Federal Budget Summary
The following is a summary of the key measures in the budget:
1. The Personal Income Tax Plan The plan begins with permanent tax relief to middle and lower income earners, to encourage and reward working Australians and to assist with cost of living pressures.
Under Step 2, the plan will help protect incomes earned by Australians from bracket creep.The third step will make personal taxes simpler and flatter to ensure more Australians are paying lower taxes on every extra dollar they earn.
The immediate benefit for low and middle income earners will be up to $530 a year and up to $1,060 for a working couple, starting in 2018-19.
By lifting the 32.5 per cent tax bracket to $90,000 from 1 July 2018, around 200,000 taxpayers will be prevented from moving into the 37 per cent tax bracket. Further threshold changes in 2022-23 and 2024-25 will simplify and flatten personal tax rates.
Under this plan, the proportion of Australian taxpayers projected to face a marginal tax rate of 32.5 per cent or less will increase from 63 per cent to 94 per cent in 2024-25. Individuals will be able to take on additional work or advance their careers knowing their extra income will not be taxed more harshly.
This plan builds on the company tax cuts and measures to strengthen the integrity of the tax system.
Together, these changes build a better tax system to support growth through investment, more jobs and greater participation in the workforce.
2. Protecting Superannuation The Australian Taxation Office (ATO) will be given the capacity to actively reunite Australians with their lost and inactive superannuation, boosting their balances at retirement.
This will prevent people with multiple accounts from having their savings excessively eroded by fees, which will particularly benefit holders of inactive low balance accounts. These are typically young members, low income earners and seasonal workers.
Limiting fees on low balance accounts High fees can make it impossible for many Australians with low balance accounts to grow or even maintain their balances. The Government will protect these balances by capping certain fees on accounts with balances less than $6,000 at 3 per cent.
Banning exit fees The Government is making it easier and more affordable for Australians to consolidate their superannuation accounts by abolishing superannuation fund exit fees.
Tailoring insurance arrangements Insurance through superannuation may not be appropriate for all people — particularly younger members, those with low balances or those who are not making contributions. Holding fewer automatic insurance policies will allow Australians to grow their balances faster and protect low balances from being eroded entirely. Importantly, these members will still have the opportunity to obtain insurance cover if they choose to do so.
3. Boosting Financial Security
Consumer Data Right The Government will implement this by giving Australians the ability to take control of their personal data and share it safely with trusted and accredited service providers. When consumers choose to share their data, businesses will be better able to offer financial products and services tailored to individual circumstances, such as personalised budgeting tools. The Right will also enable consumers to save money through improved price comparison and switching services.
Pension Loans Scheme The Government is expanding the Pension Loans Scheme to those on full pension and self-funded retirees, to give them the option to boost their retirement income. Under this scheme, full pensioners will be able to increase their income by up to 50 per cent of the Age Pension.
Pension Work Bonus An expanded Pension Work Bonus will allow age pensioners to earn up to $300 per fortnight (up from $250) without reducing their pension payments. The Bonus will also be extended to self-employed individuals, who will now be able to earn up to $7,800 per year without reducing their pension payments.
Work test exemption The Government will provide more time for Australians aged 65 to 74 to boost their retirement savings, by introducing an exemption from the superannuation work test. This exemption will apply where an individual’s total superannuation balance is below $300,000 and will permit voluntary superannuation contributions in the first year that they do not meet the work test requirements.
Retirement Income Framework Standards of living in retirement will be boosted and retirees will have greater choice in how they receive their superannuation through the Government’s retirement income framework.
4. Corporate Tax Cuts The Government will maintain its enterprise tax plan and press ahead with tax cuts for businesses with a turnover of more than $50 million.
5. Infrastructure The Budget includes $24.5 billion for new nationally significant transport projects and initiatives that benefit people and businesses in every State and Territory, building on existing projects such as the Melbourne to Brisbane Inland Rail project and Western Sydney Airport announced in last year’s Budget. These form part of the Government’s $75 billion transport infrastructure investment over the next decade.
Science and Research Infrastructure The Government is investing an additional $1.9 billion over 12 years in national research infrastructure to help Australians deliver high impact research that can be used across our economy, from health to manufacturing to agriculture.
This brings total Government investment in national research infrastructure through the National Collaborative Research Infrastructure Strategy to $4.1 billion over 12 years.
The Government will also invest $225 million to significantly improve the accuracy and availability of satellite positioning across Australia, enhancing our use of GPS.
This new technology will be used to increase productivity across the economy, including in the agriculture, construction and logistics industries.
The Government will provide $41 million to establish a national space agency and grow the Australian space industry. This will help Australian businesses capture more of the US$340 billion a year global space industry.
Building our supercomputing capabilities The Government is continuing to invest in supercomputing, including upgrading two supercomputers with total funding of $140 million for the Pawsey Supercomputing Centre in Perth and the National Computational Infrastructure facility at the Australian National University. The Pawsey Supercomputing Centre helps advance medical research, nanotechnology, mining, construction and urban planning with high-speed calculations. It supports research to maximise combustion in supersonic engines and model the physics of extreme waves to capture energy.
