Treasurer Jim Chalmers has pledged to deliver a better tax deal for younger workers

Treasurer Jim Chalmers has pledged to deliver a budget for young Australians, and a telling picture of his own youth has emerged.

He’s older, wiser and no longer sporting a modified Nick Cave haircut, but Treasurer Jim Chalmers has promised that a new generation of younger voters will be front of mind in the May budget.

The Treasurer, 46, has pledged to tackle generational injustice in the budget and deliver a better tax deal for younger workers who are “under the pump” from rising rents, mortgages and HECS debts.

After years of complaints that there was nothing in the budget for singles and younger workers, the Treasurer has told news.com.au it was a big factor in redesigning the original tax cuts.

“One of the main reasons we changed the tax cuts is because the old stage three tax cuts were going to see young people and people on low incomes miss out,’’ he said.

“And if you look across the budget, so much of what we’re doing in the budget is about trying to get a bit of a better deal for younger people.

“The way we’ve recast the tax cuts, what we’re doing on HECS, what we’re doing on paid placements and universities, and some other announcements in the budget on Tuesday are really all about recognising that young people are under the pump.

“And they need and deserve our attention and they’ll get it in the budget.”

Under the changes the vast majority of the tax cuts flow to working age Australians aged 18 to 60. but it’s younger Australians who are getting a bigger tax cut under the changes.

Chalmers when he was younger, and proudly sporting a mullet. The budget will look to help young Australians after complaints they are usually forgotten. Picture: Facebook

The development comes as news.com.au reveals a photo of Mr Chalmers in his younger years, sporting a mullet.

Speaking on the Today Show, host Karl Stefanovic said he found the photo of the youthful Treasurer arresting.

“There he is. I guess the assumption is that he’s bringing a bit of sexy back to the budget this week,’’ he said.

“Would you would you agree with him, Katie?’’ he asked Finance Minister Kate Gallagher.

“Well, that’s a very relaxed and young looking Jim Chalmers. I haven’t seen that photo before, but I could say, that’s the kind of style that he brings to the ERC room,” she responded.

“Righto,” Stefanovic replied.

“Let’s see if it’s successful as his nights out at City Rowers back in the day, Katie appreciate your time.”

What you will get?

Workers aged 25 to 40 are big winners under the revamped tax cuts that deliver more to middle income earners, not just the rich.

By reducing tax cuts for the rich to upsize tax cuts for most workers, a worker on $100,000 will get an extra $2179 a year.

The biggest losers are workers earning $200,000 or more who will see a planned $9075 annual tax cut slashed in half to just $4546.

Workers earning between $45,000 and $135,000 will secure an extra $804 a year compared to the original tax cuts.

But when you combine that with what they were already going to get under the original changes a worker earning $100,000 was going to get a $1375 tax cut and will now secure $2179.

Federal Treasurer Jim Chalmers said he wants young people to be recognised in the budget. Picture: NCA NewsWire / Martin Ollman

Benefit for new tax cuts and stage 3 tax cuts by income level.

That’s delivering big benefits to younger workers.

“Young people are a big focus in the budget. They are a big reason why we recast the tax cuts,’’ the Treasurer told news.com.au.

“They are a big motivation for us to ensure that every taxpayer gets a tax cut, not just some taxpayers.

“And tax cuts are the most substantial way that we are helping young people in the budget but not the only way.”

Generational divide

The Treasurer said younger Australians were not having a whinge without having something to whinge about.

“I do think that there are generational issues playing out in our economy and we’re doing what we can to address them,’’ he said.

“These cost of living pressures fall disproportionately on different parts of our community. Often young people are most adversely affected.

“When the cost of living goes up, we acknowledge that. But more than acknowledge that we’re taking concrete steep steps in the budget to give younger people a fair go.”

HECS debts

Cash-strapped millennials and millions of other Australians will also have their student debt slashed by $3 billion under a cost of living measure announced on Sunday by Prime Minister Anthony Albanese.

After years of complaints there’s nothing in the budget for younger workers, singles and millennials, the Federal Government is finally taking action in a cost of living measure to address the mounting weight of student debt and rising rental costs.

Australians with a HELP debt can find out how much this is estimated to benefit them using the HELP Indexation Credit Estimator here.

By backdating this reform to last year, student loans affected by last year’s jump in indexation get this important cost-of-living relief.

Benefit of tax cuts by age.

The Government will backdate this relief to all HELP, VET Student Loan, Australian Apprenticeship Support Loan and other student support loan accounts that existed on 1 June last year.

An individual with an average HELP debt of $26,500 will see around $1200 wiped from their outstanding HELP loans this year, pending the passage of legislation.

But students with huge debts of $100,000 who have studied expensive degrees including medicine, law or even studied multiple degrees could have $5000 wiped.

“This will wipe out around $3 billion in student debt from more than three million Australians,” Education Minister Jason Clare said.

“We are doing this, and going further. We will backdate this reform to last year. This will wipe out what happened last year and make sure it never happens again.”

The Government will backdate this relief to thousands of students.

While HECS-HELP debt does not accrue interest, it is indexed for inflation every year.

This means, from June 1, anyone who hasn’t paid off their loan traditionally faces a debt rise in line with inflation, which last year was a whopping 7.1 per cent – the biggest increase in 30 years.

The Government has announced it will cap the HELP indexation rate to be the lower of either the Consumer Price Index (CPI) or the Wage Price Index (WPI) with effect from June 1, 2023.

While payments towards your HECS debt are taken out of your pay in real time, that money is not coming off your debt at the same rate.

Instead, the Australian Taxation Office (ATO) holds these funds as a credit until you file your tax return on or after July 1.

But, because indexation occurs before this on June 1, your past contributions are actually applying to the higher indexed rate, despite coming out of your pay much earlier.

This is why so many people are – despite making thousands in repayments – finding themselves in the same position or even worse off than they were the previous year.

Welcome relief

Ahead of last year’s 7.1 per cent indexation, 25-year-old Betty Zhang told news.com.au she was bracing for her debt to jump by an extra $8300.

Having studied a Bachelor in Exercise and Sport Science and then completing a Masters of Physiotherapy, Betty was looking down the barrel of a $127,000 HECS debt.

“I have a huge debt that I don’t think I’ll ever pay off in my lifetime,” she said. “My debt will only keep growing and whatever I’ve paid off won’t matter anymore.”

Originally published as Treasurer Jim Chalmers has pledged to deliver a better tax deal for younger workers