Josh Frydenberg has delivered his speech. Here’s what it means to you…
The Treasurer brought down his Budget tonight against a background that the economy is forecast to fall by 3.75 per cent this year with an unemployment rate of 8 per cent in the December quarter.
The good news: Josh expects the economy to grow 4.25 per cent and unemployment to fall to 6.5 per cent by the June quarter.
But it all anticipates COVID-19 will be fixed and won’t be a factor. The truth is: no-one knows that.
“Once the recovery has taken hold and the unemployment rate is on a clear path back to pre-crisis levels, comfortably below six per cent, we will move to the second phase where there is a deliberate shift from providing temporary and targeted support to stabilising gross and net debt as a share of the economy,” Josh tells us.
Super – at last, tackling the fees
First up, the new moves will hit back at the $450 million a year in unnecessary superannuation fees charged to consumers.
Super is a war zone, with many players fighting to get you to switch and change. But, playing on the fact that few of us look at our super before we’re aged 45 and ready to take it seriously, fees have always been a problem.
Says Josh: “Australians today are paying $450 million a year in unnecessary fees as a result of six million multiple accounts.”
Now, you’ll get:
- An online comparison tool: ‘YourSuper’
- Moves to stop an account being created for you if you move jobs – part of the reason so many Australians have multiple accounts with multiple fees.
- Even more interesting: “Superannuation funds will be required to meet an annual performance test under the guidance of the prudential regulator… Poor performing funds… will be required to notify their members of their underperformance.”
Who did best?
Businesses are in line for a new hiring credit to give jobs to those on Jobseeker aged between 16-35. The aim is to create one million jobs.
The government is committing $1.2bn to create 100,000 new apprenticeships and traineeships through a 50 per cent wage subsidy.
Australians can buy a newly built home — if it is their first property — with a deposit as small as 5 per cent under an expansion of the government’s First Home Loan Deposit Scheme.
Good news for the elderly – an additional $250 payment from December and a further $250 payment from March next year. This money comes on top of $750 payments made in April and July.
For senior Australians who keep living at home, the government is unveiling an increase of 23,000 additional home care packages worth $1.6bn.
The bringing forward to July 1 2020 of the second stage of the government’s personal income tax plan means Australians earning $40,000 will pay more than a 2- per cent less in tax. Those on $80,000 will pay about 11 per cent less tax. The low and middle income tax offset will be retained in 2020-21 as a “one-off benefit”.
Business write offs
Businesses up to $5bn in turnover will be able to write-off the full value of any eligible asset they purchase until June 2022 while losses incurred to June 2022 can be offset against prior profits made in or after 2018-29.
$14bn on infrastructure
Payment on roads and rail will give Australia 40,000 jobs. The projects:
- The Singleton Bypass and Bolivia Hill Upgrade in New South Wales
- The upgrade of the Shepparton and Warrnambool Rail Lines in Victoria
- The Coomera Connector in Queenslan
- The Wheatbelt Secondary Freight Network in Western Australia
- The Main South Road Duplication in South Australia
- The Tasman Bridge Upgrade in Tasmania
- The Carpentaria Highway Upgrades in the Northern Territory, and
- The Molonglo River Bridge in the Australian Capital Territory
The government has outlined $1.3 billion for six key manufacturing areas:
- food and beverage manufacturing
- resources technology and critical minerals processing
- medical products
- recycling and clean energy
- defence industry
- space industry
Losses up until June 2022 can be offset against prior profits made in or after the 2018-19 financial year.
“COVID-19 has turned fundamentally sound businesses into loss making businesses.
“Normally, businesses would have to return to profit before they can use these losses.
“But these are not normal times,” Frydenberg said.
The Treasurer has just announced what he describes as “the largest set of investment incentives any Australian Government has ever provided”.
On top of the various wage subsidies the Treasurer has announced tonight, the government will allow 99 per cent of businesses to write-off the full value of any eligible asset they purchase for their business.
This measure will be available for small, medium, and larger businesses with a turnover of up to $5 billion until June 2022.
“A trucking company will be able to upgrade its fleet, a farmer will be able to purchase a new harvester and a food manufacturing business will be able to expand its production line.
Tax cuts back dates
Treasurer Josh Frydenberg has confirmed stage two of the legislated tax cuts will move forward by two years, to now, and be backdated to July 1.
“Australians will have more of their own money to spend on what matters to them, generating billions of dollars of economic activity and creating 50,000 new jobs.”
- 19 per cent tax threshold lifts from 37,000 to $45,000
- 5 per cent tax threshold lifts from $90,000 to $120,000
Frydenberg says compared to 2017-18 those earning $40,000 a year will be paying 21 per cent less tax and those on $80,000 paying 11 per cent less tax.
“Under our changes, more than 7 million Australians receive tax relief of $2,000 or more this year,” he says.