• Australia is a prosperous country proudly founded on decent living standards and the fair go. However, these standards have been under threat from this Budget. The idea that someone on $200,000 dollars would pay the same marginal rate of tax as someone on $41,000 destroys the very principles of a progressive tax system. This has only been budgeted for forward estimates not for the latter years. This could end up costing extraordinary amounts of revenue.
• Government forecasts on Wage growth are completely unrealistic. The Government is set to make the same mistakes as past budgets as the wage forecasts for the years ahead are overly optimistic. Wage growth is magically expected to rise to 2.75% in 2019-20, 3.25% in 2019/20 and a staggering 3.5% in 2020/2021 and 3.5% again in 20201/22 – a rate not seen for five years. Given wage growth is currently 2.1% this is completely unrealistic and will affect the forecasts on income tax receipts
• Company tax: -
The second phase of the 10-year plan which will hand $80 billion over 10 years to big
business remains on track.
• Personal tax cuts (Changes to brackets)
The government is moving (by 2024) to a flat marginal tax rate for all Australians earning between $41,000 and $200,000 dollars – they are doing this by removing the current 37 per cent bracket (so there will only be 4 tax brackets rather than 5). All Australians earning between $41,000 and $200,000 will now have a tax bracket of 32.5%. This completely erodes the principle of a progressive tax system (effect 1.8 million Australians). After 7 years and the tax reforms are implemented someone earning below $37,000 will get $3.76 a week and someone earning $200,000 will get $137.60
• Personal Tax Cuts (changes to LITO)
The low income tax offset cut off will be raised to $125,000, delivering a tax cut to lower-middle income earners.
• Shadow Economy - 10,000 limit for cash payments made to businesses for goods and services from 1 July 2019. Expanding monitoring of security providers and investigation services, road freight transport, and, computer system design and related services. Expected to increase budget by $545.8 million over the forward estimates.
$318.5m to the ATO for additional resources to combat tax avoidance in the cash economy.
• Medicare Levy low income threshold
Raises the threshold meaning fewer low income people will pay the levy. Costs $230 million
over 4 years.
• Medicare levy increase
Removed from the Budget at a cost of $12.8 billion
• R&D Tax incentive
Overhauled to prevent companies claiming tax breaks for business-as-usual practices and
rewarding high R&D intensity. Raises $2.4 billion over four years
• Instant Asset write-off
Ability of small business to write-off $20,000 extended to 2019. Costs $350 million over four years
• Beer tax
Aimed at helping smaller companies compete. Costs $85 million over 4 years.
• Cap on passive fees
3% annual cap on passive fees on accounts lower than $6,000. Inactive accounts below $6,000 transferred to the ATO. Raises $166.6 million.
• Exit fees scrapped
Funds unable to charge fees to remove balances.
The government will require those with balances below $6,000, and those under the age of 25 to opt-in to insurance. The measure will also apply to those who have not received a contribution in 13 months and are inactive. This will gain the budget $697 million in extra revenue.
• Tax deductions on personal contributions
Tightening eligibility for tax deductions on personal superannuation contributions by requiring notices of intent to be lodged in order to claim the deductions. This is expected to gain the budget $430 million in revenue.
Government is allowing more people to join SMSFs despite their lower average returns. SMSFs are an easy way for rich families to hide wealth. It is also loosening the audit requirements on SMSFs from annually to 3-yearly.
Government reforming the corporations and tax laws to provide regulators with additional tools to combat illegal phoenixing. This will introduce new offences, prevent the backdating of resignations, limit the ability of directors to resign, extend the director penalty regime to other taxes, expand the ATO’s power to retain funds where there are outstanding tax lodgements. This is expected to cost the budget $40 million.
• Tightening concessions for foreign investors
Government will increase the tax liability of foreign investors, foreign governments and foreign pension funds. This will gain the budget an additional $400 million over the forward estimates.
o Chaplaincy –
$247 million to renew and support the School Chaplaincy program.
o High Achieving Teachers Program
Under this measure, the Department of Education and Training will invite proposals in 2018 from providers to deliver alternative pathways into teaching for individuals who have specific qualifications, skills and the personal attributes to become quality teachers. Individuals would become qualified and placed from 2020 into Australian secondary schools with identified staffing needs, including schools in regional, remote and low socioeconomic areas.
• Higher education
o HELP and FEE HELP fees
Raises $30.7 million by charging HELP and FEE HELP providers a fee to continue or begin providing courses approved for those programs.
Measures to freeze funding increases and essentially cap places not withdrawn. This results in a $2.2 billion cut.
• Funding reduction
Funding for vocational and industry training will decrease 1.1 per cent in real terms from 2017-18 to 2018-19 and decrease by 11.2 per cent in real terms between 2018-19 and 2021-22
• Industry Workforce Training Program
discontinuing the competitive funding stream of the Industry Workforce Training program. Saves $21.2 million.
Skilling Australia Fund
• Levy Refund
expands the circumstances in which the levy paid for a foreign worker can be refunded to the employer. Includes circumstances such as visas not being granted or employees leaving the employer earlier than planned. Cost to revenue of $105.1 million.
• Revised Implementation arrangements in light of their inability to pass the legislation, the government is providing $250 million to start various projects aimed at apprenticeships and traineeships. Also seeks to create $1.2 billion fund over four years for the states.
