Budget Response: Dr Leonora Risse

Budget Response: Dr Leonora Risse

The Albanese Government’s first Budget, announced on Tuesday night by Treasurer Dr Jim Chalmers, did what many new owners do when they move into a new place: renovate.

As with any home renovation, the Government conducted a thorough review and clean out of the policy cupboard, identifying $22 billion of spending that could be cut or redirected to other uses and $3.7 billion of revenue that could be recouped through better tax compliance.  

This helped make way for some distinctively fresh policies, including expanding to childcare subsidies and paid parental leave and taking first steps to conduct gender impact assessments as policy levers for gender equality; creating a Housing Accord and a National Housing and Homelessness Plan to activate a much-needed boost in housing supply and affordability; and incorporating wellbeing metrics into the Budget as markers of progress of Australians’ quality of life.

Some elements of these policies still have a question mark hanging over the logistics.

  • Paid Parental Leave will be extended by two years each year to eventually reach 26 weeks in total by 2026. It will retain a ‘use-it-or-lose-it’ component for both parents to promote both parents’ involvement in caregiving but we don’t yet know how the allocation of weeks will be divvied up between parents.
  • Out-of-pocket childcare costs will fall for around 1.26 million families who make use of early childhood education and care, through a widening in eligibility and flatter tapering of subsidies. An average Australian family, with one child in childcare for three days per week, would be better off by $1780 annually.
  • Chipping away at this barrier to women’s workforce participation is set to increase women’s workforce capacity by an extra 1.4 million hours in total, the equivalent of adding 37,000 full-time workers. The Budget is sparse on details, however, on how the childcare sector could be supported to cope with extra demand for places.
  • In some first steps on gender lens to policy, the Budget highlights its support for pay increases for aged care workers and improved affordability of childcare as examples of policies that will be particularly beneficial for women. Policies to improve housing security will be especially impactful for First Nations women, women living a disability, and older women on low incomes.
  • These examples are first steps for a more comprehensive ‘gender responsive budgeting’ process to be unrolled in future budgets, which will ideally span across a wider range of policy areas.
  • On its wellbeing measures, the Budget provided examples of indicators that Australia could adopt in the formulation of its own wellbeing framework, such as measures of life expectancy, housing affordability, income inequality, greenhouse gas emissions, trust in government, and gender gaps in pay, safety and political representation. The Treasurer has indicated this first step is designed to kickstart a national conversation on “measuring what matters”.

When moving into a new place, there are of course some external factors that you can’t do much about. For this government, it’s the high inflationary environment that has forced it to be prudent in spending, ensuring that any outlays go towards activities that boost our economy’s productivity capacity and don’t exacerbate inflationary pressures.

And a bit like termites infesting the walls, inflation is menacingly eating away at real wages which are not expected to pick up again until 2023-24. And that’s only by around 0.25 per cent and under quite volatile assumptions.

The decaying scaffolding propping up the Australia’s budget structure, however, would be a cause for concern for any building inspector. The budget’s trajectory of spending obligations is set to continue to exceed revenue sources in future years, in what’s known as a “structural deficit”. Of a magnitude equivalent to around 2 percent of GDP, a large part of this gap between outlays and receipts is due by higher interest repayments, fuelled by higher inflation, and higher NDIS payments.

There are lots of great home improvements in this government’s first Budget, especially in relation to gender equality and elevating equal opportunities for women as a core feature of the government’s economic priorities. But the shadow of a structural deficit also calls for another big renovation in years to come.



Dr Leonora Risse

Senior Lecturer in Economics, RMIT University

National Chair of Women in Economics Network

Leonora Risse attended Budget lockup representing the Women in Economics Network.

26 October 2022


26 October 2022


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Acknowledgement of Country

RMIT University acknowledges the people of the Woi wurrung and Boon wurrung language groups of the eastern Kulin Nation on whose unceded lands we conduct the business of the University. RMIT University respectfully acknowledges their Ancestors and Elders, past and present. RMIT also acknowledges the Traditional Custodians and their Ancestors of the lands and waters across Australia where we conduct our business - Artwork 'Luwaytini' by Mark Cleaver, Palawa.