A brief look at some of the Abbott Government 2014-15 Budget 'highlights'

The Australian Government 2014-15 Budget Papers can be found here.

The following is a brief look at some of the 'highlights' of the Abbott Government's first budget, which Treasurer Joe Hockey describes as ushering in an age of opportunity.

From 1 July 2015 there will be a 2% 'deficit' levy on the incomes of individuals earning more than $180,00 per year. This is estimated to affect 400,000 individuals.

Personal income tax offsets for Mature Age Workers and Dependent Spouses are abolished by 2015-16.

Family Tax Benefit Part A payments will start to reduce when family income exceeds $94,316 per year and Family Tax Benefit Part B income threshold will be reduced to $100,000. Family Tax Benefit-B will cease once youngest child turns 6 years of age.

Fuel excise indexation will be re-introduced from 1 August 2014, will rise in line with inflation twice a year and is expected to be worth between $990 million and $1.8 billion to Treasury by 2017-18.

From 2015 unemployed people under 25 will get Youth Allowance not Newstart. This is a reduction in unemployment benefit of $96 per fortnight for a single person with no children and $93 per fortnight for a married couple with no children.

People under 30 will wait up to six months before getting unemployment benefits, and then will have to participate in Work for the Dole, to be eligible for income support.

From 15 September 2014 all job seekers who refuse any work without a good reason will lose their payment for eight weeks and will no longer be permitted to waive their penalty through participation in additional activities or due to financial hardship. The eight week non‑payment period will also apply to all job seekers who incur penalties for persistent non‑compliance. Job seekers will only be given one opportunity to waive the penalty for persistent non‑compliance while in receipt of an income support payment.

Support for the long-term unemployed and assistance with seeking employment via Connection Interviews and Job Seeker Workshops will cease on 30 June 2014.

The Move 2 Work initiative will cease from 1 July 2014.This initiative provided practical and financial assistance for job seekers to relocate within Australia for on-going work or an apprenticeship.

Eligibility for the Aged Pension will be further restricted over the next three years with changes to asset and income thresholds.

The age at which an individual is eligible for the aged pension will rise over the next 21 years until it reaches 70 years by 2035.

Individuals under 35 on the Disability Support Pension, but with some capacity to work, will have engagement plans to help them participate in the workforce.

From September 2017 increases in pensions will be linked twice a year to the Consumer Price Index and not to Total Average Male Weekly Earnings. Over time this will lead to a decrease in the spending power of pensions.
The Energy Supplement received by pensioners will be permanently frozen at the June 2014 payment level.
The National Partnership Agreement on Certain Concessions for Pensioners Concession Card and Seniors Card Holders will be terminated from 1 July 2014. This agreement guaranteed concessions on local government rates including land, water and sewerage; energy; motor vehicle registration and public transport concessions.

From 1 July 2015 anyone receiving a standard general practitioner consultation and out‑of‑hospital pathology and diagnostic imaging services will be charged a $7 upfront fee. For patients with concession cards and children under 16 years of age this upfront fee will cease after 10 services (ie $70 in fees) in any given year.

State and Territory Governments will be able to charge this $7 upfront fee when an individual attends a public hospital emergency department for an illness normally treatable by a GP.

Pharmaceutical Co‑payments will increase for general patients by $5.00 (from $37.70 to $42.70) and for concessional patients by $0.80 (from $6.10 to $6.90) in 2015.

From 1 January 2016, the existing Original Medicare Safety Net, Extended Medicare Safety Net and Greatest Permissible Gap will be replaced by the new Medicare Safety Net. There will be new safety net thresholds of $400 for concessional singles and concessional families, $700 for non‑concessional Family Tax Benefit‑A families and non‑concessional singles, and $1,000 for non‑concessional families who do not receive FTB‑A. This an across the board threshold reduction of between $30.90 for all Medicare cardholders, a reduction of $248.70 for those covered by the Extended Medicare Safety Net, but a $57.9 rise in the threshold for non‑concessional families eligible for Family Tax Benefit-A.

From 1 January 2015 the Medicare rebate for visits to the optometrist will be reduced from 85% to 80% and the charging cap removed so that optometrists can set their own fees for service. This will likely lead to across the board increases in out-of-pocket expenses for people in need of spectacles or contact lenses.

From 2014-15 asymptomatic people aged under 65 years will only be able to have a Medicare rebateable comprehensive eye test every three years, however asymptomatic patients aged 65 years and over will now be able to have this test every year.

Over the next four year federal government funding for adult public dental health services will be reduced by $390 million.

In 2014-15 the Dental Flexible Grants Programme will cease. This grants programme supplied funding for public dental heath infrastructure and staff in outer metropolitan, rural and regional areas.

