Treasurer Scott Morrison has donned his metaphorical red hat and beard and delivered a Santa Claus budget full of winners and a suspiciously small number of losers.
As expected, the Treasurer’s red sack is full of cash stimulus, chiefly a tax refund for 10 million workers, due in our bank accounts by the middle of next year.
A conspicuous absence of losers was a strong hint that this was an election budget. Drops in spending on pharmaceutical benefits, veterans and the unemployed were all explainable by falling unemployment, fewer wars and a more efficient system of buying drugs. Voters, get your pens ready.
But as with every federal budget, some will benefit more than others. Pity the Australians who watch or work for the ABC, as this budget has another nasty surprise for them.
LOW- AND MIDDLE-INCOME EARNERS
Get ready for a tidy sum of money to drop in your bank account in middle to late 2019.
Next financial year, workers on between $48,000 and $90,000 will get a lump sum of $530 – or roughly $10 a week – back from the government in their tax return.
For the average family with two working parents, this should give them about an extra $1000 a year, although they’ll have to wait until after they’ve lodged their tax return to see the money.
Those on $37,000-$48,000 will get $200-$530. The smaller the wage, the smaller the refund.
For workers on $37,000 or less, the refund will be a flat $200 for the year, or $3.80 a week. For high-income earners, the refund will start at $529 for anyone on $90,001 and quickly reduce to zero for someone on $125,333.
Even more generous tax cuts are on the horizon from 2022, but who knows if they will ever be legislated.
UPPER MIDDLE CLASS GET BRACKET CREEP RELIEF
Do you earn a smidge over $87,000? You’re in for some extra love.
In the 2018-19 financial year (the one that begins in July), the tax bracket that most Australian professionals dread – 32.5 per cent – will kick in at $90,000 rather than the current $87,000.
That means a worker on $90,000 in 2018 will pay roughly $135 less a year in tax than the same worker earning $90,000 in 2017.
This budget is splashing cash on the key voting demographic of less well-off retirees, allowing them to earn more while still keeping their pension and staying in their homes longer – by making it easier to get home care and/or reverse mortgage their homes to the government in exchange for pension top-ups.
There is also money to help seniors re-skill.
Workers will benefit from a fee cap of 3 per cent on accounts below $6000, a ban to exit fees when they switch super funds, a better computer system to reunite lost super accounts with their owners, and new measures to force bosses to pay superannuation entitlements.
The government boasted it would make “the largest single investment” ever into the Medical Research Future Fund of $500 million over 10 years, intending to make Australia a “world leader in genomic research”.
The government has confirmed it will fund a national space agency. Until now Australia had been one of the few developed countries without one.
SICK PEOPLE IN SMALL TOWNS
From 2019, the government will try to attract about 2100 foreign doctors to Australia with special visas so they can become GPs in rural areas.
Of course, this being a pre-election budget full of spending largesse, the biggest winner could be the Coalition government if it can manage to buy the votes of, an until now, sceptical nation still reeling from previous harsh budgets.
The national broadcaster has been hit with a funding freeze that threatens to disrupt its operations.
Tuesday’s budget cut $83.7 million from the ABC’s operational budget over three years.
Managing Director Michelle Guthrie said the funding freeze would compromise the broadcaster’s ability to meet charter requirements and serve its audiences.
The $83.7 million savings will go to other areas in the federal communications portfolio and to the budget bottom line.
Having said that, the taxman is coming for you.
In a stick and carrot move, the government is going to help fund its big tax cuts by turning the ATO into a more vicious tax-hunting machine.
The government will give it roughly $30 million a year extra to chase tax dodgers, which it expects will – after expenses – add almost $1 billion to its coffers over the next four years.
These will include more random audits and more prosecutions.
It’s not just the wealthy it will target. In recent years, the ATO has warned regular workers they are claiming too many deductions. The budget confirmed this new funding will target “over-claiming of entitlements, such as deductions by higher risk taxpayers and their agents”.
To catch tax dodgers, the ATO has used sophisticated software, including trawling of social media accounts. These mysterious “four income matching programs”, due to expire in 2018, will be continued.
The maximum you can pay as a cash purchase for anything – including houses – will be $10,000 from July 1, 2019. This is to stop crooks washing dirty money, obtained from drugs and other crime, by buying investment properties, cars and other big-ticket items.
The government also expects to claw back about $3 billion over the next four years by cracking down on the “black economy” – the murky world of everything from drug deals to tradies taking cash-in-hand.
“Mobile strike teams” are one of the more exciting methods it will employ. There’s no word on whether these troopers will come crashing through your freshly glazed kitchen window just as you’re about to pay your tradie in cash.
Australians booking domestic hotel stays are likely to pay 10 per cent extra from July 2019.
Popular foreign-owned booking sites – such as Tripadvisor – have been exempt from the 10 per cent GST. That will change from next year.
Expect to pay more for your domestic travel – or to see more Australians choose overseas holidays instead.