Federal Budget 2015: Small businesses and families the big winners

THE Budget is full of sweeteners for small businesses and families, with the aim of securing Joe Hockey and Tony Abbott’s jobs.

TONIGHT’S Budget is littered with sweeteners for small businesses and families, with the aim of securing Joe Hockey and Tony Abbott’s jobs as Treasurer and Prime Minister.

Mr Abbott sat on the government benches next to Julie Bishop, who was wearing a sparkly blue blazer, and listened to Mr Hockey’s budget speech, looking pensive.

Making his point ... Treasurer Joe Hockey delivers the budget as Julie Bishop, Tony Abbott and Scott Morrison watch on. Photo by Stefan Postles/Getty Images

Malcolm Turnbull looked attentive throughout the speech. So too did Scott Morrison who was touted as a potential for Mr Hockey.

Afterwards, Mr Hockey received a standing ovation from his government colleagues. Labor MPs encouraged him to shake Scott Morrison’s hand, however, there was much space between the pair.

LABOR TAKES AIM AT ABBOTT

The Federal Budget is a short-sighted attempt to save Prime Minister Tony Abbott’s job, Labor said shortly after its delivery. Shadow treasurer Chris Bowen said the deficit had been doubled by the coalition government within one year.

He says the worst aspects of last year’s budget - the $80 billion cut from hospitals and schools, $100,000 university degrees and cuts to family payments - remain in place.

“The fundamental unfairness of last year’s budget disaster remains tonight,” Mr Bowen said.

“This is a short-term budget to fix a short-term political problem and save one man’s job.”

The budget papers included 17 new taxes, breaking a coalition election promise, Mr Bowen said.

Round of applause ....Treasurer Joe Hockey is cheered by his colleagues during his Budget speech in the House of Representatives. Pic: Kym Smith

BUSINESS STEPS IN BEHIND GOVERMENT

On top of the government’s $4.4 billion families package, small businesses will be able to access tax write offs for all purchases of up to $20,000 in a budget measure designed to stimulate the economy.

As Mr Hockey announced the small business measures, Labor MPs heckled while Government MPs cheered.

The business lobby has locked in behind the coalition government, demanding Labor and the minor parties in the Senate pass measures it believes will boost productivity and growth. “Australia cannot afford another 12 months of obstruction and denial. The budget is without a doubt a shot in the arm for small business,” Business Council of Australia CEO Jennifer Westacott said.

Joe Hockey’s young son Xavier was seen falling asleep as he watched his dad deliver the budget speech. Mr Hockey’s wife was also present.

Among the night’s biggest losers are stay-at-home mums, multinational tax-dodgers and expectant mothers.

Seal of approval ... Joe Hockey with two of his children, Adelaide and Ignatius, in the House of Representatives. Adelaide reads his speech. Pic: Gary Ramage

SMALL BUSINESS SURPRISE

The biggest surprise of the 2015-16 budget is a $1.75 billion measure that would allow small businesses to receive an immediate deduction on each and every asset costing less than $20,000 purchased between Budget night and 30 June 2017.

The tax write off is up from the previous $1000 threshold and applies to any small business — including sole traders — who have an annual turnover of less than $2 million. Purchases would not be limited and apply to anything relating to the business.

“This will be of enormous benefit to their bottom line and help businesses with their cash flow,” Mr Hockey, who grew up in a small business family, said.

Mr Hockey said he welcomed as many small businesses as possible claiming the deductions.

“I say fantastic,” he said when asked if it exceeded the budget forecast.

“Because that will show the economy is growing better than we expected.”

Other measures aimed at small business include a company tax rate cut to 28.5 per cent. Unincorporated small businesses will also benefit from a 5 per cent tax discount of up to $1000 a year.

SAVINGS ‘CAREFULLY TARGETED’

Savings measures in tonight’s budget were carefully targeted at multinational tax-dodgers, foreign investors, rich retirees, welfare cheats and foreign workers.

Rich retirees were one of the losers in tonight’s Budget.

Following a huge backlash to last year’s budget, Mr Abbott and Mr Hockey will be hoping they hit the right note with Budget 2015-16.

In February Mr Abbott stared down a test of his leadership in his party room following months of instability resulting from the 2014-15 budget.

Both Mr Turnbull and Ms Bishop were touted as replacements for Mr Abbott.

Those in support of a change have said that they wanted to wait and see what was in this year’s budget to see if another push for change was needed.

