Finally Australia’s favourite day of the year, the day we’ve all been waiting for, is over – that’s right, ScoMo (Treasurer Scott Morrison) has dropped the 2017 Federal Budget.
As much as we know you’d love to spend the next year trawling through thousands of pages of budget documents, we’ve made it easy for you with some of the major points you need to know about.
In a budget of winners and losers there’s no doubt about one of the biggest losers this year – the big banks. These are some of the initiatives announced in the 2017 budget which target the banks:
- Increase in fines for misconduct. Breaches of misconduct will now be punished with increased fines – starting at $50 million for small banks and $200 million for large banks.
- Levy on big banks. A 0.06% levy will be imposed on the big four banks (plus Macquarie) – technically any bank with “assessed liabilities” of over $100 billion. This is predicted to reap the government over $6 billion over four years, and will be applicable as of July 1 this year.
What they said: Treasurer Scott Morrison encouraged consumers to shop around among the smaller providers if the big banks attempt to pass this levy on to customers in the form of price rises. “Take your money somewhere else and perhaps put it into a regional or smaller bank,” he said. “This does level the playing field for those smaller and regional banks.”
The budget revealed a number of measures aimed at first home buyers and housing affordability, though they might not be the comprehensive solutions young buyers in particular were looking for. Whether any of the following initiatives will go any way toward fixing the housing crisis is a question for the future though.
- First Home Super Savers Scheme. Young people attempting to save for a first home will now be able to sacrifice some of their pre-tax income into superannuation to use for a home deposit. The amount will be capped at $30,000, and will be taxed at 15%. It will be available from July 1 2017, and can begin to be accessed from July 1 2018.
- Ghost Tax. Foreign buyers can now be hit up to $5,000 in fines for leaving their properties empty.
- Retiree family home incentive. Home owners over the age of 65 will now be able to take advantage of a $300,000 non-concessional (post-tax) contribution to their superannuation upon the sale of their family home. The initiative will apply to both members of a couple if they sell, though they must have lived in the home for over 10 years.
What they said: On the first home deposit scheme for young buyers Treasurer Scott Morrison said: “Under this plan, most first home savers will be able accelerate their savings by at least 30 per cent.”
University students are some of the other biggest losers of the 2017 budget, and while the debate over school and university funding has already largely been played out in the media in the lead up to the budget, these are some of the initiatives which were confirmed:
- School funding increase. Schools will receive an $18.6 billion funding injection over the next ten years now that the coalition has adopted the Gonski needs-based funding model. Not everyone is happy though, with Labor suggesting that schools will in fact be shortchanged by $22 billion over the decade, while catholic schools have raised concern about having to increase their fees as a result of the new funding model.
- HECS threshold lowered. The budget confirms the lowering of the debt threshold to $42,000, so university graduates will now have to start paying back their student loans at a lower income.
- Tuition fee hike. The bad news continues for future university students who will now bear the brunt of a 7.5% tuition fee rise from 2018.
What they said: Labor made their position on the coalition’s education announcements clear last week with Shadow Education Minister Tanya Plibersek stating: “Students in Australia are already among the highest contributors to the cost of their own university education, so adding thousands of dollars to the cost of the degree is unfair. We also know that those students are repaying debt at the same time as every other expense is hitting them, they’re starting a family, trying to buy a house.”
Small business owners are likely to be quietly pleased with some of the budget announcements, though businesses will find it much more costly to employ foreign workers in the future.
- Asset write-off scheme. Small and medium businesses have been given an extension to take advantage of the $20,000 asset write-off scheme, with the new cut off date June 30 2018. The write-off applies to businesses with an annual turnover of under $10 million.
- Foreign worker levy. Businesses with a turnover of less than $10 million a year will now be forced to pay $1,200 a year to employ a temporary visa worker, and a one-off $3,000 payment for any employees they sponser for a permanent skilled visa.
- Company tax cut. Businesses with an annual turnover under $50 million will receive staggered tax cuts over the next few years, with businesses with a turnover less than $10 million applicable for the new 27.5% rate this financial year.
What they said: Simon Thorp, a partner at KPMG, praised the extension of the small business levy in an interview with the Sydney Morning Herald: “This will provide a much needed shot in the arm for many small businesses across the country and will stimulate the economy and increase the investment and productivity of small business.”
Australia’s energy ‘crisis’ has been one of the major talking points in politics for the past six months, with concern over a number of issues from energy prices to gas security. Despite the prominence of energy as an issue it seems to have been buried a bit in the budget, but here are some of the main points:
- Gas supply initiative. $90 million will be allocated towards increasing the country’s gas supply, including almost $30 million towards fast-tracking regulations for onshore gas development for the domestic market. $5.2 million will also be spent on studies looking at the feasibility of building pipelines from Western Australia and the Northern Territory to South Australia in order to sure up east coast supply.
- One-off pensioner payments. The budget has confirmed that single pensioners will receive $75 and couples $125 under a one-off payment scheme aimed at softening the blow of increasing energy prices. The payments will be made before June 30.
- Department cuts. In a blow for the renewable energy sector, the Australian Renewable Energy Agency will have its funding cut from $313 million to $260 million.
What they said: South Australian Senator Nick Xenophon was one of the major drivers of the one-off payment payment scheme. “This was an important concession by the Government, this will help 3 million Australians who have been battling with energy costs,” said Xenophon after the payments were agreed to by the government in March.