- Josh Frydenberg has handed down the 2021 Budget, unveiling the federal government’s planned spending measures for the next 12 months.
- They include a tax offset for middle to low income earners, childcare subsidies, and an additional $2.3 billion boost for mental health care.
- “We are better placed than nearly any other country to meet the economic challenges that lie ahead,” Frydenberg said. “Australia’s economic engine is roaring back to life.”
- Visit Business Insider Australia’s homepage for more stories.
The Morrison government has released its Federal Budget for 2021, outlining major spending initiatives and the promises it will carry into a potential election.
Delivering the annual speech from Canberra, Treasurer Josh Frydenberg emphasised the significance of this Budget, coming a little more than a year since the COVID-19 pandemic shut down the country to great cost.
“The COVID-19 recession will see our deficit reach $161 billion this year, falling to $57 billion in 2024‑25,” Frydenberg said. “With more Australians back at work, this year’s deficit is $52.7 billion lower than was expected just over six months ago in last year’s Budget.”
Frydenberg emphasised that the outlook remains bright, claiming the country was well-positioned to continue to grow.
“We are better placed than nearly any other country to meet the economic challenges that lie ahead,” he said. “Consumer sentiment is at its highest in 11 years. Business conditions reached record highs. And more Australians are in work than ever before.”
“Our plan is working. Australia’s economic engine is roaring back to life.”
Promising “record commitments on essential services, disability support, mental health, aged care and women’s safety”, this is everything you need to know about this year’s Budget.
Tax rebate for low and middle income earners
As widely expected, Australians will pocket up to $1,080 come tax time for the second consecutive year, after the Morrison government extended the temporary offset. The $7.8 billion extension will put more money in the pockets of 3.4 million Australians.
$1.9 billion more to go to vaccine rollout
Frydenberg claimed that 2.5 million doses have already been administered of various COVID-19 vaccines but that the effort would be increased in the coming months.
“In this Budget, a further $1.9 billion is allocated for the roll out of vaccines,” he said. “This Budget provides another $1.5 billion for COVID‑related health services, including for testing and tracing, respiratory clinics and telehealth.”
It comes as the Morrison government faces staunch criticism over its early ‘botched’ rollout.
$2.3 billion for mental health
Mental health services will get a billion-dollar booster. More than half of that headline figure will be directed into mental health treatment centres, with nearly $300 million more to go to suicide prevention efforts, almost $250 million for online services, and $202 million for training nurses and psychologists.
Help for homebuyers
As detailed previously, the government is rolling out three new initiatives to give Australians a lift onto the property ladder. Some 10,000 single parents will be able to get a government guaranteed loan with just a 2% deposit, while first homebuyers will be eligible with a 5% one.
The First Home Super Saver (FHSS) will be broadened, permitting Australians to drain $50,000 from their super accounts to put towards purchasing a house.
Supply meanwhile is being targeted, Frydenberg claimed, via the government’s HomeBuilder program and $2 billion to go towards affordable housing.
Businesses won big
Businesses may have been one of the biggest winners out of this Budget, with more than $20 billion lavished on them via tax incentives and cuts. Without going too deep, the government will cop a $20.7 billion bill in permitting them to carry back losses and fully expense assets. Just know that it is a lot of money and its objective is to encourage companies and businesses to spend.
There are also some sector specific breaks. Small brewers and distillers will get $255 million in tax relief as the excise relief cap jumps from $100,000 to $350,000.
Game developers meanwhile will nab a 30% refundable tax offset, intended to help them make a mark in a highly competitive $250 billion industry.
$1.7 billion in childcare subsidies
Previously, subsidies for childcare topped out at $10,560 per annum for families earning more than $189,390 a year. This cap will be binned under the new $1.7 billion scheme. In addition, families will be able to claim 95% of the childcare fees for a younger sibling if one or more of their children attend childcare.
It’s a move expected to benefit some 200,000 families.
The government claims that by reducing disincentives to work, the investment will add up to 300,000 hours of work per week, or roughly the the equivalent of around 40,000 women working an extra day per week. It estimates this will inject $1.5 billion into the economy, and maybe win it a few votes as well.
$15.2 billion for infrastructure
There’s some speculation that $10 billion of this measure was actually announced in the last Budget but never spent but either way it is being promised this year.
The funding will be spread out over 10 years and has been earmarked for projects including an intermodal terminal in Victoria, a highway project between Katoomba and Lithgow in NSW, and Adelaide’s huge north-south corridor. The goal of course being to boost freight and commuter capacity, creating jobs and injecting investment into the community in the process.
Aged care overhaul for $17.7 billion
After decades of political neglect, the aged care sector is getting a much needed overhaul. The government plans on spending over $17 billion to do so, based around the 148 recommendations made by the landmark Aged Care Royal Commission.
Frydenberg has said that the aim is to “make sure that aged care is accessible and as available as possible for as many as possible”.
Some 33,800 places will be funded to train new and existing aged care workers, while more than $200 million will be spent trying to lure nurses into aged care.