“This will be a big test,” one told News Corp Australia this morning.

Mr Abbott’s infamous chief of staff Peta Credlin was also in the chamber for Mr Hockey’s speech.

Ms Credlin has only made one other appearance in the chamber since the February leadership spill and calls for her to be sacked.

‘SWEETENERS’ FOR FAMILIES

As previously announced a $4.4 billion families package will help make the cost of living and childcare easier for Australians as part of the budget measures.

Families earning around $65,000 or less will receive a subsidy of 85 per cent of their child care fees.

Not all families are equal in the Budget ... Childcare benefits are better for parents who work.

The $7500 cap on the childcare rebate will be scrapped for middle and low-income families and capped at $10,000 for higher earners.

However stay-at-home mums will no longer get childcare benefits unless they can demonstrate that they are working or studying at least four hours a week.

Women thinking about having children will have their paid parental leave reduced, despite Tony Abbott coming into office promising better conditions for parental leave.

From July 1, 2015 expectant mothers will no longer be able to claim both their employer parental leave scheme and the government’s 18-week minimum wage payment.

In healthcare measures the government is still pushing ahead with its planned rise to prescription medicine by $5 a script from January next year.

Health checks for four-year-olds will be cut and so too will the child dental scheme.

The spending on the medical research future fund is being slashed by $1.3 billion to $3.487 billion and the $1 billion e-health record will get a further injection of funding and will switch to an opt out model.

BUDGET CRISIS AVERTED?

Tonight’s budget showed that the forecast deficit was down from an expected $41 billion to $35 billion.

The government is pushing ahead with its planned rise to prescription medicine by $5 a script from January next year.

The deficit is expected to reduce to just $6.9 billion in 2018-19 with an underlying cash surplus still on track for 2019-20.

Net debt is $285.8 billion rising to $313.4 billion in 2017/18 and then to 323.7 billion the following year.

A total of $90 billion has been lost in expected tax receipts since the 2013 Pre-Election Economic and Fiscal Outlook.

Tax receipts have been downgraded by $52 billion since the 2014 Budget. Over $20 billion of which were a direct result of the fall in the iron ore price.

Among the other measures in the budget included a “Netflix tax” in which digital movies, TV, books and music delivered by overseas companies will cost 10 per cent more from July 2017 raising $350 million over the next four years.

DEFENCE, COUNTERTERRORISM BIG WINNERS

A total of $1.2 billion in extra funding for Defence was also outlined in the budget taking the total spend to over $2 billion.

Savings measures in tonight’s budget were carefully targeted foreign workers.

The government will invest $450 million in new intelligence measures to protect Australians from extremists. A total of $750 million will be provided to expand military operations in Afghanistan, Iraq and the Middle East.

The foreign aid budget will be cut by around $1 billion with Indonesia suffering a 40 per cent drop after previously being the biggest recipient of Australian aid in 2014.

Mr Hockey said there “wasn’t any specific targeting of any country at all” despite the fallout over the Bali Nine executions.

Backpackers will also be targeted by the budget with working holiday visitors to be taxed at 32.5 cents from the first dollar they earn, up from 19 cents in the dollar on taxable income above the tax free threshold from July 2016. The measure will generate around $540 million for the budget bottom line.

Changes to passports fees and other charges will also raise a further $17.1 million for the government.

Treasurer Joe Hockey after his Budget speech in the House of Representatives Chamber, Parliament House in Canberra. Pic: Kym Smith

TAX AND WELFARE CHEATS TARGETED

Multinational tax cheats will feel the budget pain with companies who try and scam the system forced to pay back double the amount of tax they dodged plus interest.

The budget papers said there were 30 companies that were currently being targeted.

Welfare cheats however get a slight reprieve with the six month wait for the dole for young people to be scrapped and replaced with a new 4 week wait period for under 25s.

Tens of thousands of wealthy retirees will no longer receive the full pension, and many will also see a reduced part-pension as the government drops the eligibility threshold.

However 170,000 pensioners with modest assets will have their pensions increased by an average of $30 a fortnight provided they own their own home and have additional assets worth less than $250,000 for singles and $374,000 for couples.

“I believe our nation’s best days are ahead of us so now is the time for all Australians to get out there and have a go,” Mr Hockey said in his budget speech.

“This budget is responsible, measured and fair.”

Originally published as Federal Budget 2015: Small businesses and families the big winners