2013 Budget Synopsis

Posted on May 15, 2013.

Wayne Swan has handed down his sixth federal budget at Parliament House in Canberra. Here is a snapshot of the winners and losers from this year’s budget.

Budget Funding

$3.3 billion for DisabilityCare Australia in 2014-15 funded by half a percentage point increase to the Medicare levy. Total investment in scheme $19.3 billion over seven years ($14.3 billion in new money).

$9.8 billion in school funding reforms outlined in the Gonski review, over six years from 2014-15.

$113 billion in defence funding over the forward estimates, up $10 billion from last year’s budget. Includes $3 billion over nine years to obtain 12 EA-18G Growler electronic attack aircraft.

New spending of $3 billion over the forward estimates as part of a $24 billion infrastructure package. Includes $3 billion for the Melbourne Metro rail project and $1.8 billion for the WestConnex motorway in Sydney. $400 million will be allocated to Sydney’s F3-M2 link and a further $715 million to Brisbane’s Cross River Rail project.

$300 million on childcare reforms, including establishing a fund to help long daycare providers acquire a highly qualified workforce.

$300 million to support jobseekers, including allowing Newstart recipients to earn more from paid work – up to $100 a fortnight from the current $62 a fortnight, and indexed from July 2015.

$434 million for the Royal Commission into Institutional Responses to Child Sexual Abuse.

$2.2 billion to be invested in the Medicare benefits schedule across five years, with a further $2.2 billion over four years towards the private health insurance rebate.

$226 million on cancer care, including $92.2 million over the forward estimates towards breast cancer screening and pap smears and $18.5 million towards prostate cancer screening.

A trial of $112.4 million towards assisting senior Australians to downsize to a more suitable home without affecting their pension, and $9.9 million to extend the Broadband for Seniors initiative.

$100 million on natural disaster mitigation to reduce insurance premiums.

Almost $100 million for a new farm household allowance to support farmers in hardship.

$64 million on national anti-gang taskforce comprising 70 members of the AFP and state police; $40.9 million for the National Crime Prevention Fund.

$42 million for Antarctic climate change research.

Budget Cuts

Massive revenue write-downs – $170 billion over the last five years. A deficit of $19.4 billion in this current financial year, followed by a $18 billion deficit in 2013-14 and a $10.9 billion deficit in 2014-15 before a projected return to surplus by 2015-16.

Significant reduction in tax receipts of $60 billion over the forward estimates, attributed to challenging global conditions and the high Australian dollar.

Minerals resources rent tax estimate down from an original forecast of $13.4 billion to $3.3 billion over the forward estimates.

Baby bonus to be abolished from March 1, 2014 and replaced by an increase to Family Tax Benefit Part A – $2,000 for the first child and $1,000 for subsequent children.

Moving the baby bonus to FTB-A means 28,000 families who would have received it in 2014-15 will now miss out, because that payment has a tighter means test.

An additional increase to FTB-A, due in 2015 and worth $2.5 billion over the forward estimates (between $300 and $600 a year for families) has been dumped.

FTB-A eligibility changed for children aged 16 years and over – it will only be paid until the end of the calendar year in which a child completes school, effective from January 1, 2014.

$2.3 billion in cuts to higher education funding. The 10 per cent discount on paying university fees upfront will be abolished, student start-up scholarships will be converted to loans, and there will be a lower limit on tax deductibility of self-education courses, saving the Government $500 million.

Medicare safety net threshold increased from $1221.90 to $2,000 from January 1, 2015, saving the Government $105.6 million over the forward estimates.

$2.8 billion in tax cuts associated with the carbon trading scheme and due in 2015-16 have been deferred. They would have increased the tax-free threshold from $18,200 to $19,400. People earning up to $80,000 a year would have saved nearly $1.60 a week.

The tax cuts associated with the carbon trading scheme will be deferred until the estimated carbon price reaches $25.40 a tonne – the current projection has dropped to $12.10.

The research and development tax incentive will only apply to companies with an annual aggregate turnover of less than $20 billion, saving the Government $1.1 billion over the forward estimates.

$500 million over three years cut from the Carbon Capture and Storage Flagships program.

$370 million of funding for the Australian Renewable Energy Agency moved to beyond the forward estimates.

Non-Kyoto Carbon Fund scrapped, saving $389 million.

$270 million cut from a program designed to support coal mining jobs.

Deductions for work-related education expenses capped at $2,000 from July 1, 2014, saving $514.3 million over the forward estimates.

As in last year’s budget, the foreign aid increase has been postponed for another year, saving the Government $3 billion over the forward estimates. $375 million of current foreign aid investment will go towards asylum seekers in Australia, a figure which will be capped.

Tax crackdown on big business – including tightening the rules to prevent profit shifting – saving the Government $4.2 billion over the forward estimates.

$900 million in revenue over the forward estimates from changes to superannuation tax arrangements, including taxing earnings of more than $100,000 on superannuation pensions and annuities at 15 per cent instead of them being tax free.

$665 million cut from the teachers bonus over the forward estimates.

$580 million in cuts to the public service over the forward estimates.

$100 million in cuts to solar funding.

The average cost of a basic packet of cigarettes will increase by 7 cents in the first half of 2014.

Zander, J. (2013) Budget 2013 ABC News