What the Budget will mean for you


Josh Frydenberg is poised to unveil another big-spending Budget on Tuesday aimed at steering Australia out of the pandemic, with working parents and those in aged care set to be the big winners.

The Treasurer has already revealed many of the details ahead of Tuesday night's speech - his third since taking the job and the second in the space of six months, after 2020's was delayed by COVID-19 - with a focus on driving unemployment down to pre-pandemic levels.

Outlining his strategy in a speech last month, Mr Frydenberg promised there would be no "sharp pivots towards austerity", as the Morrison government avoids painful spending cuts in what is widely expected to be its last budget before the next election.

"We remain committed to lower taxes, containing the size of government, budget discipline and guaranteeing the delivery of essential services," Mr Frydenberg said.

"COVID-19 has had an unprecedented impact on our levels of government debt. As it has elsewhere around the world. Using the government's balance sheet to limit the economic cost and longer term scarring stemming from this crisis, was a responsible and prudent response."

Mr Frydenberg vowed the Budget would "drive the unemployment rate lower", from its current level of 5.6 per cent.

"We will not move to the second phase of our fiscal strategy until we are confident that we have secured the economic recovery," he said.

"We first want to drive the unemployment rate down to where it was prior to the pandemic and then even lower. And we want to see that sustained."

Here is some of what's been announced so far.


Parents will be big winners in the budget.
Parents will be big winners in the budget.


Childcare package

An overhaul of the childcare system that will slash fees for working families with two or more children has been welcomed by the sector.

But some advocates are warning the ease to hip pocket pressure will not come soon enough, with the changes not coming into effect until July 2022.

The Morrison government on Sunday announced a $1.7 billion package that will increase the childcare subsidy to a maximum of 95 per cent for the second and subsequent children in care.

The funding, part of next week's federal Budget, will also abolish the $10,560 annual subsidy cap for high-income earners.

Early Childhood Australia boss Sam Page said the move would make childcare more affordable, and give parents wanting to return to work, more choices.

"It is good for children, good for families and good for the economy," Ms Page said.

"I am a bit concerned about it not coming into effect until the middle of next year because the system is too complex. It should be introduced in a shorter time frame."


Low and middle income earners will see tax relief.
Low and middle income earners will see tax relief.


Average earner tax cuts

The Budget will offer one-off tax relief worth $1080 to low and middle income earners.

The Morrison government is expected to extend the low and middle income tax offset that applies to workers earning less than $126,000 at a cost of $7 billion in Tuesday's Budget.

The offset is refunded when workers lodge their tax returns which means the money will flow for millions of workers from July. It is currently due to expire after July 1, 2021.

The LMITO, which is sometimes referred to as the "Lamington" tax cut, was first introduced in 2018-19 under a three-stage tax cut plan and was supposed to be axed when the stage two tax cuts were introduced but was extended due to the recession caused by the pandemic.

But despite the big-spending tax cut pledge to extend that offset to 2022 that will be sold as "new" tax cuts, the temporary extension sets up a tax trap because as soon as it's withdrawn those workers face a tax increase of up to $1080.

Grattan Institute chief executive Danielle Wood said it was a good idea to extend the tax cuts last year but it set up a political problem.

"It wasn't a bad thing to do but that's what's created the problem. And so next time, when you take it away, it's an effective tax rise for that group,'' she said.


There will also be a major overhaul of aged care.
There will also be a major overhaul of aged care.

Aged care boost

The aged care sector is set to be given a $10 billion boost over the next four years in what has been dubbed a "major overhaul" of the system.

This week's federal Budget is set to deliver the much-needed funds after recommendations by the Royal Commission into Aged Care which uncovered shocking reports of neglect within the system.

In the overhaul of the aged care sector, it is expected the money will go towards addressing understaffing issues, support for the elderly to stay in their own homes and more resources for residential facilities.

At present, there are an estimated 200,000 elderly Australians in aged care facilities.

Health Minister Greg Hunt described the deal as the "largest package in Australia's history".

Mr Frydenberg said the government was committed to fixing the problems the royal commission highlighted in its report which it handed down earlier this year.

"We've had a royal commission which has indicated that the sector is in dire need of reform," Mr Frydenberg said.


Singles will be given a leg-up in the housing market.
Singles will be given a leg-up in the housing market.


Single home buyers

Single parents have been given a huge cash boost in the property market, with the government introducing a new program allowing them to buy a home with just a 2 per cent deposit.

Housing advocates welcomed the Family Home Guarantee package unveiled by the Federal Government on Saturday as "a good program", but warned it would still leave lower-income households in the lurch.

