2014 Federal Budget


2014 Federal Budget

Families

  • Paid parental leave salary cap reduced from $150k to $100k
  • $7 extra per visit to the doctor for first 10 visits, free for children under 16 after that
  • possibly extra for x-rays and pathology
  • Family Tax benefit hit, part B cut out completely if the earnings over 100k

 

High Earners

  • Temporary levy on higher income earners: Income earners over $180k will pay a 2% “deficit levy”.

 

Fuel

  • The Federal fuel excise is currently 38.1c/litre and indexing was ceased in 2001 under John Howard as a benefit to lower income families but will be re indexed from August 1 2014, it will now rise in line with inflation (CPI) twice per year

 

Pensioners

  • Retirement age to rise to 70 by 2035
  • Pension indexed to inflation(CPI) rather than wages
  • Means testing for old age pension tougher: Untaxed superannuation income included inthe health card incomes test

 

Small Business

  • Company tax rate cut by 1.5% from 1 July 2015
  • Larger companies (top 3000) will have a rate increase of 1.5% to fund paid parental leave
  • $10,000 subsidy over 24 months for businesses that employ over 50’s
  • Subsidies for businesses that employ jobseekers that haven’t got a job after 6 months of work for the dole

 

Public sector

  • Job cuts (estimate 3,000)

 

Expatriates and ABC/Australia Network

  • ABC has had its contract cancelled for Australia network despite access to China recently granted, however unclear as to whether a private broadcaster such as Sky will take over the contract
  • ABC has been partly reimbursed for having this contract cut, about $10.3mill/year.

 

Students and Youth

  • HECS cuts in at a lower salary after university
  • School leavers: Wait for 6 months for welfare after leaving school as part of encouragement for young people to look harder for work
  • 22 year old must stay on the lower youth allowance to a higher age (youth allowance rather than Newstart) till 24

 

Budget Commentary:

Chris Richardson from Access Economics has said that he is happy enough with the cuts to see progress in moving the budget to surplus and forward estimates show that it will be a small deficit in 4 years.

 

Joe Hockey commented on the Family Tax Benefit cuts that this is a supplement and hence his coining of the phrase “the age of entitlement is over and we are moving to an age of opportunity”.

 

It appears that this budget creates a start to being a “responsible budget” following the spending bailouts of the global financial crisis and other areas by the previous Government. Austerity measures were required and Australia has historically been prudent. It will be a tough budget to sell as the opposition has already signalled that they will vehemently oppose the medical related levies as a priority and clearly intend to get quite “political” about the changes. However the extra levies to top income earners and even public service and politicians (who have received a wage freeze) have not been exempt. It will be interesting to see what happens with the Australia Network overseas as Rupert Murdoch’s Sky was previously ousted in a bidding war for the contract and there was some controversy over the tendering process. Malcolm Turnbull will no doubt be updating us on this one! It is quite probable that the main issues of dissension will be centred around the re-indexation of the petrol excise and the medical co-payments going forward. It should be noted that we are continuing to see further changes to old age pension entitlement, and the utilisation of untaxed superannuation monies towards the income threshold for the healthcare card will no doubt see some interesting recalculations for seniors by Financial Planners, and probably some focus on this issue from pre-retirees. I expect to hear a lot of “argy-bargy” from the opposition about the main issues mentioned above though, as no doubt they will focus on the vote sensitive topics.

 

As always, any questions let me know.