The key housing measures of the budget 2023–24

The budget — which builds on the Albanese government’s first budget released just six months ago — largely focuses on supporting the “most vulnerable” people with the rising costs of living.

Released on Tuesday evening (9 May), the 2023–24 budget focuses on helping Australians manage rising inflation (which reached 7 per cent in the March quarter).

In it, the Treasurer outlined a range of housing affordability measures in a $14.6 billion cost‑of‑living plan, including:

• Increasing the maximum rates of Commonwealth Rent Assistance by 15 per cent to provide up to $31 extra a fortnight for people renting in the private market and community housing — the largest increase in more than 30 years.
• A Household Energy Upgrades Fund to support home upgrades that improve energy performance and save energy. This includes $1.0 billion in funding to the Clean Energy Finance Corporation to provide 110,000 low-cost finance and mortgages in partnership with private lenders for home upgrades that save energy. This aims to provide low-cost homes for double glazing, solar panels, and other improvements that will make homes easier — and cheaper — to keep cool in summer and warm in winter.
• Expanding the criteria of the Home Guarantee Scheme to enable more people to qualify (as previously announced). Permanent residents, non-couple joint applications, previous home owners and more single guardians will be able to access some of the Home Guarantee Schemes on offer from the new financial year.
• A build-to-rent tax break to encourage more investment in developments that specifically aim to increase rental housing supply. For eligible new build-to-rent projects where construction commences after 9 May 2023, the government will increase the rate for the capital works tax deduction (depreciation) to 4 per cent per year and reduce the final withholding tax rate on eligible fund payments from managed investment trust (MIT) investments from 30 per cent to 15 per cent.
• An additional $2 billion to support the National Housing Finance and Investment Corporation (NHFIC, soon to be renamed Housing Australia) in delivering more social and affordable renting.
• Expanding the Nationwide House Energy Rating Scheme to existing homes, meaning people can soon get a star rating of their home’s energy performance — helping Australians make the best choices for their hip pocket when it comes to renting, purchasing, or renovating their homes.
• Providing $2.0 million in 2023–24 to conduct a defence housing feasibility review aimed at reducing the housing burden on ADF personnel, encouraging home ownership, and ensuring Defence housing meets future needs.
• Amending NHFIC’s Investment Mandate to require NHFIC to take reasonable steps to allocate a minimum of 1,200 homes to be delivered in each state and territory within five years of the Housing Australia Future Fund commencing operation.
• Redirecting interest earnings on unallocated NHFIC funds to support more social and affordable housing and delivery of housing priorities.
• Earmarking $300.0 million over four years from 2023–24 held in the Contingency Reserve to support upgrades to social housing, in collaboration with states and territories, which save energy.
• Providing $2.7 million in 2023–24 to the Treasury to support delivery of priority housing measures.
• Enabling up to three additional members to be appointed to the National Housing Supply and Affordability Council to provide a greater breadth of policy expertise.

Mr Chalmers commented: “The Albanese government wants to give families the tools, information, and access to cheap financing they need to upgrade their home, lower emissions and energy costs.

“This Budget delivers significant investments in energy efficiency to ease cost‑of‑living pressures for Australian families and small and medium‑sized businesses, and puts downward pressure on energy bills.”

More support for SMEs

As well as more measures for housing, the budget also aims to support small businesses to manage rising costs, too.

Among the measures announced are an increase of the instant asset write‑off to $20,000 from 1 July 2023 until 30 June 2024.

Small businesses, with aggregated annual turnover of less than $10 million, will be able to immediately deduct the full cost of eligible assets costing less than $20,000 that are first used or installed ready for use between 1 July 2023 and 30 June 2024.

The $20,000 threshold will apply on a per asset basis, so small businesses can instantly write off multiple assets.

Assets valued at $20,000 or more (which cannot be immediately deducted) can continue to be placed into the small-business simplified depreciation pool and depreciated at 15 per cent in the first income year and 30 per cent each income year thereafter.

The provisions that prevent small businesses from re-entering the simplified depreciation regime for five years if they opt out will continue to be suspended until 30 June 2024.

Tax instalments and improving cash flow are also being targeted. The government will amend the tax law to set the GDP adjustment factor for pay-as-you-go (PAYG) and GST instalments at 6 per cent for the 2023–24 income year, a reduction from 12 per cent under the statutory formula.

The reduced factor will provide cash flow support to small businesses and other PAYG instalment taxpayers.

The 6 per cent GDP adjustment rate will apply to small businesses and individuals that are eligible to use the relevant instalment methods (up to $10 million aggregated annual turnover for GST instalments and $50 million annual aggregate turnover for PAYG instalments), in respect of instalments that relate to the 2023–24 income year and fall due after the enabling legislation receives royal assent.

Moreover, there will be new help for small businesses to adopt and adapt to digital technology.

The government will provide $101.2 million over five years from 2022–23 to support businesses to integrate “quantum and artificial intelligence (AI) technologies into their operations” and support small and medium enterprises’ adoption of AI technologies to improve business processes and increase trade competitiveness.

There is also $23.4 million allocated to assist small businesses with cyber security, with a plan to mitigate cyber attacks by “training in‑house cyber wardens.” This program will be administered by the Council of Small Business Organisations Australia.

As revealed ahead of budget night, the Albanese government will roll out a Small Business Energy Incentive, to provide up to 3.8 million eligible businesses with an additional 20 per cent deduction on spending that supports electrification and more efficient use of energy.

These will include assets that upgrade to more efficient electrical goods such as energy-efficient fridges, assets that support electrification such as heat pumps and electric heating or cooling systems, and demand management assets such as batteries or thermal energy storage.

The tax deduction will be available to businesses with an annual turnover of less than $50 million and up to $100,000 of total expenditure will be eligible for the incentive, with the maximum bonus tax deduction being $20,000 per business.

Business assets or upgrades will need to be first used or installed ready for use between 1 July 2023 and 30 June 2024.

Eligible upgrades will also need to be made during this period. Certain exclusions will apply such as electric vehicles, renewable electricity generation assets, capital works, and assets that are not connected to the electricity grid and use fossil fuels

A cash surplus

The Treasurer also said the government expects to deliver a “small budget” surplus in 2022–23 of $4.2 billion (0.2 per cent of GDP) — the first surplus for 15 years.

However, the budget forecasts a deficit of $13.9 billion (0.5 per cent of GDP) in 2023–24.

Mr Chalmers noted that this was still “an improvement of $42.6 billion since we came to government”.

Gross debt as a share of the economy is now expected to peak lower at 36.5 per cent of GDP in 2025–26, where it will be $154 billion lower than projected in the Coalition’s March 2022–23 budget.

[Related: Budget geared to ‘build more supply’, Treasurer pledges]