The May 3 federal budget:
What we know:
- There won't be a fistful of dollars as the government lives up to its promise of living within its means.
- Prudence, fairness and responsibility will be the catchwords.
- Measures will be included to boost jobs and growth as the economy transitions from the mining investment boom.
- The much-touted tax reform package will be included.
Whate won't be there
- Changes to tax breaks for property investors, aka negative gearing.
- Changes to the capital gains tax discount.
- A rise in the rate of GST, or broadening its base.
What will be there
- A reduction in the overall tax burden.
- Signs of modest improvement in the budget bottom line.
- Confirmation the budget repair levy on high-income earners will end on July 1, 2017.
- $5 billion over four years for a subsidised public dental scheme.
- $2.9 billion extra for public hospitals, stemming from COAG agreement.
- $230 million cyber security strategy.
- $100 million domestic violence campaign.
- $21 million in health care for chronic conditions.
- Brought-forward upgrade of Adelaide-Tarcoola rail line.
- New drugs on the Pharmaceutical Benefits Scheme.
- Extra aged-care places.
Hinted at:
- Modest personal income tax cuts to address wage inflation pushing middle-income earners into the second-highest tax bracket.
- Timetable for phased-in cut to the company tax rate of 30 per cent.
- Paring back superannuation tax concessions for high-income earners by lowering the 30 per cent tax on concessional contributions to $180,000 from $300,000, while helping those on low incomes.
- Further crackdown on welfare rorters.
- Incentives for state governments to get private sector involved in road, rail and port projects, and unlock land for housing.
- $1 billion for military role in Afghanistan, Iraq and Middle East, plus $1.4 billion in new defence spending.
What the economy is doing:
- Growing at its fastest pace in two years.
- Benign inflation outlook; unemployment rate remaining close to six per cent; wages growth at its slowest in almost two decades.
- Iron ore prices have soared to $US70 ($A90) per tonne compared to $US39 assumed in the mid-year budget review, a positive for national income.
