Budget 2015 – “Bold and Gutsy”

The main objective of this budget is “to help build a prosperous nation”. The Treasurer, Joe Hockey, announced that “it is time for all of us to contribute” and that “the time to fix the budget and strengthen the economy is now.”

WINNERS

Medical research – gets a $20 billion Medical Research Future Fund
Small to medium businesses – 1.5 per cent company tax cut and no parental leave levy
Construction firms – $11 billion in infrastructure spending
School chaplains – $245 million over five years
Defence – Spending to rise to 2 per cent of GDP within a decade
Mothers – Paid Parental Leave Scheme to pay new mothers up to $50,000

LOSERS

The sick – $7 fee increase for GP visits and cuts to hospital funding
High income earners – Deficit tax rise of two percentage points for people earning more than $180,000 a year
Pensioners – Pension age rises to 70 from 2035 and concessions cut
Families – Cuts to Family Tax Benefit Part B
Young unemployed – Under 30s face a six-month wait for a reduced dole
University students – Face higher, deregulated fees
Motorists – More expensive petrol with a fuel levy
Public servants – 16,500 job losses
Foreign aid – Reduction in foreign aid budget of $7.9 billion over five years
Indigenous people – A $500 million cut to indigenous programs over five years
Local councils – Cuts of nearly $1 billion over four years
ABC and SBS – Cuts of $43.5 million and Australia Network abandoned
Politicians, senior public servants – One-year pay freeze, gold pass travel for ex-MPs wound back then abolished

Key Measures 

• Forecast budget deficits:
  • $29.8 billion for 2014-15
  • $17.1 billion for 2015-16
  • $10.6 billion for 2016-17
  • $2.8 Billion for 2017-18
• A return to surplus in 2018-19

Key Forecasts

• 2.5% GDP growth is expected for 2014-15
• 3% GDP growth is forecast for 2015-16
• 6.25% unemployment is expected for 2014-15 and 2015-16, and 6% for 2016-17

Key Changes for Individuals and Families

• A 3 year budget repair levy (deficit tax) will apply from 1 July 2014 until 30 June 2017. This 2% tax will apply to individuals with taxable incomes in excess of $180,000.
• The dependant spouse tax offset will be abolished from 1 July 2014.
• The mature age worker tax offset will be abolished from 1 July 2014.
• The school kids bonus will be abolished.
• The first home saver accounts scheme will be abolished and the concessions won’t apply to new accounts as of budget night.
• From 1 July 2015, all Australians will pay at least $7 for GP visits, blood tests, and X-rays, and general patients will pay $5 more for prescription medication.
• The annual family income threshold for accessing Family Tax Benefit Part B will be reduced from $150,000 to $100,000. FTB B will cease when a child turns 6 years old.
• All current family assistance payments will be frozen for 2 years.

Key Changes for Businesses

• The increase in the superannuation guarantee rate will be pushed back by freezing the 9.5% rate from 1 July 2014 until 30 June 2018.
• The company income tax rate will reduce to 28.5% from 1 July 2015.
• From 1 April 2015 until 31 March 2017, the Fringe Benefits Tax rate will increase from 47% to 49% to prevent high income earners from using fringe benefits to avoid the budget repair levy.
• From 1 July 2014, a payment of up to $10,000 will be given to employers who hire a worker aged 50 or more who has been unemployed for at least six months.

Key Changes for Superannuation

•   All excess non-concessional contributions and associated earnings can be withdrawn from superannuation funds from 1 July 2013 instead of an excess contributions tax applying.
• From 1 July 2014, the cap on non-concessional contributions will increase from $150,000 to $180,000 per year or $450,000 to $540,000 over a 3 year period.

For further details of the budget analysis read our Budget 2015 PDF Report.

Sources:
Australian Government, Budget 2014-15
Knowledge Shop
Sydney Morning Herald