The federal budget for 2017-18 was characterised by hitting banks with a new tax, a rise in Medicare levy and helping first home buyers. It forecasts an unemployment rate of 5.75%, economic growth rate of 2.75% and a deficit of $29.4 billion in 2017-18. It will raise $21 billion of new taxes over 4 years of budget cycle. The budget is projected to return to surplus of $7.4 billion in 2020-21.
Bank Levy and Banking Executives
From 1 July 2017, the largest 5 banks (Commonwealth Bank of Australia, Westpac Banking Corporation, National Australia Bank, ANZ and Macquarie Group Limited) will pay a levy of 0.06% on their client deposits, raising $6.2 billion over the next 4 years.
They will face up to $200 million in fines if they cover up misconduct by their executives. In addition, senior bank executives could be stripped of bonuses, deregistered or disqualified if they breach new accountability rules.
Medicare Levy and Health
From 1 July 2019, the Medicare levy will rise by 0.5% to 2.5% of taxable income of Australians, raising $3.55 billion a year to fund the National Disability Insurance Scheme.
An extra $2.8 billion is allocated for hospitals and $115 million for mental health, mainly for war veterans.
An allocation of $1.4 billion was made over 4 years for medical research.
A gradual lifting up of Medicare rebate will cost the budget for $2.2 billion over 4 years.
Uni Fees and Education
University course fees will be increased by 8% from 1 July 2017.
Graduates will be forced to repay HECS-HELP loans when they start earning $42,000 a year, decreased from the current threshold of $55,874.
Australian universities will be hit with funding cuts of $2.8 billion over 4 years through an efficiency dividend of 2.5% per year.
Schools will receive an extra $2.2 billion over 4 years via the re-introduction of the Gonski needs- based funding model.
First Home Buyers and Housing
From 1 July 2017, first home buyers will be eligible to salary sacrifice from their pre-taxed income and contribute to a superannuation fund ($15,000 a year and a maximum of $30,000) as confessional contribution to save for a deposit towards buying a house.
When withdrawals are made for a deposit, these contributions and earnings will be taxed at marginal rates of first home buyers, less 30% as a rebate.
Retirees downsizing to smaller dwellings will be eligible to make a non-concessional contribution of $300,000 to superannuation funds.
A “ghost tax” of up to $5,000 per annum will be imposed on foreign buyers who leave homes without occupation.
Community housing associations will be able to borrow funds at a lower interest rate to build low cost housing. Investors in low cost housing will be eligible for 60% capital gains tax concessions.
In the next 10 years, the budget allocated $75 billion for infrastructure development across States and Territories.
These include $8.4 billion for Melbourne-Brisbane inland rail link, $5.3 billion for Sydney’s second airport at Badgery’s Creek and significant investments for Bruce Highway upgrade in Queensland and Western Australian infrastructure.
Other Budget Allocations
In access of $300 million was allocated to Australian Federal Police for specialised officers targeting terrorism, organised crime and child exploitation.
A one year extension of the instant asset write off scheme for small businesses in relation to capital expenses up to $20,000. Annual temporary work visa levy of up to $18,000 per worker and one-off permanent skilled visa levy of up to $5,000.
One-off energy payment for pensioners, $75 for singles and $125 for couples.
Drug testing trial will have 5,000 welfare recipients put on voucher system if found positive in the test.