The Honourable Scott Morrison MP, Treasurer of the Commonwealth of Australia, released the Budget 2018–19 on Tuesday evening (8 May), outlining the measures that the Turnbull government will take in the year 2018–19.
Among the main initiatives in the budget were tax relief for low and middle-income earners, including a new non-refundable low and middle-income tax offset (delivered on assessment after an individual submits their tax return) and an increase of the top threshold of the 32.5 per cent tax bracket from $87,000 to $90,000 from 1 July 2018.
Further, should the government still be in power in 2024, it will increase the top threshold of the 32.5 per cent tax bracket from $120,000 to $200,000, removing the 37 per cent tax bracket completely.
Treasurer Scott Morrison said that this would help Australians with “cost of living pressures while being fiscally responsible”.
There was little in the budget for housing, aside from a confirmation that the measures to unlock the supply of affordable housing remain “on track”, including the establishment of the $1 billion National Housing Finance and Investment Corporation and the release of more land suitable for housing.
In a bid to free up more land for housing, the government has said that it will deny deductions for expenses associated with holding vacant land “to address concerns that deductions are being improperly claimed for expenses, such as interest costs, related to holding vacant land, where the land is not genuinely held for the purpose of earning assessable income”.
The budget outlined that the government will also reduce tax incentives for land banking, which deny the use of land for housing or other development.
This measure will take effect from 1 July 2019.
Looking at improving housing affordability, the government recommitted to establishing the National Housing Finance and Investment Corporation (NHFIC) by 1 July 2018.
This will comprise the Affordable Housing Bond Aggregator and the $1 billion National Housing Infrastructure Facility.
However, the government did reveal that the new National Housing and Homelessness Agreement will commence from 1 July 2018 and provide $7 billion in housing funding and an additional $620 million for homelessness services over the next five years.
According to the government, this will ensure that funding for homelessness services will be ongoing and indexed.
Additionally, the government will provide $550 million over five years from 2018–19 for a new agreement on remote housing with the Northern Territory government to help alleviate overcrowding and improve employment and business opportunities in remote communities.
This commitment will be matched by funding from the Northern Territory government.
Other relevant features of note include:
- $227.4 million to increase the Pension Work Bonus from $250 to $300 per fortnight to earn up to $7,800 each year without impacting their pension, and be extended to self-employed retirees without impacting their pension, too.
- $20.2 million to amend the pension means test rules to encourage the development and take-up of lifetime retirement income products that can help retirees manage the risk of outliving their savings.
- $11.0 million to expand the Pension Loans Scheme to everyone over Age Pension age and to increase the maximum fortnightly income stream to 150 per cent of the Age Pension rate to “enable Australians to use the equity in their homes to increase their incomes”.
- $10.6 million over two years to the Australian Securities and Investments Commission (ASIC) to assist in its involvement in the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (offset by an increase in levies).
- $2.7 million in 2018–19 to the Australian Prudential Regulation Authority (APRA) to assist in its involvement in the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (offset by an increase in levies).
- $10 million for initiatives that “develop women’s financial capability” and put “women in control of their financial lives” as part of a $50 million fund to promote the financial capabilities of Australian consumers.
- Making the ATO proactively find Australian workers’ “lost super” and automatically send it to active superannuation accounts “ensuring it doesn’t get eaten up in ongoing fees”.
- Banning exit fees on superannuation accounts for when consumers want to change funds.
- Stopping superannuation funds from “forcing young people under 25 or with low balances to pay for life insurance policies they have not asked for or do not need”.
- Legislating a Consumer Data Right to give Australians greater control over their data and share it safely with trusted and accredited service providers — which will be first applied to banking.
- $100,000 to promote Australia internationally as a financial technology (fintech) destination.
- Extending the $20,000 instant asset write-off to 30 June 2019 for business with aggregated annual turnover less than $10 million.
Speaking after delivering the budget, Treasurer Scott Morrison said: “A stronger economy. More jobs. Guaranteeing essential services. The government living within its means. That is what this budget is about.
“In this year’s budget, there are five things we must to do to further strengthen our economy to guarantee the essentials Australians rely on:
- provide tax relief to encourage and reward working Australians and reduce cost pressures on households, including lowering electricity prices;
- keep backing business to invest and create more jobs, especially small and medium-sized businesses;
- guarantee the essential services that Australians rely on, like Medicare, hospitals, schools and caring for older Australians;
- keep Australians safe with new investments to secure our borders; and, as always
- ensure that the government lives within its means, keeping spending and taxes under control.
Mr Morrison said that the budget deficit would be $18.2 billion in 2017–18, and $14.5 billion in 2018–19.
He added that the budget is forecast to return to a modest balance of $2.2 billion in 2019–20 and increase to projected surpluses of $11.0 billion in 2020–21 and $16.6 billion in 2021–22.