“We’re a nation of lifters, not leaners” said Treasurer Joe Hockey in his Budget speech – meaning that we all need to do a bit of heavy lifting, as he announced an unprecedented level of savings or cuts to major areas of expenditure.
But where you stand on the Federal Budget, and your reaction to it, is likely to depend on your stage of life, the age of your children, where you live, where you work - or whether you work, how you get to work, the state of your health and how, overall, it affects you professionally and personally.
Rather than unite the nation, it is likely to be a Budget that emphasises the differences between those who are relatively advantaged even if they are required - according to the Treasurer - to do their share of 'lifting', and those who are not.
Sole parents on low incomes are likely to be the hardest hit.
Having said that, there is some good news from a national perspective.
- The $20 billion medical research fund – funded by a $7 co-payment for visiting your GP – addresses the issue of a ‘brain drain’, plays to the notion of a ‘clever country, and is a long-term initiative to position Australia as a leader in cutting-edge competitive medical research.
- A further $200 million over four years has been given for dementia research.
- Small and medium business owners, of whom many are mums (and of which Motherpedia is also one) will receive a 1.5% decrease in company tax.
- New mums will benefit from a Paid Parental Leave Scheme which pays up to $50,000.
- $100 million over three years has been allocated for after-school sport and physical activity through the Australian Sports Commission.
- $50 billion will be spent on improving infrastructure (but not the NBN)
- The availability of 'home care packages' for frail, older Australians will be increased.
- $95 million has been provided to increase bowel cancer screening.
However, these good measures are offset by savings that will affect many families. The Government has made $80 billion worth of cuts to expenditure in the Budget, some of which will cut deep into State programs, specifically health, hospitals and education.
- Unemployed young people will have to wait six months before claiming a reduced benefit.
- There is a cut to Family Tax Benefit B – largely paid to sole parent families – with the eligibility threshold cut to $100,000. Low income single parents with children between 6 and 12 years will receive an additional $750 per year - apparently to make up for it!
- Families in receipt Tax Benefit A will receive less once their income hits just over $94,000.
- As noted earlier, there will be a $7 co-payment to attend the GP, pathology and imaging diagnostic tests. $2 of the co-payment goes to the health care provider and around $1.50 towards the Medical Research Fund.
- The cost of petrol will increase.
- The cost of prescriptions will increase.
- The School Kids Bonus will be cut.
- The budget for foreign aid has been cut by almost $8 billion.
- University graduates will have to start repaying HECS at a lower salary – at around $50,000 – and subsidies for courses will be cut which means the cost of degrees will increase.
- From January 2016, universities, TAFEs and private colleges will be able to set their own fees with 20% of the anticipated revenue going towards funding scholarships for those from lower socio-economic backgrounds.
- The age pension will be indexed to the Consumer Price Index (CPI) rather than average weekly earnings. While this is a reasonable move, as most other government programs are indexed against CPI, it will also mean savings for the government – and less money for pensions. The 'basket of goods' included in the CPI is also not that relevant to most people in receipt of the age pension.
- As already announced, the age pension will not be available until age 70 from 2035.
- A 2% ‘deficit levy’ will introduced for those earning more than $180,000.
There are numerous other measures which are covered extensively in news media but the key point is one we have written about previously: the fairest and most efficient means of the government addressing the fiscal imbalance it faces would be to increase the GST.
But Mr Hockey says this is up to the States. While it is the fact that all States must agree to a GST increase, Mr Hockey's stance is a politically convenient one. The Federal Government could take the leadership on this issue. By cutting deep into health, hospital and education funding to the States, Mr Hockey is challenging the States to ask for a GST increase – thus positioning the Federal Government to apportion the responsibility for a GST increase on the States, if it ever happens, rather than the Abbott Government.
The policy purpose of this year's Budget is to reduce the deficit to a relatively modest $2.8 billion in three years time – something which the Government sees as essential but others, including the Labor Party and some leading economists, do not.
In introducing tough measures now, in its first year in office, the Government is also counting on much of the memory of the pain being out of the way by the time the next election comes along in 2016 – and with two more budgets to present between now and then.
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