Last year, we said Treasurer Scott Morrison’s budget would be the last before the next election. That was before the Liberal Party shenanigans that now have Mr Morrison as PM and another budget squeezed in as a last gasp pitch to voters.
It should come as no surprise that the government has provided tax cuts and spending measures aimed at lower and middle income earners to help gain back some support ahead of the May election. Although if the preferred party polls are to be believed, the Labor Party’s budget response this evening is perhaps more relevant to your future over the next few years.
We provide a summary of the key points below.
- Real GDP growth is forecast at 2.75% for 2019/20 and 2020/21 which is down from the 3.0% forecast made in December 2018.
- Unemployment to remain 5.0%.
- Wage growth expectations have been pulled back to 2.75% for 2019/20.
- As expected, the Budget is set to return to surplus in 2019/20.
- 2019/20 government revenue is expected to be $513.8 billion versus expenses of $500.9 billion.
- $100 billion for infrastructure projects focused on delivering ‘faster and safer’ communities.
- $2 billion for a fast rail link between Melbourne and Geelong.
- $4 billion through the Urban Congestion Fund targeting the worst affected urban areas.
- $2.2 billion road safety package including spending on maintenance and repair, and bridge renewals.
- $500 million for a Commuter Park Fund allowing more Park and Ride schemes.
- $1.4 billion for the Snowy 2.0 project.
- $184 million to support tourism along the Great Ocean Road and in Geelong.
- Income tax cuts for low and middle income earners doubled from last year’s budget up to $1,080 per annum – proposed to still have a commencement date of 1 July 2018 so if legislated can be received when tax returns are lodged for the current financial year.
- A plan that by 2024/25, the marginal tax rate for incomes between $45,000 and $180,000 will be 30% plus Medicare levy.
- Extension, and increase to $30,000, for the asset write off provisions for small business. Also extended to medium sized business with annual turnover of less than $50 million.
- Commitment to cut the corporate tax rate to 25% for small and medium sized companies by 2021/22.
- Increasing the age from 65 to 67 where a work test is applied to make super contributions.
- Also extending the non-concessional bring-forward rule to 67.
- Increasing the age limit for spouse contributions from 69 to 74 years of age.
- $525 million over five years in vocational education and training (VET).
- $453 million to extend the Universal Access to Early Childhood Education until the end of 2020.
- $17.7 billion in the university sector in 2019 including new $93.7 million over four years for scholarships for students to study at regional campuses or vocational training providers.
- $64.2 million of new funding for social cohesion measures including funding for local sport, languages and community hubs.
- $58.2 million in the Safer Communities Fund.
- $328 million over four years to deliver its Fourth Action Plan under the National Plan to Reduce Violence against women and children 2010-2022.
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Keep Wealth Partners Pty Ltd (AFSL 494858). This information is of a general nature only and may not be relevant to your particular circumstances. The circumstances of each investor are different and you should seek advice from a financial planner who can consider if the strategies and products are right for you.