- The 2021 Federal Budget announcement is hours away, but Australians have a good idea of which key measures will be included in the nation’s next economic roadmap.
- Tax offsets, support for first-home buyers, an overhaul of the aged care system, and tweaks to child care subsidies are all expected.
- Here’s a brief list of what you can expect from today’s Federal Budget.
- Visit Business Insider Australia’s homepage for more stories.
In just a few hours, Australian taxpayers will learn exactly how the Federal Government plans to deploy their funds over the next financial year.
And while every Federal Budget has wide-ranging implications for the ways we live, work, and earn, Tuesday’s announcement will come at a crucial moment.
Australia’s economic recovery from the coronavirus crisis is underway, even as the pandemic keeps borders closed; unemployment is dropping, even as vital industries remain suppressed; a Coalition allergic to spending faces non-negotiable expenses; and tentative optimism is shrouded by the knowledge more must be done to ensure women reap the rewards of any economic ascendancy.
Treasurer Josh Frydenberg’s speech will outline how the Coalition intends to splash your cash, and detail how Australia will spend its way out of disaster. Until then, here’s what you can expect the Budget to deliver.
Low and Middle Income Tax Offset extension
What is it: A temporary tax offset, introduced in the 2018-2019 financial year, will likely be extended for a further 12 months. This financial year, the Low and Middle Income Tax Offset (LMITO) reimbursed $255 to those who earned under $37,000 a year, and provided up to $1,080 for those earning over $37,001.
Who gets it: The primary beneficiaries will be those in lower and middle tax brackets, hence the name. As a result, the measure is broadly tipped to impact women, who often work lower-earning roles and experience heightened job insecurity compared to their male counterparts. All up, some 3.4 million people will be eligible.
How much will it cost: An estimated $7.2 billion.
Infrastructure funding boost
What is it: A massive injection of Commonwealth cash into major infrastructure projects across the country, with the goal of boosting freight and commuter capacity — and potentially creating a couple of jobs in the process.
Who gets it: Projects including an intermodal terminal in Victoria, a highway project between Katoomba and Lithgow in NSW, and Adelaide’s huge north-south corridor.
How much will it cost: Around $10 billion.
Aged care funding injection
What is it: A direct response to the landmark royal commission into Australia’s aged care system, which this year provided 148 recommendations to revolutionise a field which has gravely failed older Australians.
How much will it cost: In the vicinity of $10 billion.
Jobs and training package tweaks
What is it: The JobMaker hiring credit, introduced last year to encourage businesses to take on new workers aged between 16 and 35, will be overhauled and extended past its current October 2021 end-date.
Who gets it: Employers receive up to $200 for each eligible employee registered under the scheme. Initial take-up numbers dramatically undershot government estimated, leading to the policy shake-up.
How much will it cost: The JobMaker scheme is listed as a $4 billion expense.
Child care subsidies expanded
What is it: A tweak to Australia’s child care subsidy scheme, designed to lower the final cost of child care — allowing parents to re-enter the workforce, instead of staying home to mind their young ones.
Who gets it: As another measure designed with women in mind, the shake-up will impact families across tax brackets. Subsidies for childcare top out at $10,560 per annum for families earning more than $189,390 a year. This cap will be binned under the new 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. The Sydney Morning Herald reports some 200,000 families could reap the rewards of the change.
How much will it cost: $1.7 billion over three years, kicking off in the middle of 2022.
What is it: As it stands, workers must earn more than $450 from one employer each month before that employer contributes to their superannuation fund. This minimum earning limit will reportedly be abolished in the Budget. All up, it’s another measure the Federal Government hopes will address the gap in retirement savings between everyday Australians and top earners, however marginally. (Notably, reports the Federal Government will ensure superannuation contributions apply to parental leave appear to have been wound back.)
Who gets it: Lower-income earners and those who work part-time hours across several employers will benefit.
How much will it cost: This one will rest on employers, who will be expected to cough up between $100 and $300 a year to the super funds of eligible employees.
JobSeeker funding boost
What is it: The Federal Government has lifted the base unemployment support payment to $615 a fornight, an increase of $3.50 a week. Is it commensurate to the temporary (and life-changing) doubling of the JobSeeker rate through the worst of 2020’s pandemic shutdowns? No. Are social services advocates happy with the marginal uptick in funding? No. Will it have an appreciable impact on Australia’s bottom line? Yes.
Who gets it: Australians job hunters, who are yet to benefit from the record-high levels of new job listings and falling unemployment.
How much will it cost: $9 billion over four years.
Financial support for new homeowners
What is it: In keeping with the Federal Government’s insistence that property ownership is the key to longterm financial security, a raft of supports will be unveiled with the goal of funneling more Australians into the housing market. Among these: a ‘Family Home Guarantee’ allowing single parents to buy after providing just 2% upfront, with the Federal Government covering the excess 18% of the deposit. In addition: an extension of the First Home Guarantee to an extra 10,000 prospective first-home buyers, allowing them to provide just 5% for their deposit; and an adjustment of the First Home Super Saver Scheme, allowing applicants to temporarily pump $50,000 into their super funds, up from $30,000.
Who gets it: Australians who might otherwise struggle to enter the housing market (whether these measures will only serve to inflate already sky-high prices is another matter entirely).
How much will it cost: The programs are expected to fall within the Federal Government’s projected $8.2 billion investment in all housing initiatives over the next financial year.
Reinsurance pool for northern Australia
What is it: Government-backed insurance for the insurance industry, which the Federal Government hopes will improve access and affordability for residents in cyclone-prone northern Australia.
Who gets it: The nation’s biggest insurers will be the primary beneficiaries of the fund. The Australian insurance industry says this added level of protection will lead to cheaper premiums for policy-holders.
How much will it cost: The reinsurance pool will reach $10 billion, with the precise operating model yet to be determined. In addition, $40 million has been assigned for disaster resiliency improvements for strata buildings.
Funding for private colleges
What is it: Australia’s university sector has taken a beating. Border closures have kept international students from filling local lecture halls, leading to massive revenue hits. This problem extends to the non-university sector, which will now benefit from renewed Commonwealth support.
Who gets it: Non-university tertiary education providers who can demonstrate they’ve adjusted to pandemic conditions, and some 30,000 new and existing students who accrue FEE-HELP loan fees.
How much will it cost: $53 million.