6. Medical Research A 21st Century Medical Industry Growth Plan will deliver $1.3 billion to support Australia as a global health industry leader in medical technology, biotechnology and pharmaceuticals while improving health outcomes for all Australians through investments in medical innovation. The Growth Plan includes a landmark ten-year $500 million commitment to the Genomics Health Futures Mission. A further $707 million in funding from the Medical Research Future Fund will be provided to support the Frontier Health and Medical Research program, expanded clinical trials, Biomedtech programs and Industry Researcher Collaborations.
Supporting jobs in the smart economy The Government is investing around $2.4 billion over 12 years in boosting Australia’s research, science and technology capabilities to build a smarter economy and give Australians the skills they need to prosper. A $1.9 billion investment in research infrastructure over 12 years will support Australia’s world-class research sector which has made breakthroughs like a new needle-free way to deliver vaccines and the cervical cancer vaccine.
Investment in digital infrastructure to improve the accuracy of GPS and satellite imagery will promote the competitiveness of sectors like agriculture, mining, and marine industries. The Government will support the development of Australia’s artificial intelligence (AI) and machine learning capability to keep pace with global progress and improve our existing expertise in these technologies to maintain our competitiveness. Initiatives such as the Asian Innovation Strategy and SME Export Hubs will help Australian businesses and researchers tap into new growth opportunities overseas.
Boosting women’s participation in STEM careers and education The Government is continuing to equip Australians with the skills they need to innovate and make the most of opportunities offered by technology and science. A Women in Science Ambassador will encourage girls’ participation in STEM subjects, while the 10-year Plan for Women in Science will set out a long-term strategy for increasing female involvement in STEM education and careers.
7. Backing Regional Australia New funding of $102 million for biosecurity and $26.6 million to better manage costly pests and weeds will help farmers maintain access to valuable export markets.
Regional Tourism The Government is investing more than $500 million to secure the future of the Reef and the jobs it supports, including through improving water quality, combating crown-of-thorns starfish and conducting scientific research.
Supporting Regional Communities The Government is providing $200 million for a third round of the Building Better Regions Fund, which supports regional infrastructure and community investments. This is in addition to the Regional Growth Fund, which is investing $272 million in larger regional infrastructure projects that support long-term economic growth and create jobs in regions undergoing structural adjustment.
8. Hospital Funding The Government is providing record levels of funding for public hospitals, ensuring Australians have access to high-quality health care. A new public hospital agreement will deliver more than $30 billion in additional funding between 2020-21 and 2024-25 — a 30 per cent increase over the previous five years.
9. Medicare Australians can be assured that funding for the Medicare Benefits Schedule (MBS) and the Pharmaceutical Benefits Scheme (PBS) is guaranteed through the Government legislated Medicare Guarantee Fund. For 2017-18, $34.4 billion has been credited to the Fund. A further credit of $35.3 billion will be made to meet estimated MBS and PBS expenditure for 2018-19. This Budget includes $1.4 billion for new and amended listings on the PBS, including medicines to treat spinal muscular atrophy, breast cancer, relapsing-remitting multiple sclerosis and a new medicine to prevent HIV.
Schools The Government is delivering the $24.5 billion Quality Schools package. This will ensure genuine needs-based funding for Australian schools to achieve the best outcomes for all students. The Government is supporting the 23 recommendations of the landmark Review to Achieve Educational Excellence in Australian Schools. The Government will work with the States and Territories to deliver reforms in the Review.
Pre-school The Government is continuing to support Australian families to access preschool education by providing $440 million to extend the National Partnership Agreement on Universal Access to Early Childhood Education for the 2019 calendar year. This takes total preschool funding to around $870 million over the 2018 and 2019 school years.
Regional Education Building on the initiative announced in the 2017-18 Budget, the Government will provide $28.2 million to expand access to sub-bachelor programs in regional areas, and $14.0 million to fund additional places for bachelor students studying at Regional Study Hubs. The Government will make it easier for students from regional Australia to be considered independent through work, by reducing the impact of the Youth Allowance Parental Income test.
11. Cracking Down on the Black Economy In response to the Black Economy Taskforce Final Report, the Government is announcing a comprehensive approach to stamping out the black economy, levelling the playing field for all businesses, and changing perceptions that black economy behaviour is acceptable.
New measures include:
• increasing the ability of enforcement agencies to detect and disrupt black economy participants. • removing the unfair advantage black economy participation gives businesses by removing deductions for non-compliant payments and changing the Government’s procurement procedures to incentivise tax compliance in supply chains. • consulting on reforms to the Australian Business Number (ABN) system to improve the confidence the community has in identifying who they are dealing with, including development of rigorous new identification systems for company directors (DINs). • introducing an economy-wide cash payment limit for large cash transactions of $10,000 to reduce the ability of black economy operators to use cash to avoid their tax and reporting obligations and launder the proceeds of crime. • providing additional funding to the Tax Practitioners Board to take action against tax agents that facilitate activity in the black economy. • expanding the taxable payments reporting system to contractors in industries with higher identified risks of not reporting their income. The Government is also creating an Illicit Tobacco Taskforce which will investigate, prosecute and dismantle organised crime groups operating in illicit tobacco. The taxing point of tobacco will also be moved to when it enters Australia to help starve the illegal tobacco market. These measures will ensure that all Australians receive a ‘fair go’ and that exploitative and illegal behaviour is curtailed.