McGowan wants COVID deal extended

Cost of living relief was praised but some are questioning the long-term vision in last night’s federal budget, while Premier Mark McGowan says the state needs health support as COVID peaks.

Mr McGowan welcomed the previously announced infrastructure and defence funding when speaking at a press conference today, and said Western Australia had carried the nation’s economy during the recovery.

But he said the state needed an extension of the COVID-19 health funding agreement, which is set to expire in September.

The agreement is intended to share costs for COVID-19 management between the states and the federal government.

It should run until at least the end of the year, Mr McGowan said, as the state was still going through what was effectively its first wave.

“More broadly, health funding is an issue because the costs of providing health continue to increase significantly,” he said.

“So we'd like to see additional support for the states in providing public hospitals and public hospital funding, both here and in other states around Australia.

“Hospital funding is an important issue.

“We fund our hospitals better than any other state in Australia per capita.

“We'll continue to do that, but further support from the Commonwealth government, whichever persuasion, would be a good thing.”

With the total cost of services for WA Health now nearing $11 billion for the 2022 financial year, spending is almost triple that of the 12 months to June 2005.

Short termism to the extreme: Deloitte

Three of the headline measures in the budget are very temporary.

A 50 per cent cut in fuel excise, equivalent to about 22 cents per litre, will last six months.

There was also a $250 cash bonus for pensioners and other groups on social security, and a $420 lift in the tax offset for low and middle income earners for this financial year.

"[The] 2022-23 budget takes short termism to an extreme, with its centrepiece – a temporary cut to the fuel excise – something which wasn’t really on the agenda more than three weeks ago,” Deloitte Access Economics partner David Rumbens said. 

“A missed opportunity to set out an economic vision, to say the least.”

He said there were $39 billion of spending decisions, mostly over the next six months.

The underlying cash deficit would be about $80 billion, an improvement of more than $19 billion on projections just three months ago.

“While the projected budget deficits are smaller than they used to be, they’re still big,” Mr Rumbens said.

“And going forward, they don’t yet fully reflect some ‘known knowns’, including cost pressures in both defence and social services.”

But he said the best news in the budget was the economic backdrop, particularly jobs, declaring Australia was only months out from an unemployment rate of 3.75 per cent.

That compares very favourably to earlier aims to get the jobless rate below 6 per cent.

The Committee for Economic Development of Australia said the budget made quick fixes to deal with cost of living concerns, but did not have a long-term plan.

“This budget’s focus on temporary measures to alleviate rising costs of living such as cutting the fuel excise, cost of living tax offsets and one-off payments will be welcomed by many,” chief economist Jarrod Ball said. 

The budget had not offered long-term solutions to cost of living issues, he added.

“The $8.6 billion of cost of living measures mostly benefit income earners and motorists, with many income support recipients receiving the least relief from cost of living pressures,” he said. 

“With growing inflationary pressures and interest rate rises on the horizon, cost of living pressures will not dissipate any time soon, and these measures do not provide a long-term solution. 

Pitcher Partners National Chairman John Brazzale said the government had left it up to business to drive the recovery, as emergency support ends.

“There’s nothing in this budget that will stand in the way of business but there’s equally nothing that provides a strong incentive for investment or action,” he said.

“Unlike other recent budgets, there’s very little to get the pulse of business racing.”

Cost of living relief

CPA Australia general manager external affairs Jane Rennie said expansionary elements of the budget were focused and temporary.

“The increased (low and middle income tax offset) will bring relief to many Australians within months,” Dr Rennie said.

“Temporary support measures have a way of outstaying their welcome; we’re pleased the government is signalling that this is the final year for the LMITO.”

Cash payments such as the $250 to social security recipients would be popular but could add to inflation, she said.

“Given these payments are temporary and targeted at lower income earners, they will help those households most in need,” Dr Rennie said. 

“However, the combination of the increased LMITO and direct cash payments may contribute to inflationary pressures.”

Many needs

There’s no shortage of groups lining up to ask for more from the federal budget.

Among them were pharmacists, the Australian Hotels Association and the Australian Healthcare and Hospitals Association.

The Pharmacy Guild of Australia said the government’s move to extend the safety net threshold for the Pharmaceutical Benefits Scheme did not go far enough.

The move reduced the number of scripts for a concession card holder to hit the threshold by 12, and for others by two.

The Hospitals Association said there would be financial and health impacts from missed opportunities for early diagnosis and treatment during the pandemic.

“In this budget, resources towards catching up on the high numbers of patient for whom care was delayed should have been a given,” acting chief executive Kylie Woolcock said. 

“Funding as a one-off boost to capacity for breast cancer, cervical screening and colonoscopy triage is welcomed, yet this only addresses one element of delayed care, with nothing further reflected in public hospital funding beyond recurrent spending and planned growth.”

Ms Woolcock also said investment was necessary to deal with Long COVID, and longer term funding agreements were needed for the sector, particularly for remote and regional services.

Almost $106 billion will be spent by the federal government on health in the year to June 2023.

That compares to $89 billion projected for the 2023 financial year in the 2019-20 budget.

Despite the government’s claim that its strong bottom line is driven by more people in work, social security and welfare spending has also lifted in that time.

When Treasurer Josh Frydenberg revealed his first budget in March 2019, before the most recent federal election, he predicted social security and welfare spending would be $200 billion in 2023.

The most recent update has it on course for $221.7 billion.

Hoteliers had wanted a cut to the tax on alcohol.

The Australian Hotels Association said taxes on draught beer were the fourth highest in the world.

The AHA had hoped to cut the tax in half, particularly in response to COVID rampaging through the industry.

That would reduce the price of a schooner by 30 cents, AHA national chief executive Stephen Ferguson said.

“The way we are going, draught beer poured at a pub is becoming a luxury item,” Mr Ferguson said.

“It’s safe to say our members, staff and patrons feel let down. 

“A hidden beer tax doesn’t pass the pub test and it was great so many backbenchers agreed with us.”