Federal Budget 2016: Treasurer Scott Morrison delivers low-risk election Budget

SMALL business tax cuts to drive jobs. No major savings or cash splash. Battlers super boost as wealthy slugged. Get your full wrap of the Federal Budget and what it means for Victorian families.

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A JOBS boost from small business tax cuts is the centrepiece of Scott Morrison’s low-risk election Budget.

With just 59 days until Australia goes to the polls on July 2, the Treasurer handed down a Budget virtually devoid of major spending or cuts.

So careful was the economic reform, the Budget will bring only a $1.7 billion improvement to Australia’s bottom line in the first year.

The nation’s debt is set to keep rising for the next three years, peaking at $356 billion in 2019 before beginning to fall.

The deficit this year of $39.9 billion will be $37.1 billion next year, a deterioration from the $33.7 billion projected in the mid-year update.

It is tipped to fall to $6 billion in four years — if the Senate passes laws allowing $13 billion in blocked savings to pass.

Treasurer Scott Morrison delivering his Budget Speech. Picture Kym Smith

Mr Morrison sold his first Budget as a responsible economic plan for the next decade, saying it was the Budget “we can afford”.

“When I say ‘This isn’t like any other Budget’, I mean it,’’ he said.

The losers in the Budget include smokers, who will see the price of cigarettes rise from $25 a packet to almost $40 a packet in four years.

And people earning more than $250,000 will see tax on their superannuation contributions doubled.

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Winners included the 500,000 on $80,000-$87,000 a year, who will get income tax cuts of around $315 a year.

The ending in a year of the Temporary Budget Repair levy of 2 per cent for people on over $180,000, coupled with those tax cuts, give high-income earners significant tax relief.

At the other end of the pay scale, three million low-income workers will be spared a $500 superannuation tax slug.

The Budget’s central element is a 10-year plan to cut company tax for small and medium businesses. And bosses will be paid up to $10,000 to employ young people.

The Budget was delivered on the same day the Reserve Bank handed down a 0.25-percentage-point cut in official interest rates, to 1.75 per cent.

Mr Morrison said the income tax cuts were modest.

“I am not claiming this is some great big tax cut. That’s not its purpose,’’ he said.

“In this Budget we haven’t spent more than we have saved. We haven’t added to the tax burden. We have a plan for getting us through this economic transition.’’

He indicated the efforts to reduce the deficit and attack debt was a down-payment on what the government hoped to do should it be re-elected.

Key elements of the 2016-2017 Budget include:

AN immediate company tax cut for 870,000 small businesses, down to 27.5c.

A FREEZING of Medicare rebates at $37.

ALLOWING firms turning over up to $10 million immediate access to the instant tax write-off for assets of up to $20,000.

SPENDING of $840 million on a youth jobs scheme.

A ROAD-rail package of $50 billion, including $594 million for a Melbourne-Brisbane inland rail project.

A REVIEW of 30,000 disability support pensioners’ eligibility for the benefit.

FOUR years of 12.5 per cent tax hikes on cigarettes.
HIRING of 1000-plus specialists in the tax office to recover $3.9 billion in tax from profit-shifting multinationals.

Shadow treasurer Chris Bowen said the Budget was “fiscal recklessness on a grand scale, proposing an unfunded and uncosted 5 per cent company tax cut over 10 years, which has the potential to put our AAA credit rating at risk”.

$840m carrot to ditch the dole

THOUSANDS of dollars will be dished out to employers and the long-term unemployed in an effort to get people off the dole and into work.

More than $840 million has been allocated for two employment programs to be rolled out over four years to encourage vulnerable young Aussies to start their own businesses or find and stay in work.

From April 30,000 young Australians each year will receive six weeks of pre-employment training in a measure designed to provide “basic employability skills” such as presentation advice and computer training. Job seekers will then be paired up with businesses for up to three months as ­interns working between 15 and 25 hours a week.

During this phase, employers will be given an extra $1000 from the government and job seekers will receive “incentive payments” of $200 a fortnight on top of their income support payments. After three months, employers who hire eligible young people will receive wage subsidies of between $6500 and $10,000.

An extra $87 million will be spent on workshops, starter packs and mentor services to boost self-employment.

Both initiatives will be funded by cuts to other programs, including a $494 million saving by forcing job seekers to wait 12 months before receiving dole payments, instead of six months.

Coalition to slash social security

FAMILIES and pensioners will lose more than $300 a year and welfare eligibility will be tighten as the Turnbull Government tries to trim its $150 billion social security bill.

The Coalition will also push ahead with its three-year campaign to abolish Family Tax Benefits and will cancel backdated payments for new carers in a measure that will save more than $100 million.

Welfare payments — which include pensions and allowances for families, the unemployed, sick and veterans — are the Commonwealth’s biggest expense, accounting of 35 per cent of Budget expenditure.

The government will save $1.4 billion over five years by axing two payments — the Energy Supplement and Single Income Family Supplement — which were introduced as compensation for the carbon tax.

The payment is worth up to $300 a year for families and between $7.90 and $14.10 a fortnight for pensioners and will be phased out for all new recipients from September.

The government has also banked more than $62 million over five years by kicking some of the 785,000 recipients of the Disability Support Pension off the payment.

More than 90,000 recipients at “high risk of not being eligible for the payment” will have their work capacity assessed over the next three years by government-allocated doctors or allied health professionals.

The government was poised to tighten up the DSP after a review into the sector by former Mission Australia chief Patrick McClure found that 50 per cent of people receiving the payment had conditions that could improve over time, such as psychiatric conditions and musculoskeletal problems.

- Annika Smethurst

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@ellenwhinnett