Quick guide to the Australian Federal Budget 2021
Treasurer Josh Frydenberg will hand down the Federal Budget on Tuesday, May 11. In short, the Budget estimates the government’s revenue and spending for each fiscal year. It also considers what's important or valuable to our nation at a given point in time.
With this in mind, here's the backdrop of the upcoming Budget:
- Despite Covid-19 impacts of 2020, a strong recovery and outlook.
- An economic bounce back and positive consumer response.
- Better than expected unemployment figures, with possibility of further job creation.
- Aussie business is generally improving.
- Income tax, childcare, super and women's economic security are notably on this year's slate.
What's already on the Budget table and what might we expect?
Ahead of Tuesday, Westpac says it expects the deficit in 2020-21 will be $155bn, down from the $197.7bn estimated by the government in December.
This likely improvement reflects a faster than expected recovery in our economy, where both the employment market and household spending have ticked up higher than most thought they would.
In summary, the government is in a position to spend $62bn in new policy measures over the Budget period to 2024-25.
Among these it's been reported that much of the spending will be on child care, aged care, employment and on those industries still impacted by border closures. Those include education and tourism, affordable housing, infrastructure, small business and health.
Indeed, expenditure plans on two of the most pressing issues at this time - child care (annual costing of $1.7bn) and aged care (annual costing of $2.5bn) - have already been well publicised.
The savings should be notable for some families and according to the Treasurer, aim to help participation in the labour market. Specifically, the childcare subsidy for families with two or more children aged five and under will increase to a maximum of 95 per cent, a measure that is expected to save around 250,000 families as much as $2,260 a year.
Another area of focus is tax for low and middle income earners. To this end, the Low and Middle Income Tax Offset is expected to be rolled over to benefit 10 million people who earn up to $90,000 a year, sparing them a tax increase.
The government will also allow the superannuation guarantee to increase to 12 per cent.
Certainly many more areas will be covered, but for now, Westpac's analysis highlights a few central themes:
- A further Covid package
- Child care savings
- A women friendly Budget
- Aged care improvements
- A focus on adding jobs
- Natural disaster recovery
Of course, Budget time tends to get most of us thinking about our own personal budgets and savings. We did a recent story on how to do a financial health check and consider a savings account that might suit you. It's worth a look!
Or go to our Family Finances Hub for a series of stories that might help your family with handy money tips this year.