04 May 2016

Budget 2016: The budget in five minutes

The Treasury expects non-mining investment will pick up.

Your five-minute guide to Scott Morrison's first budget.


Treasury expects households, supported by more jobs and lower petrol prices, will continue to invest and save, and that non-mining investment will pick up. The budget papers also forecast lower inflation over four years, which is one of the reasons that the RBA cut rates. A return to surplus has been pushed further out well into the future.


Modest small business tax relief will cost $5.3 billion over four years but the Treasurer will happily pay that for the goodwill it will stoke in the sector. Lowering the company tax rate to 25 per cent for businesses big and small will make Australia more competitive.


The government remains committed to the popular $40 billion Jobs for Families package included in last year's budget but has pushed its start date back a year to July 2018. That's because it's still trying to pass the family tax benefit cuts necessary to pay for it. It is hoping a more co-operative Senate after July 2 will help it get the changes through.


Scott Morrison says the government has "listened to the people" on corporate tax evasion. Anger among taxpayers is indeed white hot. But actually squeezing the forecast $3.9 billion from companies with records of sidestepping the tax man appears optimistic at best.


Jobs and the high-tech economy are the preoccupation of the defence budget narrative now, unlike the past focus on national security and terrorism. Spending is on track to meet the pledges in the defence white paper and to reach 2 per cent of GDP by 2020-21.


The government has moved to neutralise education – one of Labor's traditional campaign strengths – as an election issue and has largely succeeded. Killing off university fee deregulation will be welcomed by students while an increase in school funding shows the Coalition remains committed to public schools.


Changes to the funding for aged care residents' complex healthcare under the Aged Care Funding Instrument will deliver the largest saving to the health portfolio, with plans to halve inflation on payments to aged-care providers. The government will also cut or amend a number of items on the Medicare Benefits Schedule that its review has so far declared clinically obsolete.


Defending the modest tax cut, Mr Morrison sheepishly remarked "it's a start". Explaining the decision to target wealthier Australians with tax relief, he said low-income Australians had done well out of carbon tax compensation, which remained in place even after the tax was abolished. This is, at best, a symbolic tax cut, designed to burnish the government's low-taxing credentials before the election.


Overall the changes to super taxes are expected to net the budget an extra $2.9 billion over four years while only hurting the wealthiest 4 per cent. Tougher limits for the rich but more flexibility to encourage middle-income earners to save. A reprieve for low-income earners.


The ABC will be pleased to receive top-up funding for investigative journalism and regional news services. And while not as much as they asked for, commercial TV broadcasters will be glad to pocket $163 million in reduced licence fees.


Victoria once again misses out, getting just 7.8 per cent of the $34 billion set aside for new projects over the four years to 2019-20. There will be plenty of federal money spent on roads throughout Sydney and NSW over the next year, but little of that money will be the result of this budget.


The government is seeking to make most efficient use of its onshore detention network by upgrading some centres and closing others, and the budget emphasises the ongoing taxpayer burden of maintaining highly criticised offshore detention camps. Premium border clearance provides a way for airport operators and airlines to differentiate their offerings in the marketplace.