Budget 2018: Scott Morrison gives seniors a lift after $41bn in repair measures

A multi-billion-dollar aged-care and retirees package will be the centrepiece of a government values statement tonight.

Treasurer Scott Morrison will deliver the budget speech tonight. Picture: Kym Smith

A multi-billion-dollar aged-care and retirees package — including 20,000 new home-care places to allow older Australians to live in their homes for longer — will be the centrepiece of a government values statement in tonight’s budget.

Scott Morrison will capitalise on $41 billion in legislated budget ­repair measures to deliver for older Australians, targeting baby boomers by providing incentives for retirees to start new businesses and help them to stay at home longer with better care.

In a pitch to disaffected ­Coalition voters, the Treasurer will for the first time include an ­official aged-care statement in the budget in a move to repair the electoral damage caused by its superannuation tax and pension reforms and past cuts worth more than $2bn to the aged-care budget. The Australian understands the aged-care reforms will include 20,000 new places for home-care recipients. There are currently 105,000 people on the national priority list for support.

Home-care packages are ­offered in four levels of support, allowing older Australians to pay for personal care, meal preparation and household chores.

The Coalition is expected to ­increase its Work Bonus program, which currently allows aged pensioners to earn $250 a fortnight without affecting the rate of their pension. A government-backed reverse mortgage scheme that ­allows part-pensioners and some self-funded retirees to borrow against the value of their home is also set to be expanded.

There has also been speculation the package for older Australians will include a rebadged pensioner energy supplement to help ease cost-of-living pressures.

GRAPHIC: What’s in the budget

The Coalition package for retirees counters Labor’s planned tax grab on franking credits, which would raid some retirees’ income from share investments.

As revealed by The Weekend Australian , the Treasurer will hold the line on spending, with the budget forecast to return to surplus a year ahead of schedule, with the figure expected to come in between $2bn and $3bn in 2019-20.

The spending restraint to date has been the greatest achieved since the period of the Hawke government from 1985-86 to 1989-90, when real outlays fell by an average of 0.8 per cent a year.

The budget will deliver tax ­relief to low and middle-income earners of up to $500 a year — or about $10 a week — through the Low Income Tax Offset, which was revealed in The Australian yesterday, at a cost to the budget of $3bn to $4bn.

With tax cuts being modest, the government will seek to make older Australians the cornerstone of the budget measures.

The Weekend Australian also revealed that high-income earners would be quarantined from having to share an even greater tax burden, with the 400,000 ­people earning more than $180,000 a year currently paying a median personal tax bill of ­almost $85,000 a year.

The budget will contain offsetting savings for new spending measures (although not for the tax relief) and will show the government keeping growth in its spending to no more than 2 per cent (allowing for inflation) over the four-year budget estimate ­period, despite the rollout of the ­National Disability Insurance Scheme.

Mr Morrison is counting on keeping to this spending growth limit as economic growth rises to three per cent to reduce spending as a share of the economy and build the size of budget surpluses.

GRAPHIC: Budget repair measures

Credit rating agencies doubted the Coalition’s ability to implement budget-repair measures after its wafer-thin victory in the 2016 election, which left it with a majority of one in the House of Representatives and only 30 of the 76 Senate seats. However, the government has been able to hold its majority in the lower house and wrangle support for measures with the support of crossbenchers and, on occasion, Labor or the Greens.

Despite the failure to implement most of the savings measures in the Abbott government’s draconian 2014-15 budget, total spending over 2017-18 is expected to be more than $10bn less than was forecast then.

The Turnbull government is claiming $41bn in budget improvement as a result of measures implemented since the 2016 election.

The biggest budget repair would have been the increase in the Medicare levy, which was expected to raise $8.2bn in its first three years. However this did not win Senate support and was scrapped last month. The Senate approved the bank levy, raising $5.5bn with the backing of both Labor and the Greens. Major measures from the 2016-17 budget that have been implemented include the $4.1bn package of high-income superannuation limits and $1.4bn in cuts to the public service, which did not require legislation.

Although aged care is now receiving additional funding, it has been the subject of more than $2bn in cuts through adjustments to the residential care funding formula. The government was also able to win Senate support for extending a freeze on indexation of family benefit thresholds, raising $1.4bn.

Measures to increase budget revenue account for about 62 per cent of the budget repair, while cuts to spending contributed 38 per cent. Budget repair measures represent 2 per cent of total budget outlays over a four-year period.

Other significant budget gains have been achieved with tighter control on programs, such as the tightening of eligibility for the disability pension, the raising of the assets test for the age pension and the crackdown on overpayments using data-matching.

Improved economic growth is helping to reduce welfare costs. Department of Social Services figures show that in the year to March, the number of jobseekers on Newstart and youth allowances had fallen by 5.5 per cent as employment has grown. The budget will show real growth in welfare costs, excluding the NDIS, has been kept to less than 2 per cent.