Treasurer Scott Morrison will deliver the Federal Budget on May 3 and, as usual, there’s no shortage of speculation as to what it will contain.
Once the big interested centred around smokes and liquor, now it’s housing affordability and its effect on families.
Here are five things to watch out for on budget night.
The Government has made a lot of noise about housing affordability – the one issue that affects everyone: renters, home owners, investors, those wanting to get their foot in the door and those wanting to sell out for a large profit.
While prices continue to soar, especially in Sydney and Melbourne, saving for a deposit has become increasingly hard, and while a booming market may be good for some, the level of national debt concentrated in the housing sector should concern everyone.
So far, measures such as small interest rate hikes have done nothing to stop surging prices. The one thing the government could do – get rid of negative gearing that gives investors tax incentives on investment properties – is generally considered a non-starter.
Instead, look for modest deposit and new-home incentives, especially in outer metropolitan and regional areas, on the night.
The PBS cost $10.8 billion to administer last year and the government will be looking to rein in costs. It is currently working with medical industry bodies on a reform package that may reduce the prices of some prescription medication.
Generic drugs in particular are likely to be cheaper once all parties reach an agreement on pricing reform.
Changes to the Medicare levy
The Australian Council of Social Services (ACOSS) is calling for a Medicare levy for higher income earners that could raise up to $4 billion a year in revenue.
Those currently earning more than $90,000 without private health insurance are made to pay an extra 1 to 1.5 per cent Medicare levy surcharge, but are exempt if they hold a sufficient level of private health insurance.
ACOSS chief executive Dr Cassandra Goldie believes this is unfair and that those on higher incomes should be made to pay the levy because they can afford it. She also said the funds should go towards improving the National Disability Insurance Scheme (NDIS).
The government has given little indication of whether it would support such a proposal but the lure of such a huge revenue boost may be tempting.
The black economy
We’ve all done a little extra work for cash, right? That’s all well and good, but unpaid federal tax and illegitimate welfare payments cost the government an estimated $15 billion in lost revenue every year.
The government already has a taskforce in place to investigate the issue, which often involves the exploitation of students and temporary visa holders in poorly paid cash jobs. This year’s budget is likely to contain increased funding and other measures to tackle the problem.
Tax increases and welfare cuts
The majority of pre-budget speculation usually centres around tax cuts or increases and changes to welfare payments. Sadly, however, this is a non-election budget and the economy is in pretty average shape, so there’s no reason to expect any great largesse.
There may be some announcements regarding changes to welfare policy and family tax arrangements, but don’t be at all surprised if those changes remain mired in the Senate for the foreseeable future.