Budget 2016: Slogan Pushes Jobs and Growth
Tuesday, 3rd May 2016 at 8:21 pm
Federal Treasurer Scott Morrison has delivered his first federal budget describing it is an economic plan for the future, addressing jobs, tax reform, superannuation changes and a National Disability Insurance Scheme Savings Fund.
With a slogan of “jobs and growth”, Morrison told federal Parliament that the government’s economic plan was the foundation on which Australia can “build a more secure future in a stronger, new economy with more jobs”.
“This budget is a practical, targeted and responsible economic plan that meets these challenges by clearing the way for jobs and growth, in a stronger, more diversified new economy,” Morrison said.
The budget revealed a 10 year enterprise tax plan to support jobs and growth.
“From 1 July this year, the small business tax rate will be lowered to 27.5 per cent and the turnover threshold for small businesses able to access it will be increased from $2 million to $10 million,” he said.
“This means businesses with a turnover of less than $10 million will also be able to access other tax incentives.”
Morrison also announced that the small business tax rate would be lowered to 27.5 per cent from 1 July this year, and the government will increase the upper-limit for the middle-income tax bracket from $80,000 to $87,000 per year.
However, the government held back from removing or limiting negative gearing. The treasurer said that that would increase the tax burden on Australians who were just trying to invest and provide a future for their families.
In terms of a further crackdown on multinational tax avoidance, the government confirmed new laws to be backed up by a new operational task force of more than 1,000 specialist staff in the ATO to police and prosecute companies, multinationals and high wealth individuals not paying the tax they should.
From 1 July 2017, the treasurer said the government will be reducing access to generous superannuation tax concessions for the most wealthy by:
- introducing a transfer balance cap of $1.6 million on amounts moving into the tax-free retirement phase, with balances able to increase above this cap, on account of tax free earnings once transferred
- extending the 30 per cent tax on concessional contributions to those earning over $250,000
- reducing the annual cap on concessional superannuation contributions to $25,000
- from now, establishing a lifetime non-concessional contributions cap of $500,000.
The treasurer said that in addition to tightening access to tax concessions, the government would introduce a Low Income Superannuation Tax Offset from 1 July 2017, to ensure that people earning less than $37,000 are not paying more tax on their superannuation than they are on their income.
“This will effectively allow individuals with an adjusted taxable income of up to $37,000 to receive a refund into their superannuation account of the tax paid on their concessional contributions, up to a cap of $500,” Morrison said.
“The Low Income Superannuation Tax Offset will, in particular, assist around two million low income women to build their superannuation savings.”
Morrison said the government was trying new ways to get young people into jobs.
“The cost of not doing so resigns thousands of young Australians to a lifetime of welfare dependency. In addition to the financial cost, the social and human cost is too great for our country to ignore,” he said.
“That is why the Youth Jobs PaTH is such an important part of the Turnbull Government’s economic plan for jobs and growth.
“We have already announced we will provide an estimated additional $2.9 billion over three years for public hospital services. The additional funding is linked to reforms that focus on improving patient safety and the quality of services, and reducing avoidable hospitalisations.
“The government will also deliver a new approach to funding essential dental services for children and low income adults.
“The Commonwealth effectively provides around 53 per cent of education expenditure by States and Territories, once Commonwealth general revenue assistance is taken into account. Between 2018 and 2020, the Commonwealth will also provide $1.2 billion in additional funding for government and non-government schools.
“This funding will grow by 3.56 per cent … and will be contingent on reform efforts from the states and non-government schools sector to get better outcomes for students and parents.”
The treasurer said that to meet the future costs of the National Disability Insurance Scheme due to be implemented nationally from July 1, the government is establishing an NDIS Savings Fund.
“This fund will hold unspent funds from the NDIS as well as the proceeds of savings measures from better targeting our welfare spending. These funds can then be reinvested back into delivering the NDIS and contribute to filling the current funding gap that exists,” he said.
Social Services Minister Christian Porter said the government would meet future NDIS costs through a deposit of $2.1 billion of budget savings into the NDIS Savings Fund Special Account, once it is established.
“Savings in the NDIS Savings Fund will be quarantined, locking them in as protected forward contributions to the NDIS,” Porter said.
“This will help make up Labor’s $4.4 billion shortfall in NDIS funding in 2019‑20, which increases to over $5 billion per annum in the following years.
“Savings of $711.2 million over five years that were achieved through finalising transitional arrangements with states and territories, will also be set aside in the Savings Fund for re-investment in the NDIS.”
He said the savings measures committed to the Savings Fund include:
- Closing carbon tax compensation for new welfare recipients from 20 September 2016 at a saving of $1.3 billion over five years.
- Closing carbon tax compensation for those single income families not already in the welfare system but who will enter the welfare system from 1 July 2017, with a saving of $67.2 million over five years.
- Additional reviews for Disability Support Pension recipients, with a saving of $62.1 million over five years.
Opposition leader Bill Shorten said in response to the budget that: “Australians would be waking up to realise that 75 per cent of all Australian workers, people who earn less than $80,000, haven’t got a cent out of the budget, and yet they’re seeing their family payments undermined, they’re seeing their funding for hospitals and schools cut”.
“This is a great budget for millionaires, it’s just not so good for battlers,” he said.
“This is a budget that puts high income earners as more important than families.”
CEO of the Community Council for Australia, David Crosbie said the federal budget fiddled around the edges, but changed very little in the short term, leaving the charities and Not for Profit sector facing ongoing uncertainty.
“All governments tax and spend. All governments seek to increase productivity, investment and jobs. It now seems all governments continue to promise for the future what they cannot deliver in the short term – increased productivity and a balanced budget,” he said.
David Crosbie will be taking part in Pro Bono Australia’s post budget webinar Wednesday at 3.30 EST. Bookings can still be made up until 1230. Book here.