With the Federal Budget looming, what are the headline announcements expected? While we’re unlikely to see sweeping and substantial stimulus packages like JobKeeper, there is likely some more targeted measures to get the still struggling sectors of the economy re-engaged.
The 2021/22 Federal Budget is due to be delivered by the Treasurer Josh Frydenberg on Tuesday, 11 May. Leading up to the budget, we’ve captured some expected announcements being speculated to date by experts, the media and the government themselves. Time will tell if these expectations are realised but anticipating proposed changes may position you or your business better to take advantage of opportunities.
1. Over $10 billion for Aged Care
Following the Royal Commission report into aged care delivered in March, it has been made clear that aged care will be a focal point in this year’s budget. It has been reported that the total level of assistance from the federal budget could exceed $10 billion.
The findings from the Royal Commission showed that many elderly people requiring care would much prefer to live in their own homes for as long as possible. It is expected the focus of assistance will be on enabling more home care services to the elderly. This may also be complemented by an increase in the $10 daily bed fee currently paid to age care facilities.
To pay for this, there has been talk of a potential aged care version of the Medicare levy to cover the almost $7 billion that will need to be directed to aged care each year.
2. Possible extension of the tax offset
For the past two years, people earning between $48,000 and $90,000 have received up to $1080 as a tax offset after completing their tax return. This measure was only expected to be in place for one year but was extended last financial year due to the pandemic.
At a cost of around $7 billion, the government has a decision to make. Do nothing and let the tax cut expire as planned. Or, extend this offset for low and middle-income earners for another year. If it expires, this could restrict the economic return from the pandemic. However, if it is extended this further adds burden to the ballooning budget deficit.
The twist here is that the removal of the tax offset will adversely affect women. The recently established women’s taskforce created in the Prime Ministers cabinet is expected to closely review all budget initiatives for their impact on women.
3. Childcare and parental leave adjustment
With the increased focus on equality in the workforce, particularly around women, the budget is expected to announce new measures on childcare and parental leave.
This could include boosting the base childcare subsidy, making the taper rate less aggressive or offering free care for subsequent children. The parental paid leave scheme may also get some adjustment. This could include 6 weeks leave for each parent in addition to 12 weeks shared leave between parents.
Moreover, it is argued by the Grattan Institute that the focus should not be on the cost of childcare subsidies but instead, the return on investment of having more women in the workforce.
4. Continued focus on skills training
With COVID disrupting many industries, retraining is seen as a necessary for those whose jobs have been adversely affected. The $4 billion JobMaker Hiring Credit initiative looks to be getting a re-adjustment after a lower than expected take up from employers. The new initiatives have not been released but it is expected these will still focus on getting young people into more secure roles in the workforce.
The 11 May federal budget will be watched anxiously by all sectors of society. It may have impacts or open opportunities for you or your business. To get the right advice it pays to speak to the experts.
Saige Accountants and Financial Planners can provide both business advisory services and personal financial advice tailored your specific circumstances. Talk to us about how the Federal Budget may impact you.