Date published: Wednesday 9 May 2018
The Government has delivered a pre-election Budget with tax cuts directed at low and medium-income earners and a Budget result which returns the bottom line to a modest surplus in 2019-20, a year ahead of last year’s forecasts.
The tax cuts, to be followed by further cuts for higher income earners in 2022-23 and 2024 will provide a tax cut of about $10 a week for those earning up to $90,000 a year but will cost the Budget $13.4 billion over four years.
The Budget includes a substantial increase in in-home aged care packages (14,000 plus 6,000 previously announced) and funding for mental health care in residential aged care.
Hidden in the Budget are a number of large savings measures which target the most needy and vulnerable in our community, including $300 million to be clawed back in debt recovery from welfare recipients, $270 million by cutting income support and services to refugees and newly arrived migrants and $141 million by freezing foreign aid spending.
The Budget forecasts the Government will return to surplus a year earlier than the forecast in December’s Mid Year Economic and Fiscal Outlook (MYEFO) and last year’s Budget.
According to the Budget, the Government will achieve a surplus of $2.2 billion in 2019-20, compared to the first surplus of $7.4 billion in 2020-21 forecast in last year’s Budget and $10.2 billion forecast in MYEFO. Treasurer Scott Morrison in his Budget speech acknowledged the size of the surplus was “modest” but argued, “the Turnbull Government has now stayed on track for a surplus for six successive budget updates.”
The 2018-19 deficit will be $14.5 billion, compared to the $20.5 billion forecast in MYEFO.
Some key elements of the Budget this year include:
- a seven‑year Personal Income Tax Plan aimed at low and middle-income earners
- extending the $20,000 instant asset write‑off for businesses with a turnover of up to $10 million to apply in 2018–19
- investing $75 billion in transport infrastructure over the coming decade
- an additional investment of $2.4 billion in technology and science over 12 years and
- a $1.3 billion National Health and Medical Industry Growth Plan.
The Budget is forecasting an increase in both economic and wages growth in the current financial year. The Budget forecasts GDP growth of 3 per cent in both 2018-19 and 2019-20, up from 2 ¾ per cent in 2017-18.
Wages growth is forecast at 2 ¾ per cent this year rising to 3 ¼ per cent in 2019-20, from 2 ¼ per cent in 2017-18.
Wages growth is forecast to pick up to 2¼ per cent through the year to the June quarter 2018, 2¾ percent through the year to the June quarter 2019 and 3¼ per cent through the year to the June quarter 2020, as economic growth strengthens to be above its potential rate and excess capacity in the labour market is absorbed.
Real GDP is forecast to grow by a solid 2¾ per cent in 2017‑18 and to accelerate further to 3 per cent growth in 2018‑19 and 2019‑20.
The unemployment rate is forecast to be 5½ per cent in the June quarter 2018 before declining to 5¼ per cent by the June quarter of 2019.
The Budget includes a big increase in the number of aged care Home Care packages, to enable older people to receive increased services in their home rather than in residential aged care.
It also includes a number of initiatives designed to encourage older people to remain engaged in the workforce, including changes aimed at older small business owners.
Home care packages
The Budget provides $1.6 billion to support 14,000 additional high‑level home care packages by 2021–22. This adds to the 6,000 places the Government has provided since the last Budget.
Pension Work Bonus
Age Pensioners will be able to earn up to $300 each fortnight, which is an additional $50 each fortnight without reducing their pension payments.
Pension Loans Scheme
The little-utilised Pension Loans Scheme is being expanded so eligible retirees can borrow a maximum of 150 per cent of the age pension. Eligibility for the scheme is being expanded from pensioners and part-pensioners to include all people over Age Pension age at a cost to the Budget of $11.0 million.
The Budget includes $61.7 million to improve the My Aged Care website and $14.8 million to streamline the assessment process for aged care services.
The Government is investing in the health of older Australians by providing: $82.5 million for mental health services for people in residential aged care facilities; $20 million to pilot services for older Australians to help them remain connected to their communities; and $22.9 million to boost the physical activity of older Australians.
Domestic and family violence
The Budget provides $6.7 million in 2018‑19 towards Domestic Violence Response Training (DV‑Alert) for community and frontline workers to support women and children affected by domestic and family violence.
It also provides $11.5 million over two years for 1800RESPECT. The additional support will allow trauma specialist counsellors to respond to the growing demand for its services and continue to provide a responsive service to support women and families affected by family and domestic violence.
The Budget includes an additional $92.1 million over five years from 2017‑18 for people who are not eligible for the National Disability Insurance Scheme (NDIS), but are currently receiving support under programs that are transitioning to the NDIS.
The Government will also provide:
- $0.5 million in 2018‑19 to undertake stakeholder consultations and develop a new model for supported employment
- additional funding to support disability advocacy organisations
- $64.3 million over four years from 2017‑18 to establish an NDIS Jobs and Market
- $9.9 million over two years from 2018‑19 for the Disability Employment Services program.
Welfare, migrants and social services
The Budget includes a number of measures aditional to those in the previous three Budgets directed at welfare recipients and migrants.
Welfare debt recovery
The Government will achieve savings of $299.3 million over three years from 2019‑20 by extending the Department of Human Services’ (DHS) fraud detection and debt recovery activities.
Encouraging lawful behaviour of income support recipients
The Government will establish a scheme to “encourage lawful behaviour from income support recipients”. Under the scheme, the Commonwealth will be able to make compulsory deductions from the welfare payments of serial fine defaulters who have outstanding State and Territory court‑imposed fines.
Increased waiting period for migrants
The Government will achieve savings of $202.5 million over five years from 2017‑18 by increasing the waiting period for newly arrived migrants to access welfare benefits from three years to four years from 1 July 2018.
Reduced assistance for refugees
The Government will save $68.1 million over four years from 2018‑19 by requiring newly arrived refugees to wait 26 weeks for income support payments rather than 13 weeks.
Extending the Cashless Debit Card trial
The Government will extend the cashless debit card trial in Ceduna (South Australia) and East Kimberley (Western Australia) for one year to 30 June 2019.