Budget time is a bit of a media frenzy, and it can often be hard to sift through everything to find out what you really need to know. Between media outlets publishing a thousand different versions of why the budget is horribly awful or the best thing ever and pollies taking shots at each other left and right, the whole thing gets a bit confusing.
But not to worry, since I had to watch the budget speech for my job, I decided I would do all the hard yards for you. I know that even though the budget info is available online, it’s a lot to read, and you have better things to do. So here are the 5 biggest changes that will affect young people, and what exactly those changes are.
1) You’ll be able to use your super to buy your first house
First, the biggest (and most complicated) set of changes. After months of media coverage that called housing affordability a “crisis” for young Australians, the government has taken some steps to help fix the situation. There were a lot of announcements about different little pieces of this big ol’ pie, but I’ll focus on the ones that mostly affect youth.
Along with measures that encourage baby boomers to downsize in order to free up properties for young buyers, the budget introduced changes to superannuation so that you can use it to save for your first home. Whether that’s a good idea is probably a whole other blog post, but here’s how it works:
- From the 1st of July this year, you’ll be able to use your superannuation as savings fund, by sacrificing some of your pre-tax salary and putting it with what already goes into your super.
- You’ll be able to withdraw those savings from July 1 next year.
- Any contributions you make this way will be taxed at 15 per cent
- Withdrawals will be taxed at 30 per cent below the marginal tax rate.
You can only do this once, for your first home, and the maximum amount you’re allowed to save this way is $30,000, which is less than a quarter of a standard, 20 percent deposit on an apartment in Sydney- the city worst affected by housing affordability.
But Scott Morrison says this will still accelerate your savings by “at least 30 percent” compared to just using a normal bank account.
The government hasn’t gone near capital gains tax or near negative gearing, which were big players in the media coverage of this issue in the last year, but did introduce other measures, like releasing surplus defence land to create a brand new suburb on the outskirts of Melbourne, and ensuring developers can only sell half of new developments to overseas buyers.
Renters are probably still out of luck, though
There have been no major funding increases targeted at lowering the cost of rent, or social housing and homelessness support services.
The only big policy change there is that foreign investors will be charged $5,000 if they don’t lease their property or put tenants in them for at least six months out of each year. This might drive prices down a little, but likely not by much.
2) Uni students will pay more, and sooner
It’s not as big an increase as Abbott’s government tried to introduce in the last budget, which you’ll probably recall sparked widespread protests across the country, but the liberal party is sticking to its guns. They cut 2.8 billion dollars of funding to universities, while making uni students pay more for their degrees.
If you go to university, the income threshold at which you’ll have to repay your HECS-HELP will drop significantly from $55,000 to $42,000. If you make a killing (over $119,882 according to the government) you’ll pay it back as 10 percent of your income rather than 8. This applies to those with current HECS loans as well as future students.
Tuition will rise by 7.5 percent, to be phased in over the next four years. Those increases will be capped at $3,600 for four-year, government-subsidised degrees. Eventually the result will be that four year degrees will cost a max of $50,000, and six year medical degrees $75,000.
Unis themselves will also have to work a bit harder, because their future funding will be dependent on performance, and they’ll have to meet a 2.5 percent efficiency dividend.
The government expects this to save them about 3.8 billion by June 2021.
3) It will cost less to go to the doctor, but you’ll also pay more for Medicare
The freeze on Medicare rebates will be lifted, and the government will introduce incentives for doctors to bulk-bill patients, starting in July this year, and scrap their previous plans to dump incentive payments for pathology and diagnostic imaging, ultimately saving you money when you see a doctor.
The government will restore the Medicare Benefits Schedule indexation, with the freeze lifted on specialist consultations next year, specialist procedures the year after and then advanced procedures like radiation in 2020.
You’ll also save on medicine, because doctors will be given incentives to prescribe cheaper, generic brands.
The Medicare levy will rise from 2 to 2.5 percent of your taxable income
If it’s passed by parliament the increase will come in from July 1, 2019 in order to cover the cost of the National Disability Insurance Scheme (NDIS), and will amount to an extra $50 for every 10 thousand you earn. Single people will start paying the levy as soon as you make the weirdly specific annual income of $21,655, and couples will pay it at $36,541.