Under the plan, announced ahead of next week's federal Budget, single parents with a household income of less than $125,000 would only need to save a 2 per cent deposit to get into the market.

The scheme would target single mothers in particular, with the government estimating that out of the 125,000 single parents who are eligible, 80 per cent are women.

The program would support up to 10,000 single parents with dependants over four years, commencing July 1, 2021.

Everybody's Home spokeswoman Kate Colvin said the overall benefit would be to those households earning between $80k to $125k a year.

"The real need is for housing for people on low incomes who can't afford to make the repayments on a new home purchase - a lot of households are earning less than $50k a year," she said.


The Budget will aim to appeal to women. Picture: iStock
The Budget will aim to appeal to women. Picture: iStock


Women's health

Women's services are tipped to be a winner in the federal Budget with $354 million in packages being spread across the issues of cervical and breast cancer, endometriosis and reproductive health.

Among the funding announced by Health Minister Greg Hunt and MP Dr Katie Allen on Sunday was a $100 million investment in improving cervical and breast cancer screening programs.

There will also be a $96 million injection for new tests under the Medicare Benefits Scheme for pre-implantation genetic testing of embryos for specific genetic or chromosomal abnormalities prior to pregnancy.

A $47.4 million boost will be given to ensuring the mental welfare of new and expecting parents and $26.9 million in funding for people with eating disorders.

Kirsten Pilatti, chief executive Breast Cancer Network, said the funding would have an acute effect in regional areas.

"It will certainly help us to pave the way for better outcomes for Australians who were diagnosed," she said.

"I'm so proud that this funding will help to build on the community support that we have right around the country, and ensure that Breast Cancer Network Australia can take the very best emotional care experts out into regional Australia, where we know they are screaming for additional support right now."




Road upgrades

A $10 billion cash splash on roads to slash commute times will be another focus of the Budget.

The Blue Mountains in particular is set to benefit from $2 billion in funding - the bulk of the $3 billion slated for NSW projects.

The new infrastructure spending will include $2.03 billion for the Great Western Highway Upgrade - Katoomba to Lithgow - including Construction of East and West Sections in New South Wales.

It will also include $2 billion of initial investment for a new Melbourne Intermodal Terminal designed to get thousands of trucks off busy roads.

New spending will also include $400 million for the Inland Freight Route (Mungindi to Charters Towers) upgrades in Queensland and $161.6 million for the Truro Bypass in South Australia.

There's also $160 million for agricultural supply chain improvements (Package 1) in Western Australia and $150 million for national network highway upgrades (Phase 2) in the Northern Territory.

In Tasmania, the Morrison government will commit to spending $80 million for Bass Highway safety and freight efficiency upgrades in Tasmania; and $26.5 million for William Hovell Drive duplication in the Australian Capital Territory.


Small brewers will get big tax breaks. Picture: Lachie Millard
Small brewers will get big tax breaks. Picture: Lachie Millard


Bucks for booze

The price of a beer keg could be "shaved by a couple of bucks" with small brewers and distillers to receive up to $250,000 in tax breaks.

The Federal Government has announced a support package for the nation's craft brewers and distillers, which Treasury estimates will see an average of $55,000 put into their pockets.

The changes, which will be unveiled in Tuesday's Budget, will triple the amount of liquor producers can sell before excise tax applies.

From July 1, small brewers and distillers will be able to claim a full refund on any excise they pay up to $350,000 annually.

They are currently able to claim 60 per cent of paid excise, up to $100,000 annually.

Mr Frydenberg said the measures would spark investment in the sector, which currently employs around 15,000 people.

"This change will allow these small businesses right around Australia … to go and hire more people, to go and invest in their business to grow, to get the new equipment and machinery that they need," he said.


There will be investments in clean energy. Picture: Mick Tsikas/AAP
There will be investments in clean energy. Picture: Mick Tsikas/AAP


Clean energy

Low emissions technology could be cheaper in Australia under a plan to attract international investment in clean energy.

The Federal Government has confirmed a new $566 million plan focused on low emissions technology partnerships will be included in next month's Budget.

The proposal would see $3 to $5 added to every dollar invested in Australia, which the government claimed would create up to 2500 jobs.

Prime Minister Scott Morrison insisted the investment would work in tandem with Australia's existing export industries, which would not be shut down to reduce emissions.

He said the investment would protect jobs in energy-reliant businesses while creating new ones in the low emissions technology sector.

"These partnerships mean Australia will keep leading the way in low emissions technology - that also means more jobs here at home," he said.

"The world is changing and we want to stay ahead of the curve by working with international partners to protect the jobs we have in energy-reliant businesses and create new jobs in the low emissions technology sector."




Originally published as What the Budget will mean for you