Previously employers did not need to pay superannuation to workers earning less than $450 per week but the government is abolishing this limit in a bid to close the super gap between the haves and have nots. Given it will be paid by employers, it’s not costing taxpayers a damn cent.
From July 1 next year, the government will allow people aged over 60 years to downsize their homes and put the difference into their super as part of a special contribution program. Previously the cut off was 65.
Self-funded retirees meanwhile will no longer be subject to the work test, allowing them to top up their super more easily.
More than $350 million for women’s health
In a Budget that had been tipped to focus on women, this stands as one of the headline policies. Nearly $354 million will be used to fund women’s health services, treating endometriosis and perinatal depression, as well as increasing the screening of breast and cervical cancers.
More than $26 million will be spent combatting eating disorders, $95 million will go towards screening for abnormalities during IVF, and another $13 million will try to prevent pre-term births.
$680 million for domestic violence services
The Morrison government gave an extra $150 million to DV services during the pandemic and is again increasing funding. With more than one woman being killed on average each week in Australia, it’s much needed.
$464 million to lock up refugees
Locking up refugees and “stopping boats” doesn’t come cheap. It’s costing taxpayers $464.7 million to keep those offshore detention centres like Christmas Island open.
JobMaker makeover and skills package
There is a $6.4 billion skills package here. Of that, $500 million is to expand the existing JobTrainer program until the end of 2022 with a focus on training in digital skills and upskilling in critical industries like aged care.
Another $2.7 billion will extend the ‘Boosting Apprenticeship Commencements’ program, paying businesses a subsidy of up to half of an apprentices wages over 12 months.
Nearly $24 million will expand access to basic language, reading, writing, maths and computer skills training for job seekers. Almost $130 million will be spent encouraging Australians to open their own businesses and $43 million goes to cybersecurity training.
The $1 billion JobMaker program will be extended for another year, subsidising the wages of workers under 35.
Australia is chucking $124.1 million into artificial intelligence (AI) research and industry capability led by the CSIRO.
Shut borders but incentives to relocate
Importantly, while borders are still shut to the outside world the government is pursuing foreign investment. The $550 million package will provide greater assistance to the rich via the Tax Office and other sweeteners. You can read about that here.
Arts and education sectors get a $350 million present
Around 230 projects — productions, festivals and events — will divide up grants worth $125 million. Independent cinemas will nab $20 million. Private colleges will pick up $53.6 million worth of grants.
Unis get nothing but the promise of international students
While universities miss out on an any funding increase, they will benefit from a government plan to slowly get international students back to Australia. Flying them back in this year in small groups, the idea is to keep increasing the program size into 2022 if it is successful.
JobSeeker rate and wage subsidies has been lifted
Another announcement that has come before but is wound into this Budget is the lifting of JobSeeker to $615 a fortnight. At just $3.50 extra a day it’s not going to change the world, but it’s something at least.
In return, the government is upping mutual obligations, a fancy way of describing the hoops JobSeeker recipients have to jump through to get their money. This includes showing up to employment service providers, increasing job search requirements, and introducing a controversial ‘Employer Tip-Off line’ to report job seekers who are “not genuine in their job search.”
Wage subsidies offered under the jobactive, Transition to Work and ParentsNext programs will meanwhile be increased to $10,000.
$12 million for the Matildas
In a bid to promote Australia’s (excellent) national women’s soccer side, the government will fork out $12 million to get them playing more internationals as well as invest in the next generation of talent.
NDIS costs blowing out
Not so much a spending measure as a notable item, the government has indicated that the cost of the National Disability Insurance Scheme (NDIS) is blowing out. It now expects the important scheme to come with a $30 billion price tag by 2025 and says it is fully funding the NDIS with an additional $13.2 billion in this Budget.
Open banking opening up
A policy designed to make financial services, banking and other sectors more competitive, $111 million will be spent rolling out the Consumer Data Right (CDR).
$500 million worth of admin
It’s boring but it matters. $200 million will be used to improve myGov and a further $301 million will go into the My Health Record system.
Half-price tickets and other goodies
If you haven’t heard the government is basically subsidising airlines to provide cheap domestic flights, costing those same Australians a good portion of $1.2 billion spent on the aviation sector.
There’s also $274.6 million to support Australian businesses such as travel agents, zoos and aquariums and events providers, as international tourists disappear.
The biggest policies missing from this Budget
There were a few surprises in what wasn’t included in the Budget papers. For one, the long-teased policy of paying super on parental leave didn’t show up after weeks of speculation.
Another big miss was anything resembling climate policy. While a Coalition government was hardly going to trot out a carbon tax, it was expected it would try to close some of the distance that has opened up between it and other nations, particularly as US President Joe Biden puts climate change back on the agenda.
Instead, there wasn’t so much as a squeak on anything as small as removing the luxury car tax on electric vehicles (EVs) for example. Inaction on it is expected to cost the country $3.4 trillion in the coming decades.