• Hospital funding
The Government will provide $130.2 billion over five years from 2020-21 to the States and Territories for public hospital services after the expiry of the current agreement on 30 June 2020. As part of the agreement, the Government has committed to continue existing Activity Based Funding arrangements, including the existing 45 per cent of growth in hospital services, and the existing 6.5 per cent per annum growth cap to the Commonwealth’s contribution. The agreement will extend important reforms that focus on safety and quality improvements and coordinated care.
• Mental Health
o $4.7 million to Head to Health
The Government will provide $33.8 million over four years from 2018-19 (including $15.5 million ongoing) to Lifeline Australia to enhance its telephone crisis services.
o National Mental Health Commission
The Government will provide $12.4 million over four years from 2018-19 to strengthen the National Mental Health Commission
o Suicide prevention campaign
The Government will provide $1.2 million in 2018-19 to SANE Australia to deliver a targeted suicide awareness campaign, Better Off With You.
• Aged care
o More choices for a longer life – Aged Care
▪ 14,00 new high level home care packages in four years from 2018-19
▪ 13,500 residential aged care places and 775 short term places
▪ $105.7 million over four years to support the National Aboriginal and Torres Strait Islander Flexible Aged Care Program
▪ A wide variety of measures to provide information to older Australian about aged care, improve access to information and to establish various trials. Full details pages 117-119 in Budget Paper 2.
o Elder abuse –
$22M expenditure over five years to address elder abuse.
o 20M new spending to establish international services at Avalon Airport.
o $206.5 million new spending over four years from 2018-19 for round three of the Building Better Regions Fund, to support investment in community infrastructure and capacity building projects in regional areas, including $45.0 million to improve tourism-related infrastructure
o Already provided for in forward estimates:
▪ $1.5 billion for priority regional and urban infrastructure in New South Wales,
▪ $280.0 million for priority regional road projects in the Northern Territory
▪ $100.0 million for Monaro Highway upgrades in the Australian Capital Territory (ACT).
▪ $250.0 million to establish a Major Project Business Case Fund.
▪ $160.0 million to improve priority sections of the Outback Way between WA and QLD.
▪ $5.2 billion for priority regional and urban infrastructure in Queensland;
▪ $3.5 billion to establish the Roads of Strategic Importance initiative to support the upgrade of key regional road corridors in Australia.
▪ $1.8 billion for priority regional and urban infrastructure in South Australia.
▪ $520.8 million for priority regional infrastructure in Tasmania.
▪ $1.0 billion to establish the Urban Congestion Fund.
▪ $7.8 billion for priority regional and urban infrastructure in Victoria
▪ $3.2 billion for priority regional, urban and water infrastructure in Western Australia (WA)
▪ $518.9 million from uncommitted funding in the Infrastructure, Regional Development and Cities portfolio
▪ $47.5 million over five years from 2019-20 towards 12 projects to reduce pollution and improve the health of the Tamar River in Launceston, Tasmania
▪ $125.0 million over five years from 2017-18 to support infrastructure projects and liveability initiatives under the Western Sydney City Deal.
• Indigenous Housing
Government will provide $550 million over five years from 2018-19 to increase remote indigenous housing in the Northern Territory.
• CDP changes
Creation of 6,000 wage subsidy positions. Eligible employers will be able to apply for a two year wage subsidy of $21,0341. Changes will also be made to the scheme to create tighter conditions and reduce hours of work.
Robo-Debt program to continue. Raises $299 million over 3 years.
• Aligning student payments to HELP courses
The Government will achieve savings of $101.1 million over five years from 2017-18 by aligning eligibility for student payments for higher education courses with eligibility for the Higher Education Loan Program.
• Cashless Debit Card
Extends the cashless debit card trial in Ceduna and Western Australia for one year
• Reduced Access to welfare for migrants
202.5 million cut by ‘encouraging self-sufficiency for newly arrived migrants’ i.e. extending the time before they can claim welfare payments
• Reduced Access to welfare for refugees
Double waiting time for refugees for welfare from 13 weeks to 26 weeks. Saves $68.1 million.
• Pension changes
o $227.4 million to increase the Pension Work Bonus from $250 to $300 per fortnight to earn up to $7,800 each year without impacting their pension. It will also be expanded to allow self-employed retirees to earn up to $300 per fortnight without impacting their pension
o $20.2 million to amend the pension means test rules to encourage the development and take-up of lifetime retirement income products that can help retirees manage the risk of outliving their savings;
o $11.0 million to expand the Pension Loans Scheme to everyone over Age Pension age and to increase the maximum fortnightly income stream to 150 per cent of the Age Pension rate. This will enable Australians to use the equity in their homes to increase their incomes. 1 Page 165 budget paper 2
• Great Barrier Reef package
$535.8 million for water quality, R&D and Crown of Thorns starfish
• Movie funding
$140 million to encourage movie-making in QLD.
Raising $4.8 million over four years by raising court and Native Title Appeals Tribunal and Administrative Appeals Tribunal fees (through moving from biannual to annual indexation). Spent on budget repair.
• Court fees
Increasing High Court and Federal Court fees to raise additional $6.4M over 4 years. $4.5M to be spent on High Court security.
• DHS Cuts
1,280 jobs from Department of Human services
• Agriculture and Water Resources
10 jobs lost.
• ABC Cuts
Pauses indexation of the ABC’s operational funding $83.7 million in cuts over 4 years
• Home Affairs
Government expects to cut $256.3 million by amalgamating existing departments into Home Affairs by reducing duplication of service delivery and procurement functions.
• Attorney General
$20.3M in cuts to departmental activities. 208 ASL lost.
102 ASL lost.
• Space Agency
$41 million to establish the Australian Space Agency
• $141.1M in cuts to foreign aid over four years.