Federal Budget 2015: Changes to childcare, paid parental leave

HOW did Treasurer Joe Hockey respond to that question from 7.30’s Leigh Sales straight after delivering the Government’s second Budget in Parliament?

AUSTRALIA’S economic future will be packed with strong growth, rising employment, cashed-up workers resuming hefty spending, and an incredible shrinking deficit.

That’s the upbeat picture from tonight’s federal Budget which starkly contrasts with the bleakness of the “Budget emergency” statement of last year.

Here are some of the key statements made by Treasurer Joe Hockey:

* “From 7:30pm tonight, small business can claim an immediate tax deduction for each and every item they purchase up to $20,000”.

* “For every dollar we spend buying China’s goods, Chinese spend $2 to consume our goods”.

* “We are investing $6b in trade agreements with China, Korea, extending to India.”

* “Tonight I am releasing the details of a new tax integrity multinational anti-avoidance law. This will stop multinationals using complex schemes to escape paying their tax.”

* “The Government is committing an extra $450 million for our intelligence capabilities to ensure that we have the very best equipment and skills necessary to keep our community safe.”

* “Next year we will spend $38 billion to support families, which includes more than $7 billion on child care.”

* “This Government will invest more than $330 million to help young and disadvantaged Australians get their start.”

* “This will include a new $212 million Youth Transition to Work programme that will fund community workers, on the ground, in high youth unemployment areas.”

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The depiction of Australia’s medium term prospects -- certain to be contested as too bold -- is so rosy the Government is likely to be accused of creating a positive mood to take into an early election.

“There will be no new taxes on the aged pension.” - Treasurer Joe Hockey

Mr Hockey told reporters he had an optimistic view of the near future and dismissed doubters by saying, “You can always look at the dark side of life.”

Now is the time for all Australians to get out there and have a go #Budget2015

— Joe Hockey (@JoeHockey) May 12, 2015

But he acknowledged the higher revenue take for the Government raised the prospect of “bracket creep” – when the buying power of a pay packet falls but the income tax demand rises.

There will be casualties to fund the Hockey economic recovery, one of them being the taxpayer-funded long boozy lunch, and another, working holiday tourism.

Aid to Indonesia was cut from $600 million to $366 million, but Treasurer Hockey said this was made according to a fixed formula and no specific country was targeted for reductions.

Meanwhile, Foreign Minister Julie Bishop will have $50 million to spend on overseas programs for “gender equality”.

This Government will invest more than $330 million to help young and disadvantaged Australians get their start #Budget2015

— Joe Hockey (@JoeHockey) May 12, 2015

There will be big spending programs worth $38 billion aimed at families, including more than $7 billion on child care, the measure the Government has already spent more than a week promoting.

Under new child care support tables, a household on a combined income of $100,000 a year will get $3749 towards 10 hours long day care a week. A family on $80,000 will receive $4089.

Under new family day care assistance, the $100,000 family will get $3692 for each child, and the $80,000 family will get $4026.

The Government will highlight the big economic picture.

“When it comes to national security there can be no shortcuts.” - Mr Hockey

Treasurer Hockey told Parliament the Budget deficit, which reached $41.billion in 2014-15, would drop to $35 billion in 2015-16 and plummet to $6.9 billion in 2018-19, defying claims significant improvement was beyond the Government.

By that projection, we could be in the vicinity of a surplus within five years.

The economy is expected to grow by 2.75 per cent in 2015-16 while household spending will rise by three per cent. The Budget also anticipates that while mining investment will fall by 25 per cent in 2015-16, non-mining investment will grow by four per cent.

Rather than introducing new taxes on you, we simply want people or companies who are avoiding their tax to pay their fair share #Budget2015

— Joe Hockey (@JoeHockey) May 12, 2015

Government revenue, mainly from taxes, will rise from 23.5 per cent of GDP in 2014-15 to 24 per cent in 2015-16, and to 24.2 per cent the following year.

Government revenue in the coming financial year will be $405.5 billion, of which the ordinary PAYE worker will contribute $194.3 billion.

Mr Hockey said the only way to combat bracket creep was to cut spending and there are several snips and trims on government outlays to reduce the burden on the Government.

“Tonight, the Government is committing an extra $450 million for our intelligence capabilities”

The Budget cracks down on “overly generous meal and entertainment expenses” claimed under the fringe benefits tax to save $295 million a year.

In another example, foreign backpackers on working holidays will lose a $20,000 tax free income threshold to pick up an extra $540 a year.

And some $325 million will be taken from recipients of the zonal tax offset who don’t actually live in the zone. This will mainly affect fly in/fly out workers in mining areas.

And families claiming Family Tax benefit B who live overseas will lose the tax benefit after six weeks away, for a saving of $42 million.

We are abolishing Fringe Benefits Tax on all portable electronic devices used for work, like mobile phones, laptops and tablets #Budget2015

— Joe Hockey (@JoeHockey) May 12, 2015

Treasurer Hockey will be criticized for not making bigger, sweeping cuts, but he said was concerned business activity would have been damaged.

He defended a spending reduction of about 0.5 per cent a year by telling reporters: “If I went any fast I would crash the economy.”

The big hope for the Government is a small business boom and Mr Hockey tonight confirmed the 1.5 per cent corporate tax cut for businesses with an annual turnover under $2 million. Unincorporated businesses will be offered a $1000 “tax discount”.

He also revealed a new program beginning tonight which to give small businesses an immediate tax write-off of up to $20,000. The offer will last until June, 2017, and is seen as a stimulus to the sector.

Mr Hockey said he hoped the assistance would unleash the cash ready to be invested in small business, with associated job creation.

The debt and deficit mess that we inherited was not of our making, but we have taken positive action that is delivering results #Budget2015

— Joe Hockey (@JoeHockey) May 12, 2015

Later, on ABC’s 730, Leigh Sales asked Mr Hockey: “Is this what political retreat looks like?”

“No, not at all. It is part of our economic plan to strengthen the foundation for our future prosperity and it is working. We are getting the budget deficit down. We are getting back to surplus, importantly, the economy will continue to grow and it will improve, its economic growth,” Mr Hockey replied.

Shadow Treasurer Chris Bowen told Leigh Sales:

“This budget sees the deficit continue to grow. It fails the Government’s own test. That figure used by Joe Hockey is plain wrong.

“Even on Joe Hockey’s own figures, his own budget shows the budget deficit doubling over four years just over the last 12 months from his own budget 12 months ago.”

Originally published as Federal Budget 2015: Changes to childcare, paid parental leave