The deficit
• A smaller deficit than predicted, coming in at $35 billion underlying cash terms for the forthcoming year – still larger than the deficit bequeathed by Labor in 2013. • The budget blames the deterioration on write downs in tax revenues (nothing new there) of $90 billion since the government took office. • Revenue is down because of the low iron ore price, as well as "persistently low wage growth." • The budget will stay in deficit until 2019-20. • Spending is forecast to be $434 billion this year, or 26.2 per cent of GDP.
The economy: key forecasts
• real GDP: 2.75 per cent, rising to 3.5 per cent in 2017-18. • employment growth: 1.5 per cent, rising to 2 per cent in 2017-18. • unemployment rate: 6.5 per cent, returning to 5.75 per cent by 2018-19. • consumer price index: 2.5 per cent, remaining steady across the forward estimates. • wage price index: 2.5 per cent, remaining steady. • nominal GDP growth: 3.25 per cent, rising to 5.5 per cent next year. • household consumption: 2.5 per cent, rising to 3.25 per cent in 2016-17. • dwelling investment: 6.5 per cent in 2014-15, falling to 4.5 per cent in in 2016-17. • mining investment: -15.5 per cent in 2014-15, worsening to -30 per cent in 2016-17. • non-mining investment: 2 per cent in 2014-15, rising to 7.5 per cent in 2016-17.
The economy: what the Treasury says
• The economic outlook remains positive. • Low interest rates and a low Aussie dollar will underpin an economy that is slowly returning to trend growth. • “The transition from mining-led growth to broader-based growth is underway.” • Exports are expanding, as the lower Aussie dollar facilitates services exports. Housing construction is helping, and household consumption, “while still constrained”, is expected to pick up. • However mining investment is slowing rapidly, and terms of trade are down. • The unemployment rate will only slowly trend downwards, peaking at 6.5 per cent but easing below 6 per cent by 2018-19.
The big announcements: Families
• $3.2 billion over five years, most of which will be spent on the new Child Care subsidy that will fund up to 85 per cent of the cost of childcare for eligible families. • More funding for a child care safety net: $327 million over four years for disadvantaged families to help access child care. • $262 million for more generous means testing of youth payments. • $843 million over three years for early childhood education. • But $968 million saved over four years by removing "double dipping" from Paid Parental Leave. • Kevin Andrew's marriage vouchers abandoned, for a $17 million saving.
The big announcements: Jobs and small business
• $3.3 billion in tax cuts for small businesses – 1.5 per cent tax cut for small companies and a 5 per cent discount on income from unincorporated small business activity, capped at $1,000 per person. • $1.8 billion over the forward estimates for accelerated depreciation for small businesses, for assets up to $20,000. • $212 million over four years for young people at high risk of long term unemployment. • $40 million for capital gains tax rollover relief for small businesses. • $30 million towards immediate deductibility for professional expenses for small businesses. • wage subsidies to be consolidated into a single pool, worth nearly a billion dollars. • $18m for work experience programs.
The big announcements: National security
• The Australian Customs and Border Protection Service will be amalgamated into the Department of Immigration for a saving of $270 million. • $554 million in savings in immigration detention by closing a number of immigration jails. • $437 million in new revenue over four years from higher visa charges. • $168 million in visa, refugee and humanitarian processing efficiencies. • $108 million over four years in new revenue from import licensing. • $389 million new funding for resettlement of asylum seekers. • $164 million funding for Border Force, better IT and for airport eGates. • $296 million over six years for the spy agency ASIS, $7.6 million for the Office of National Assessments. • $21.7 million to combat terrorist propaganda. • $154 million to implement mandatory metadata retention, including $131m for ISPs and telcos to spy on their customers. • $74 million funding for the customs ship Ocean Shield. • $40 million for anti-people smuggling strategic communications campaigns. • $1.3 million to continue the Independent National Security Legislation Monitor.
Other significant measures, by portfolio:
Aged Care • $74 million for "increasing consumer choice" in the Home Care Programme. • $40 million saving in the Aged Care Workforce Development Fund. • $31 million saving in aged care quality accreditation.
Agriculture • $333 million in new and extended drought assistance over the forward estimates.
Attorney-General’s Department • $54.2 million in efficiencies. • $25.2 million over two years for community legal centres. • legal aid funding: $1 billion over four years for a new National Partnership on Legal Assistance Services.
