Federal Budget 2023: Big pay rises for Aussie workers
Big pay rises are coming for Aussie workers and wages are expected to grow fastest in 14 years
Workers are lining up for a bigger-than-expected increase in their pay packages.
Fierce competition for Labor has led to faster wage growth tipped to reach four per cent during the year to the June quarter of 2024 – the fastest rate since 2009.
The Treasury’s wage forecasts in the Albanian government’s second budget are slightly higher than in the October edition, which projected the wage price index to peak at 3.75 percent in the next fiscal year.
The government has taken some credit for the improved projections by funding a wage increase for aged care workers, along with a plea for an increase in the minimum and wages so that low-wage workers “don’t decline”.
Employees can expect an increase in their pay packages
A faster-than-expected deceleration in inflation is expected to lead to real wage growth for workers, which is when wages rise faster than prices rise.
Inflation is at seven percent and the consumer price index is expected to fall to six percent over the course of the year, according to forecasts from the Treasury Department.
Competition for Labor behind wage growth
After that, it is expected to fall to 3.25 in the June quarter of 2024 — lower than the October budget — and then to 2.75 percent through mid-2025 — slightly above earlier forecasts.
Treasurer Jim Chalmers said the government’s cost package was largely responsible for bringing inflation down quickly in 2023/2024.
The energy cost package alone β including household bill relief and coal and gas price caps β is expected to shave three-quarters of a percentage point off headline inflation by the June quarter of 2024.
βThis budget has been carefully calibrated not to increase inflation, it is responsible and targeted and spread over a number of years so that it does not hit the economy all at once,β he told reporters on Tuesday.
The unemployment outlook remains broadly unchanged, but will be a quarter of a percentage point lower this year due to labor market resilience supported by a rapid recovery in post-pandemic migration.
Treasury’s near-term growth forecasts are unchanged from October, slowing to 1.5 percent in 2023/24 and then strengthening to 2.25 percent in 2024/25.
The budget tips wage growth to four percent, the highest since 2009
After a few years of subdued growth, the continued population recovery β and the associated jump in housing construction to accommodate the newcomers β is expected to support growth of 2.75 percent in 2025/26 and 2026/ 27.
While the inflation battle was the front line for Labour’s second budget, restoring the fiscal position was also a pressing concern.
Fortunately, the government got a revenue windfall from low unemployment, strong job and wage growth, and skyrocketing prices for key exports, enabling Labor to deliver a small surplus of $4.2 billion.
However, the surpluses will not last as commodity prices are expected to fall and the labor market to cool.
However, future shortfalls are expected to be much smaller than previous projections, with the underlying cash balance improving by $125.9 billion cumulatively over the next five years.
The decision to invest 82 percent of the tax increases significantly reduced the national debt.
The budget is $887 billion in debt this financial year, and while it’s still a huge amount, it’s less than predicted in October.
It’s still moving toward the trillion dollar mark, but that’s been delayed for another two years.