balance and strengthens the support system for working families.

From 1^st July 2023, the current entitlement to 18 weeks’ of parental leave pay will be combined with the current Dad & Partner Pay into a single 20‑week payment, and a new family income test of $350,000 per annum will see nearly 3,000 additional parents become eligible for the entitlement each year.

This means partnered couples will be able to claim up to 20 weeks of paid parental leave between them, whilst parents who are single at the time of their claim can access the full 20 weeks. Partnered couples must take at least 2 weeks of paid parental leave each.

Furthermore, the requirement for employees to return to work in order to be eligible for paid parental leave will be removed. The Government will also allow the payments to be delivered flexibly, so that employees can claim it in blocks up until the child turns two.

These changes affect employees whose baby is born or placed in their care on or after 1st July 2023.

Wage increases

As part of what’s being called a “historic” increase to an award wage, it has been announced that employees in the aged care industry can expect a 15% pay rise in recognition of the critical work that they do.

Treasurer Jim Chalmers also hinted at further wage reforms to come in the near future, such as a federal approach to criminalising wage theft and providing greater protection for gig workers and casuals.

The Budget acknowledges the need to improve wage growth across Australia, and employers should anticipate potential wage increases and plan their remuneration strategies accordingly to attract and retain skilled talent.

Superannuation reforms

Chalmers announced two significant upcoming changes to the payment of superannuation. Firstly, super guarantee payments will be paid out on pay day, rather than in quarterly instalments, as of July 2026. This will provide employees with greater visibility over their super payments and increases the opportunity to identify any instances of missing or incorrect payments.

The Australian Tax Office will also receive support to crack down on unpaid superannuation with a $13.2 million investment into a new compliance system.

Funds to boost Australia’s skills shortage

The Government has already started to move forward on addressing the skills shortage in Australia. In December 2022, it announced the $402 million Jobs and Skills Councils to help address skill shortages.

A further $3.7 billion of the Budget is going towards a five-year national skills agreement. In conjunction with the states and territories, this aims to enhance the quality of vocational education to “boost productivity and support Australians to obtain the skills they need to participate and prosper in the modern economy”.

Expansion of instant asset write-offs for small businesses

The Government announced a limited extension to the instant asset write-off threshold to $20,000, from 1^st July 2023 to 30^th June 2024. The rules allow for immediate deduction for the cost of a depreciating asset for small business entities with an aggregated turnover of less than $10 million.

The Government will further provide an additional 20% deduction for eligible depreciating assets supporting more efficient energy use by businesses with aggregated annual turnover of less than $50 million.

Industry Growth Program

The Budget has allocated $392.4 million to establish the Industry Growth Program to support SMEs and start-ups to commercialise their ideas and increase growth, replacing the existing Entrepreneur’s Programme.  This is another way that businesses can access funding and support to invest in their future.

Supporting organisations to manage their teams in the context of their strategy is critical. The ever-changing landscape that we all operate in, including our tax landscape and government policy means that being abreast of what is available, what is changing, and what decisions I need to make to adjust becomes an ongoing requirement. If your business requires support to effectively navigate the evolving industrial relations landscape, our dedicated team of consultants and advisors would love to help. Reach out today on 1300 406 005 or email us at hello@performhr.com.au.