Federal Budget 2019: The verdict

VERDICT | Josh Frydenberg has responded to two challenges facing the economy.

Treasurer Josh Frydenberg with Minister for Finance Mathias Cormann ahead of Budget 2019. Picture: AAP

What our experts say:

Tax verdict The Aus Michael Roddan

Josh Frydenberg has responded to two challenges facing the economy with a suite of fixes to Australia’s tax system, one which is likely to face stiff political opposition.

The first is a cash splash scheduled for just after the May federal election. By expanding the low and middle income tax offset, changes to which Labor has also proposed, working Australians will be able to access more than $1000 in instant household budget relief through their tax returns posted after July. For couples, this would double to more than $2000.

After the election, billions of dollars in money households were not expecting will flow into the economy in a Kevin Rudd-style economic stimulus that could help restart faltering growth, which has taken a hit from falling house prices, droughts and floods.

However, a plan to expand the share of workers paying a 30 per cent marginal tax rate to more workers will face criticism from Labor of watering down the progressive nature of the tax system.

Cutting the marginal tax rate for workers earning up to $87,000 from 32.5 per cent to 30 per cent in addition to last year’s tax cut measure to abolish the 37 per cent marginal rate for workers earning up to $180,000 in favour of the current 32.5 per cent rate would mean 70 per cent of the country would be in same income tax bracket.

The share of revenue coming from personal income tax in Australia is high by global standards, but the government will need to avoid accusations the measures seeking to address this are overly friendly to the top end of town.

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Infrastructure verdict The Aus Andrew Clennell

Treasurer Josh Frydenberg has promised the biggest roads and rail infrastructure spend by a federal government in recent memory, lifting the 10-year promised spend of $75 billion to $100 billion, including $42.8 billion over the next four years.

In a clear sign the government wants to campaign on infrastructure and easing congestion into next month’s election, the promises include $3.5 billion for a north-south rail line through the Western Sydney Airport, $2 billion for fast rail from Melbourne to Geelong and an increase in an urban congestion fund from $1 billion to $4 billion, with billions more for road projects around the country.

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Aged verdict The Aus Rick Morton

Aged care was supposed to be the flashbang grenade that took everyone by surprise last year but that budget landed with a whimper. This year, the aged care package is even more of a fizzer with no new money for home care packages and a piecemeal approach to reform that feels a lot like tunnelling to freedom with nail clippers.

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Health verdict The Aus Sean Parnell

Ahead of its election check-up with voters, the Morrison government is taking better care of its more sensitive health problems: GPs have been promised a small payrise and more jobs, there is a much-needed top-up for mental health and chronic disease care, and long-promised research funding may now be long lasting.

The budget is light on detail, and almost absent of reform, but cash splashes instead of cuts won’t hurt the electorate - even if it is too late to save the Coalition.

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Education verdict The Aus Rebecca Urban

A record $21.4bn will flow to schools from the Commonwealth in 2020, with both government and non-government schools to benefit from increases to recurrent funding.

Initiatives geared towards boosting educational outcomes have attracted new spending, including $9.5m to boost teachers skills in mathematics and phonics instruction and $1.4m to develop strategies to boost preschool participation rates, which lag in remote and disadvantaged communities.

The Federal Government’s $450 million annual contribution to preschool funding appears uncertain beyond the end of next year, with Education Council to conduct a national review of the program.

Labor’s pledge to extend preschool funding to three-year-old’s has not been matched.

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Security verdict The Aus Paul Maley

The decision to fund the security agencies an additional half billion dollars reflects the incredibly resource-intensive nature of the work now required of them. Five years after the rise of Islamic State and the technical capabilities of the Australian Federal Police and ASIO remain as stretched as ever. Monitoring the large number of radicals at large in the community is a huge drain on the agencies’ surveillance resources. The ubiquitous use of encryption technology has made this job even harder, and, consequently, more expensive.

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Business verdict The Aus John Durie

Small business is the big winner from the budget with tax cuts and expanded access to the instant asset write-offs which will benefit more businesses employing 7.7 million workers.

Much of the budget benefits to business like the $100 billion in infrastructure spending were pre-announced, but $525 million extra in vocational training and the cash splash will all help business along with smaller items like $60 million in export grants. The government is giving the Tax Office an extra $1 billion to help claw back tax avoided by multinationals.

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Defence verdict The Aus Paul Maley

No surprises here. The government remains on track to meet its commitment to raise Defence spending to 2 per cent of GDP by 2020-21. The big ticket items, the subs, the frigates and the new Joint Strike Fighters, are accounted for. The declining tempo of operations against Islamic State in the Middle East has eased the cost of the ADF’s overseas operations.

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Jobs verdict The Aus Ewin Hannan

If you are unimpressed by the Coalition’s record on wages, skills and workplace relations, this budget is not going to convert you. After a sustained period of low wages growth, previously optimistic wage growth forecasts have been revised downwards for the next two financial years. And it wouldn’t be a Coalition budget without tricked up skills and apprenticeship funding. The hyped $525 million skills package is drowning in reallocated funding, only containing $55 million in new money over five years. That’s just 10 per cent of the headline figure over half a decade, and follows a $200 million cut last year.

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Welfare verdict The Aus Rick Morton

In four years, and for the first time, the total social security expenses for the commonwealth will hit $200 billion and that is factoring in major savings and underspends. Growth in spending is 3.6 per cent across the forwards but that figure is much smaller for welfare payments specifically.