Joe Hockey described the budget as the next step in the Coalition Government’s economic plan. There was a stark contrast between this budget and last year’s in the message, tone and delivery. Gone is the Hockey Stick and all the talk of heavy lifting, replaced instead with encouragement and enthusiasm to ‘get out there and have a go!’ Accru Melbourne’s Daniel Arnephy outlines the key announcements.
The ABC’s post budget analysis suggested that the Government had hit the pause button on budget repair and that this was a budget from which an election platform could be based.
Although no one is sure if an election will be called in the next year, politics remains just as big a part of the budget as economics these days and the challenge now lies with the Senate to negotiate constructively to help the Budget pass. Some of the nasties of the 2014 Budget around health cuts and Family Tax Benefit still remain, although there are other areas that seem generous enough to be negotiation tools in passing the intended measures.
Big spending was everywhere in the budget. The biggest item was a $5.5 billion package for small businesses, one which Mr Hockey delivered like it was six o’clock on a Christmas morning, preceded by the story of his own family business upbringing. The next major item was a $5 billion Northern Australia Infrastructure Facility, making $5 billion concessional loans available for infrastructure projects to essentially partner with private industry.
The key economic content of the budget was confirmation that the budget deficit is $35 billion, unemployment is 6.5% and economic growth is expected to be 2.75% for 2015/16. The growth projection is the mid-range of official forecasts (2.5% – 4%) and is underpinned by assuming the iron ore price is $48/tonne for two years. Deficits are forecasted for another 4 – 5 years, essentially deferring the previous surplus goal by one year.
What is still lacking from the budget though is any serious tax reform. It had been made clear in the lead up to Budget night that negative gearing was not under consideration and Joe Hockey himself emphatically stated in his delivery speech that there will be no new taxes on super under this Government. Clearly they’re happy to run the Re:think White Paper process independent of the Budget for now, but claims of being on a credible economic path are less credible without acting on the need for serious and comprehensive tax reform.
The most relevant super and tax changes affecting individuals, families and companies are covered below.
Individuals & Families
- Personal tax rate changes due
- Streamlined motor vehicle deductions
- HELP debt repayments for Australians overseas introduced
- Taxation for working holiday makers increased
- Exemptions, levies and offset changes
- New child care subsidy
- Changes to family tax benefits
Superannuation & Pensions
- No major changes to superannuation
- Age pension eligibility tests softened
- Minor changes to superannuation release conditions and levies paid by financial institutions
Companies & Business
- Company tax and unincorporated business tax rate reductions
- Start-up businesses
- CGT roll-over relief
- FBT exemptions
- Employee share schemes
- Crowd sourced equity funding
- Big business and integrity matters