The federal budget for 2017 has been released by the government, presenting some benefits and drawbacks for Australians. Described by the Treasurer Scott Morrison, as “fair and responsible”, we aim to clarify exactly what this year’s federal budget means for you.
With the prospect of rising interest rates in 2017, some of those negatively affected by the budget may begin to feel under pressure. So, take a look at our summary to see the major points and get a better understanding of what’s going on. If you’re already worried about the 2017 federal budget and want to take back control of your debts, please contact us now.
Education
School students in 9400 schools around the country have fared well with the new budget. Standards are set to improve due to an additional $18.6 billion having been assigned for school funding over the next decade. However, allocation is based on a “needs” model and will not differentiate between public, private, and Catholic schools. This means some wealthier schools will experience “negative growth” or “slower growth”.
University students are to suffer from cuts and increased costs under the new budget. In total, university funding will be cut by $2.8 billion over the next four years and there will be a 7.5% increase to tuition fees from 2018. Four-year government-subsidised degrees have had a maximum increase set at $3600 and can cost no more than $50,000. Additionally, six-year medical degrees have been capped at a maximum cost of $75,000.
In a further blow to university students, loans now have to be paid back at a lower income threshold of $42,000, replacing the old $51,957 threshold. Those earning over $119,882 will be still be deemed as high income earners and must now pay 10% of their income instead of 8%. The method in which the income thresholds will be indexed allows the government to receive increased repayments in the long run.
Social Welfare and Taxation
Anti-vaxxers will receive $28 less Family Tax Benefit Part A per child, every fortnight, from July 2018. The government is taking a tough stance on parents who do not vaccinate their children and this measure is expected to raise $15 million over a four-year period. However, there will be no other cuts to Family Tax Benefit in the 2017 federal budget.
Welfare recipients are set to be drug tested in order to receive their unemployment benefits. This will be trialled among 5000 new welfare recipients and those who test positive will be given a special debit card that makes it impossible to withdraw cash. In effect, they will only be able to spend money on legitimate expenses. However, actually being intoxicated at appointments and work-for-the-dole placements will cause welfare recipients to have their payments reduced or cancelled.
Those deemed to be ‘work shy’ are also expected to be hit hard by the new budget reforms. A three-strike system will be in operation for Australians on job-search benefits and penalties apply if they fail to meet their obligations. The worst offenders can expect to have their payment cancelled for up to four weeks before they can apply again.
Additionally, older people over the age of 60 on welfare will now have to complete 10 hours of approved work per fortnight. This tough stance at Centrelink is expected to save the government $632 million over the next 5 years.
Smokers buying roll-your-own tobacco and cigars can expect to spend more under the new budget. Taxation will be brought in-line with pre-made cigarettes and will be gradually phased in from 2017 to 2020. The move is expected to net the government $360 million and will coincide with the annual 12.5% tobacco tax increases on 1 September.
Medical
Tax payers will foot the bill for a government increase to the Medicare levy from 2% to 2.5%, starting 1 July 2019. This increase will affect the majority of workers badly and will help to fund the National Disability Insurance Scheme (NDIS) as well as essential healthcare services. However, you’ll be exempt from the Medicare levy if your taxable income is below the threshold of $21,655 for singles, $36,541 for families, and $34,244 for pensioners.
Pharmaceutical expenses could be reduced as doctors are being encouraged to prescribe cheaper brands. Money will be spent to overhaul the Pharmaceutical Benefits Scheme medicine listings and this should provide some financial relief to Australians.
Housing
First time buyers are to get a boost to their housing hopes. From 1 July, 2017, first time buyers will be able to use their superannuation to create a low-tax savings account in order to build up a deposit. In total, up to $30,000 can be saved with a maximum of $15,000 a year from any pre-tax earnings. According to the government, this should leave first time buyers with 30% more than what they would have otherwise.
Baby boomers are being financially incentivised to sell their properties if they have unoccupied rooms. This measure is designed to free up the housing market and those that sell will be able to contribute an additional $300,000 to their super accounts in addition to the current annual $100,000 limit. It’s hoped that up to 50,000 properties could be made available because of this incentive.
Utility Bills
Gas production is to be examined and increased in an effort to reduce the cost of power for the domestic market. $86.3 million has been set aside to assess three onshore gas sites and their potential environmental footprint. In addition to this, the Australian Competition and Consumer Commission will have $6.6 million at its disposal to create a monitoring system for the gas market from 2017-18. Effectively, this means that there will be more detailed information available about supply and pricing.
Pensioners will be provided with $268.9 million over two years in order to help relieve the burden of energy bills. Due to come into play in 2016-17, this one-time payment will be $75 for singles and $125 for couples.
Banking
Big banks have been hit hard with a levy on liabilities of $100 million or more. This is due to take effect on 1 July and is expected to bring in $6.2 billion for the government over a four-year period. However, it’s anticipated that consumers will have to foot the bill of this new 0.06% levy in some way.
While the 2017 budget has brought some financial relief to some Australians, other areas of society will take the brunt of the incoming pressure. If you’re already struggling with debt and are fearful about the consequences the federal budget may bring to you, we’re here to help. Take a look at our Debt Solutions to learn more or contact our friendly team today.