2018 Federal Budget
Earlier tonight, Treasurer Scott Morrison handed down the Government’s final budget ahead of the 2019 federal election.
Prime Minister Malcolm Turnbull pitched this budget as one that can be sold “all the way to the election”. To this end, the Treasurer set out a clear five-point economic plan for the Government, to:
Provide tax relief for working Australians
Support business
Guarantee essential services
Invest in national security
Keep Government spending under control
A copy of the Treasurer’s 2018-19 federal budget speech can be found here.
The major announcement from tonight was the Government’s highly anticipated personal income tax cut package. From 1 July 2018, the 37 per cent tax bracket threshold will rise to $90,000, up from $87,000. In 2022-23, the 32.5 per cent tax bracket threshold will rise from $37,000 to $41,000. By 2024-25, the 37 per cent tax bracket will be abolished, meaning that Australian’s earning more than $41,000 but less than $200,000 (94 per cent of workers in total) will only pay 32.5 cents in the dollar. Essentially, more Australians will pay less personal income tax under this budget.
Another important outcome from this evening’s proceedings was the Treasurer’s announcement that Australia is due to return to a surplus of $2.2 billion by 2019-20, one year earlier than predicted. Australia’s underlying cash deficit now sits at $18.2 billion, the best budget result since the Howard Government.
Will this budget boost the Government’s chances of re-election? We will have to wait and see...
THE BOTTOM LINE
PORTFOLIO MEASURES
The Government will provide $86.8 million over four years from 2018-19 to enhance Australia’s biosecurity system. The budget also provides an additional $51.3 million over four years to boost growth in Australia's agriculture and food exports industries, and $55.2 million to establish a drinking water program in communities surrounding Army Aviation Centre Oakey, RAAF Base Williamtown, RAAF Base Tindal, and RAAF Base Pearce.
Since the 2017-18 budget, a large part of the Attorney-General's portfolio has moved to the new Home Affairs portfolio. This budget delivers $22 million over five years to protect older Australians from elder abuse under a new National Plan, $6.3 million over three years for a task force to coordinate an institutional child sexual abuse redress scheme, and $1.6 million over two years to deliver the national apology to those victims of abuse.
The budget has provided $140 million to attract international investment in the domestic film industry through a competitive incentive program. Other measures include $48.7 million to commemorate the 250th anniversary of James Cook's first voyage to Australia, $17.6 million for the SBS, and $14.2 million to support the functions of the Office of the eSafety Commissioner.
The budget has allocated $80 million over four years from 2018-19 for measures designed to enhance Australia’s defence export industry. A further $68 million in grant money will be spent over forward estimates to enhance the capabilities of small-to-medium enterprises in the defence sector. This budget does not alter last year’s $200 billion defence infrastructure spend.
In addition to the Government's previously-announced Gonski 2.0 funding package, the Government has boosted rural tertiary education by $123.6 million over five years, to help expand access to training and bachelor places across regional study hubs. The Abbott Government's school chaplains program has been extended for four years, and has revised to focus on bullying in schools, at a cost of $247 million. Early childhood education has been given a major boost, with $440.1 million over two years to extend access for pre-schoolers to 15 hours of early learning each week.
This budget makes the largest ever investment in Great Barrier Reef conservation and management, with $500 million to tackle crown-of-thorns starfish issues, boost water quality and reduce pollution. The Government has also allocated $37.6 million over five years to support measures to improve energy affordability, reliability and sustainability, including energy market transformation and energy security assessments.
The budget provides $11.3 million over two years to drive productivity improvements across the Australian Public Service. Other measures include $2.2 million over five years to reimburse lease and operating expenses for those members of the House of Representatives who represent large areas and need more than one electorate office, and funding to the four largest parliamentary parties to improve the security of voter information held by those parties.
The Government will spend $40.2 million over forward estimates on projects that support the Foreign Policy White Paper, such as opening new High Commissions. Almost $20 million funding will be provided to Papua New Guinea, while $50 million will be directed towards supporting the Netherlands’ efforts to prosecute those responsible for downing Malaysia Airlines flight MH17. Unsurprisingly, the Australian Secret Intelligence Service’s budget has been kept confidential.
The Government has announced a new medical industry plan to create more jobs in a sector that represents 2 per cent of the economy. It has also committed an extra $1.4 billion for listings on the PBS, including medicines to treat spinal muscular atrophy, breast cancer, refractory multiple myeloma and relapsing-remitting and new medicine to prevent HIV. LifeLine Australia will receive additional support, as will funding for Metal Health Research, with $125 million over 10 years.
This is the first budget since the creation of the new Home Affairs portfolio last year. The Government will spend $62.2 million over two years to continue Operation Sovereign Borders, and $68.6 million to establish an Australian Centre to Counter Child Exploitation. A further $59.1 million will be spent over forward estimates to establish a National Criminal Intelligence System for use by the Commonwealth, states and territories, to provide a uniform picture of criminal activity.
The budget will provide $316.2 million over four years to continue the transformation of Centrelink’s online platform and technological delivery of welfare payments. Other measures include $50 million to reduce Centrelink call wait times and relaxing of the Parental Income Test for access to Youth Allowance for independent students to ease financial pressures on families in regional areas.
Infrastructure has been one of the key planks of this budget, with a total spend of $24.5 billion dollars. Key commitments include $5 billion for a Melbourne airport rail link, $1.75 billion for Victoria’s North-East Link road project, and more than $2.6 billion for major road upgrades in Queensland. The Federal Government kicked in more than $1.6 billion for NSW projects, including $971 million for the Coffs Harbour bypass, $400 million to duplicate the freight rail line between Mascot and Port Botany, and $50 million for the North South Rail Link for the new Western Sydney Airport.
The Government has committed $70 million to upgrade Australia’s supercomputing and data collection technology, $50 million seed funding to set up an Australian space agency, and $29.9 million over four years to enhance Australia’s Artificial Intelligence capability to support economic growth and the productivity of Australian businesses.
The Government will deliver $550 million over five years to continue to provide property and tenancy management for indigenous people in remote communities in the Northern Territory. Other measures in the budget include $92.4 million to accelerate implementation of the GovPass Program, and $23.3 million to enhance the policy capability of the Department of Prime Minister and Cabinet.
Baby boomers won big in this budget, with the Pensions Loan Scheme being opened to all older Australians, including full rate pensioners and self-funded retirees, so that they can boost their retirement income by up to $17,800 for a couple without impacting on their eligibility for the pension or other benefits. An expanded Pension Work Bonus will allow pensioners to earn an extra $1,300 a year without reducing their pension payments. Other measures include $92.1 million to ensure continuity of support for people who are not eligible for the National Disability Insurance Scheme, and $6.7 million towards Domestic Violence Response Training (DV-Alert) for community and frontline workers.
Along with an early balance and income tax cuts, the budget has committed to changes to Australia's superannuation agenda, including having the ATO proactively finding lost super and having it sent to current person accounts, banning exit fees on superannuation accounts for when you want to change funds, and stopping funds from forcing young people to pay for life insurance policies. The Government is also persisting with its company tax cuts, which will see the corporate tax rate lowered to 25 per cent by 2026-27, while also extending the provision for small businesses to instantly write off asset purchases under $20,000 and abolishing of a 40 per cent tax on craft breweries.