How will the budget affect working people?

The Australian Council of Trade Unions (ACTU) has produced a detailed analysis of the 2015-16 Federal Budget.

“This budget is a missed opportunity to stimulate the economy with spending on infrastructure that would have boosted our manufacturing industry and created new jobs and apprenticeships,” said ACTU President Ged Kearney.

Jobs

A single wage subsidy pool will be established with access to funding of $1.2 billion over four years, and last year’s new Restart program for job seekers aged over 50 will be revamped to give employers access to wage subsidies of up to $10,000 earlier.

Young workers

The government has dramatically scaled back the harsh ‘earn or learn’ measures from last year, which would have forced job seekers aged 30 and under to wait six months before receiving Newstart or youth allowance. This backdown will strip $2 billion from the bottom line over five years. Instead, under 25-year-olds will need to wait four weeks for assistance. The Budget also allocates $25 million to enforce mutual obligation requirements for job seekers. Overall, $330 million has been provided to a youth employment strategy, including $212 million for a transition to work program for disengaged young people and $106 million for intensive support for key groups of vulnerable young people.

Pensions

A major shake-up of the treatment of assets for eligibility to the aged pension will result in a boost to the pension for about 170,000 people. Under the changes, the threshold for assets (apart from the family home) will be raised, upgrading about 50,000 to the full pension. But for those with assets above the threshold the taper rate will double to $3 for every $1000 of assets. It is estimated that these changes will cut about $2.4 billion from spending on the pension, even after the government decided not to go ahead with unpopular changes to the indexation of the pension and other payments which would have cut its value over time.

Childcare

A simplified, single childcare subsidy which will come into effect from July 2017 is the centrepiece of a $4.4 billion families package, which includes $3.2 billion in new childcare funding. It will be means and activities tested, so that families earning $65,000 or less will receive a subsidy of 85% of their childcare fees, tapering to 50% for families with earning $165,000 a year, and capped at $10,000 per child for families earning more than $180,000. The government is spending an extra $327.7 million to establish a ‘childcare safety net’ for disadvantaged, vulnerable and special needs children. It is also spending $250 million on a trial of home-based nannies, which will begin in January next year. The government says this will help shift workers.

Paid parental leave

One of the most controversial changes in the 2015-16 Budget is the scaling back of the paid parental leave scheme introduced by the Labor Government in 2010, which guaranteed new parents 18 weeks pay at the minimum wage, in addition to what their employer already provided. But from next July, access to the government PPL scheme will be reduced or even cut completely if an employer also provides a payment. The government calls this ‘double dipping’ and expects to save $967.7 million over four years from the change.

Industry assistance

The demise of Australia’s carmaking industry will have a silver lining for Treasury by saving $795 million that had been allocated to the Automotive Transformation Scheme over seven years from 2014-15, while still spending $783 million over the forward estimates. Funding has been cut for other key industry and research programs, including Co-operative Research Centres, Commercialisation Australia, Enterprise Connect and Industry Innovation Precincts, saving $58.5 million. There is no money to replace programs that were cut last year, including the Tools for Your Trade scheme for apprentices.

Infrastructure

A special $5 billion loan facility will be available to the governments of Western Australia, Queensland and the Northern Territory for construction and infrastructure projects. Additionally, a one-off payment of $499.1 million will be made to the Western Australian government for infrastructure projects to compensate for the downturn of the iron ore boom.

Public sector jobs

The slashing of the public service since the election of the Abbott Government is set to stop in 2015-16, with confirmation in the Budget Papers that more than 17,300 jobs have been cut in the Australian Public Service (outside of the military) and average staffing levels have fallen from 179,953 in 2012-13 to 167,411 this year. This is the smallest public sector since 2006-7, and has come at a cost of $212 million in redundancy payments.

Healthcare

After the backlash to last year’s Budget proposal of a $7 GP co-payment, there are only modest changes in this year’s Budget. From next January, parents who refuse to have their children vaccinated, except for credible medical reasons, will lose access to childcare payments and Family Tax Benefit Part A, which will save $508.3 million, while $252.2 million will be saved from price changes for some medicines on the Pharmaceutical Benefits Scheme.

Schools

The Budget confirms that the Abbott Government will not honour the final two years of the Gonski agreements on schools funding to the states. Two-thirds of extra funding was due to be delivered in the years five and six of Gonski, and by failing to honour the agreements beyond 2016-17 and cutting indexation of schools funding beyond that, the Abbott Government will cut approximately $3.8 billion from schools in 2019 and 2020. For public schools alone this is the equivalent of cutting 20,000 educators from schools, according to the Australian Education Union. There was also no new funding to support students with a disability in schools.

Higher education

After failing to convince the Senate to pass deregulation of university fees and higher interest payments on HELP loans, the government has this year explored a more modest option of requiring graduates living and working overseas and earning over $53,345 to begin making minimum repayments of their HELP debts. But this will only bring $26 million into the government coffers.

Privatisation

The government will explore the sale of the Australian Rail Track Corporation, although no figure has been put in the Budget Papers on how much this could raise. It is also looking at outsourcing to a private operator the activities of the Australian Securities and Investment Commission Registry.

The workplace

Extra resources will be pumped into the Office of the Fair Work Building Inspectorate, which had its coercive powers extended by the Senate on Monday, with its budget more than doubling to $35.2 million, and staff growing to 155. But funds will be cut from the Asbestos Safety and Eradication Agency, while the Fair Work Ombudsman will lose 25 staff, taking total numbers down to 685. Just $3.7 million has been allocated over four years to tighten the 457 visa program following the recommendations of a review earlier this year.

Tax

After lobbying by domestic retailers, the GST will be applied to overseas suppliers of digital products and services – such as Netflix – from July 2017. This is estimated to bring in an additional $350 million in revenue over the forward estimates period. About 30 large multinational companies who are suspected of diverting profits by using artificial structures to avoid tax will come under the scrutiny of a new regime which could see them facing penalties of up to 100% of the tax they owe and interest.

Small business

The company tax rate for all companies turning over $2 million or less a year will be cut by 1.5% to 28.5%. For unincorporated companies, there will be a 5% tax discount, up to $1000 a year. Small businesses will also be entitled to an immediate tax deduction for every asset they buy costing less than $20,000, up from a threshold of $1000. The total cost of these changes will be $5.3 billion over four years.

2 thoughts on “How will the budget affect working people?

  1. The Budget is also bringing changes to how the Age Pension Income Test treats those who also receive income from Defined Benefit Pension Schemes. This measure will affect 35% of retired public servants – so will affect PSS & CSS retirees.

  2. Healthcare
    – changes to PBS Safety Net – increase to the number of prescriptions required before reaching the Safety Net; so increased costs to the patient
    – freeze on rebates for visits to the Doctor – which means some Doctors will increase fees

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