Watch this space though, because it’s still unclear whether the measure will pass parliament, as both Labour and the Greens haven’t decided whether to support it. The issue was hotly debated during Question Time today, and in true Labour form Opposition Leader Bill Shorten accused the Government of unfairly targeting taxpayers while giving big business and rich people a tax cut.
4) The government is going to build a whole lot of stuff
Really. A lot of stuff. If you like roads, trains or planes, you’ll be a fan of this new spending program, which will cost around 75 billion over the next ten years, including 10 billion for rail projects that connect cities and the country.
Now, this is the biggest infrastructure spending hike in a generation, and there are a lot of projects set to be funded, so for simplicity’s sake I’ll just list them.
- A new, 5.3 billion dollar West Sydney Airport at Badgerys Creek, expected to begin operating by 2026.
- The modernisation of state-based passenger train lines and an 8.4 billion dollar inland freight line stretching 1,700 km between Melbourne and Brisbane, with construction scheduled to start late 2017. The rail line is expected to support 16 thousand jobs in regional Australia.
- One billion dollars of spending on regional rail lines and other infrastructure in Victoria, including upgrading the Geelong and Murray Basin rail lines.
- Also in Victoria, plans for a proposed Tullamarine Airport rail link will be assessed, at a cost of 30 million.
- The Bruce Highway in Queensland will be given an 844 million dollar upgrade, including 530 million dedicated specifically to work between Pine Rivers and Caloundra.
- 2 billion dollars towards the first major expansion of the Snowy Hydro scheme since it’s construction in 1974, which will add an extra 2,000 mega-watts of renewable energy to the scheme’s current 4,000 output. The government has also put in an offer to buy back the Snowy Hydro project from NSW and Victorian governments, potentially adding another 5.25 billion to the total cost.
- WA will receive 1.6 billion dollars towards a joint federal-state package of 2.3 billion in total, for various infrastructure projects including 1.2 billion towards the METRONET rail and 237 million on upgrades to the Kwinana freeway.
All that infrastructure is likely to impact young people in one of two ways: you’ll get to ride on fancy new trains, or you’ll get a job building them.
5) Some people on welfare will be drug tested
5,000 welfare recipients will face drug testing as part of a new trial, and anyone who tests positive for illegal drugs will be placed on a cashless debit card which can’t be used for anything other than “legitimate living expenses”.
Also, people who don’t show up to job seeking and work for the dole shifts without a “reasonable excuse” will have their payments frozen until they talk it out with their job services provider, and a demerit point system will be put in place. It’s essentially a three strikes you’re out system that works like this:
- First: you lose half on your welfare payments
- Second: you lose your whole payment
- Third: you get locked out of the welfare system for life.
Treasurer Scott Morrison said in his speech that the government would no longer be accepting inebriation as an excuse for not showing up to appointments, and other new changes also make addicts ineligible for disability pensions for medical conditions related solely to their addictions.
These measures have been widely criticised by people who claim the government is unfairly punishing people for their illness, but PM Turnbull said in Question Time today that it will be “doing them a favour,” and argued that there are about 100,000 people who persistently fail to comply with “the basic requirements of mutual obligation.”
The other big stuff:
Mental health research and services will get lots of extra funding, particularly in rural and regional areas ($9 million) where suicide rates are extraordinarily high. If you can’t work due to mental illness but don’t qualify for the NDIS, no stress, you’re covered too, with $80 million now made available.
Foreign Aid will be cut back to $3.35 billion, and yearly rises will be paused, effectively cutting foreign aid by almost 17 percent in real terms. Australia’s aid budget (as a proportion of gross national income) is now at the lowest level it has ever been, pushing us down to 17th in the rankings among our peer countries.
The ASIS, Australia’s foreign spy agency, will get a big boost, but just like the spies themselves the Treasury is being sneaky about it and won’t reveal how much more money they’ll get for security reasons.
And in a final sneaky move, there was no dedicated climate change research or renewable energy funding, and the environment actually didn’t come up in Scott Morrison’s speech at all. Spending on climate will come out of other areas such as energy, innovation, and infrastructure, so we don’t know exactly how much it will be. This is a worry considering Australia has been struggling to meet the targets agreed upon at the Paris Climate Agreement.