2020 Federal Budget wrap-up

Embracing spontaneity

Happiness studies show that a fulfilling life comes from those moments of ease and coincidence – when we achieve miraculous things without striving and stressing.

Jobs, hope and recovery – themes of the 2020 ‘Pandemic Budget’

According to the Morrison Government’s 2020 Budget announcement, economic recovery and job creation go hand in glove. Dubbed the most important budget since World War Two, this is a budget like no other, characterised by tax cuts, big spending, record levels of debt, and a lot of talk about resilience, hope and ‘having each other’s backs’.

We’ve zeroed in on five proposals likely to affect our members in this year’s Budget:

Strengthening the super system

While it wasn’t a key item – and in fact it received far less attention than expected – it’s important our Budget update contains information on super for our members.

Enter the Government’s Your Future, Your Super Package of reforms designed to make the super system better in four ways:

  1. Preventing multiple super accounts – An individual’s super fund will automatically follow them to their next job, preventing the creation of multiple accounts currently costing $30 billion a year.
  2. Empowering members – The creation of the YourSuper tool to help Australians make informed decisions by comparing the performance of MySuper products across funds.
  3. Holding underperforming funds to account – A proposal to require funds to undergo an annual investment performance test. Underperforming funds will not be allowed to take on new MySuper members, and existing members must be advised of the fund’s underperformance.
  4. Increasing transparency and accountability – Super funds will be required to demonstrate members’ retirement savings will be spent only on activities that are in the members’ best interests, and be required to disclose key information ahead of Annual Members’ Meetings.

Of note, there was no proposal to extend the Early Release of Super scheme introduced in April at the height of the COVID-19 crisis. This scheme remains set to expire on 31 December 2020. Find out more at https://budget.gov.au/2020-21/content/essentials.htm#seven

Something for older Australians

For older Australians, the Federal Budget provides some sweeteners in the form of Economic Support Payments for pensioners, and for other eligible recipients such as Pensioner Concessional Card holders and Commonwealth Seniors Health Card holders. Two one-off cash payments of $250 will be made in November 2020 and March 2021.

There’s also the introduction of 23,000 additional home care packages which will give older Australians the option to continue living at home. Find out more at https://budget.gov.au/2020-21/content/essentials.htm

Delivering tax cuts

Taxpayers are one of the biggest winners in this year’s Federal Budget as the Government seeks to stimulate spending to boost economic recovery. Stage Two of the already legislated Personal Income Tax Plan will be brought forward, delivering an immediate boost for most workers.

The Government indicates more than 11 million people will get a tax cut backdated to 1 July 2020, with the 19% threshold increasing from $37,000 to $45,000 and the 32.5% threshold from $90,000 to $120,000. The low and middle income tax offset will also be extended for an extra 12 months.

What does this mean for you? From the end of October 2020, people earning between $45,000 and $90,000 will pocket an extra $1,080 per year (in addition to the $1,080 per year from the low and middle income tax offset). Those earning more than $90,000 will take home up to $2,565 extra. Find out more at https://budget.gov.au/2020-21/content/jobmaker.htm#five

Supporting jobs for young people

With unemployment expected to peak at 8% in December, and with the Treasurer’s announcement that ‘there can be no economic recovery without job recovery’, job creation is a necessary focal point in this Budget.

As a strong supporter of apprentices through our membership base, employers and industry partnerships, we’re delighted to see the Budget support young people with the creation of apprenticeships and traineeships, as well as support for those seeking upskilling and re-skilling.

Starting from tomorrow, the JobMaker Hiring Credit will give $200 a week to employers who hire anyone aged 16–29, and $100 a week for those aged 30–35 until September 2021. In addition, the Boosting Apprentices Wage Subsidy will support up to 100,000 new apprentices and trainees.

Meanwhile, the JobTrainer program will provide free or low-cost training courses for school-leavers in sectors with job opportunities. Support will also be provided for the delivery of additional university places, and higher education short courses in areas including teaching, health, information technology, science and agriculture. Find out more at https://budget.gov.au/2020-21/content/jobmaker.htm

Spending on infrastructure

Rebuilding the economy entails spending on infrastructure such as rail and roads and bridges – key infrastructure that not only creates jobs, but also creates a future for Australian cities. The list of proposed infrastructure spending is long, with new and accelerated infrastructure projects including:

  • Coomera Connector in Queensland
  • The Wheatbelt Secondary Freight Network in Western Australia
  • The Main South Road Duplication in South Australia
  • The Tasman Bridge Upgrade in Tasmania
  • $23 million towards new Rockhampton Stadium in Victoria Park, Queensland
  • $5 million towards the Goolwa Sports Precinct, South Australia

The Government proposes to spend over $1.3 billion over five years from 2020–21 to support the Modern Manufacturing Initiative. This will support manufacturing projects focused on building long-term business collaboration at scale, translating research into commercial outcomes and bringing new products to market.

It’s worth noting that while the $1 trillion debt is large and unprecedented, Australia’s budget deficit remains a fraction of the debt of other countries in these times. Given the global record-low interest rates, it’s also an affordable debt that Australia is well placed to manage in order to bring about economic recovery. You can read about this here.

Find out more

This is a wide-ranging budget that cuts across a number of key sectors. You’ll find all the detail in the Government’s budget website. Just remember that these announcements are proposals only and are yet to be passed by Parliament.

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