Arts • the government will shift more than $104m in funding over four years from the Australia Council, and set up a ministerial program entitled the “National Programme for Excellence in the Arts”, controlled by Arts Minister George Brandis • $13 million in further efficiency cuts to the Australia Council and Screen Australia.
Communications • $375 million over four years for digital transformation ($120 million redirected from other government agencies)
Defence • $191 million over three years to extend Operation Accordion in the middle east. • $403 million for Operation Okra to fight the Islamic State in Syria and Iraq. • $217 million for Operation Highroad, which funds the training of security forces in Afghanistan.
Education • $26 million in new revenue by recovering HECS and HELP debts from overseas graduates. • $4 million for Bjorn Lomborg's Australian Consensus Centre. • $131 milion over five years in departmental efficiencies.
Environment • Climate Change Authority extended to December 2016. • $73 million in cuts to Green Army programs. • $100 million for the Great Barrier Reef Trust. • $60 million for Tasmanian irrigation.
Foreign Affairs and Trade • $17 million in new revenue over four years from higher passport fees. • $106 million for the Australian embassy in Baghdad. • $138 million over two years for Australian diplomatic efforts in Afghanistan. • $98 million for new embassies in Buka, Doha, Makassar, Phuket and Ulaanbaatar.
Health • $963 million in funding cuts over five years “by rationalising and streamlining funding across a range of health programmes” – including cuts to GP Super Clinics, Health Portfolio Flexible Funds, preventative health research and dental workforce funding. $10 million for organ donation matching. • $126 million in cuts to dental health for children through the Child Dental Benefits Schedule. • $162 million for immunisations under the National Immunisation Programme, and $26m for improving immunisation rates. • GP co-payments abandoned. • $145 million over four years in savings by cuts to Medicare funding for child health assessments. • $485 million for eHealth, to be renamed as the My Health Records program. • a one-off $155 million payment to continue the National Partnership on Adult Public Dental Services. • $1.6 billion for new drug listings through the PBS. • $252 million in savings through prices paid by the the PBS for certain drugs. • $113 million in Health department efficiencies. • $72 million funding cut to health workforce scholarships. • No Jab, No Pay – only parents of fully immunised children can access government benefits; $508 million saving over five years.
Homelessness • $230 million over two years to extend the National Partnership on Homelessness.
Human Services and Disabilities • $1.7 billion in savings through a crackdown on welfare fraud. • $177 million cut to family benefits by abolishing the Large Family Supplement. • $42 million savings by reducing family tax benefits portability. • $43 million saved by abolishing the Low Income Supplement. • $63 million for microfinance projects. • $143 million for IT for the National Disability Insurance Scheme. • $17 million for a violence against women campaign.
Infrastructure • Melbourne’s East-West Link: federal government will not give $1.5 billion to Victoria for the abandoned project; it is attempting to claw back $1.5 billion already contributed. • $2.1 billion to be spent on capital infrastructure from the Asset Recyling Fund. • $5.7 billion from sale of Medibank to be banked in Asset Recyling Fund in 2016-17.
Pensions and superannuation • savings of $2.4 billion over five years by increasing asset test thresholds for the pension. • $465 million over five years by tougher means tests for defined benefits.
Regions • $203 million for the Tasmanian Freight Equalisation Scheme. • $5 billion concessional loan facility for infrastructure in Northern Australia. • $499 million for infrastructure projects in Western Australia.
Science and Research • $150 million for a one-off continuation of the NCRIS program for 2016-17. • $262 million cut to Sustainable Research Excellence programme. • $26.8m cut to Cooperative Research Centres. • new $100 million cap for companies claiming R+D tax offset. • $13 million in new funding for the Synchrotron. • $235 million for the Australian Bureau of Statistics.
Treasury and Finance • crackdown on the “dirty 30” of worst tax-avoiding corporations (no revenue target). • “Netflix tax”: GST on cross-border supplies of digital products, $350 million gain in GST revenue. • GST compliance programme: $265 million in a Tax Office crackdown on GST compliance, expected to raise $1.8 billion for the states. • $295 million in savings through a crackdown on salary sacrificed meals and entertainments. • $325 million over the forward estimates for removing a tax offset for fly in, fly out workers. • $845 million in savings by forcing all personal income tax claims for car expenses to the logbook method.
Veterans' Affairs and Anzac • an additional $36 million for Great War centenary commemorations. • $13 million for official histories of Timor Leste, Afghanistan and Iraq wars. • $99 million for the Sir John Monash Centre in eastern France.