Over three years from 2015‑16 the federal government will reduce funding for Public Hospital Services by $201 million and will cease preventative health measures funding made under an existing partnership agreement with State And Territory Governments.

From 2013-14 to 2014-15 $53.8 million in previously agreed mental health funding will not be received by 48 organisations which provide people who have a severe and persistent mental illness and complex support needs with integrated support that coordinates clinical, housing, education, employment, income and disability services.

In 2013-14 the following discretionary grants programmes will all cease: Australian Community Food Safety Campaign; eHealth Summit and Implementation of Clinical Trial Functionality into Jurisdictional eHealth Systems; Flat Out Incorporated Outreach Support Services for Criminalised Women and Mental Health Better Access to Education and Training will all cease.

From 2013‑14 the Australian National Preventive Health Agency is abolished.

All Medicare Locals will cease to exist by 1 July 2015.

Voluntary additional contribution to the World Health Organization will be reduced by  $2.3 million.

From 2014-15 to 2017-18 research funding for the Commonwealth Scientific and Industrial Research Organisation (CSIRO) will be reduced by $111.4 million, the Australian Nuclear Science and Technology Organisation by $27.6 million and the Australian Institute of Marine Science by $7.8 million.

The Bureau of Meteorology will be expected to find $10 million in efficiency savings between 2014-15 and 2017-18.

Australian Renewable Energy Agency is abolished.

As a $4.1 million cost cutting measure the Federal Government's Ford Australia — Assistance to Workers Programme will cease and workers will allegedly be supported under the Automotive Industry Structural Adjustment Programme funded by the Federal and Victorian Governments.

From 1 January 2015 the following programmes will cease: National Partnership Agreement on Training Places for Single Parents; Accelerated Australian Apprenticeships Programme; Australian Apprenticeships Mentoring Programme; National Workforce Development Fund; Workplace English Language and Literacy Programme; Alternative Pathways Programme; Apprenticeship to Business Owner Programme; Productive Ageing through Community Education; Australian Apprenticeships Access Programme; and Step Into Skills Programme.

Indexation of eligibility thresholds for Family Tax Benefit and Newstart; thresholds for the Medicare Levy Surcharge, Private Health Insurance Rebate, most Medicare Benefits Schedule fees, Official Development Assistance funding, Local Government Financial Assistance Grants and 112 government grant programmes will be frozen – generally for between two and three years.

UPDATE

The Sydney Morning Herald 13 May 2014:

Universities will have unfettered freedom to set their own fees under the most radical shake-up to higher education funding since the introduction of HECS 25 years ago.

While fees in some courses may fall, the cost of a degree from prestigious universities is expected to soar when government caps on course costs are scrapped in 2016. The federal government's contribution to degree costs will decline by an average of 20 per cent from 2016 as students take on a greater share of the cost of their education. The changes will not affect current students until 2020.

To calm concerns about the impact on poor students, 20per cent of all additional revenue raised through increased fees will fund scholarships for disadvantaged students.

Nevertheless, heated protests are expected when Education Minister Christopher Pyne travels to campuses across the country to sell the reforms over coming weeks.

The HELP student loans scheme will remain, but in a less generous form. Graduates will repay their debts earlier: once they start earning $50,638, down from $53,345 this financial year.

Interest will be pegged to the government bond rate rather than to inflation. This means graduates will pay an interest rate of up to 6per cent on their student loan – up from 2.9 per cent currently. This will affect all students from 2016, regardless of when they started their degree.

The changes to the student loans scheme will save the budget $3.2 billion over four years....

direct government support will be extended for the first time to students at TAFEs, private universities and in diploma programs from 2016....

 ABC Budget Response 13 May 2014:

The ABC’s budget will be cut by $120m over the next four years as a result of decisions made by the Federal Government in tonight’s budget.

Operational funding cuts of close to $40m over four years will come on top of the termination of the $220 million contract to deliver the international broadcasting service, Australia Network.

The 2014-15 budget also foreshadows further significant funding cuts in the wake of the Lewis review into the operations of the ABC and SBS.

“The funding cuts will be disappointing for audiences. The government gave repeated commitments before and after the election that funding for the Corporation would be maintained,” the ABC’s Managing Director, Mark Scott said.

Mr Scott said while the ABC would look to make its operations more efficient, the funding cuts would regrettably and inevitably result in redundancies and a reduction in services. The ABC Board and Executive would need time to work out the full impact and to review strategies and internal budgets.

Mr Scott said the decision to cut the funding for Australia Network was very disappointing, given the ABC was only one year into a 10-year contract with the Department of Foreign Affairs and Trade.

“Countries around the world are expanding their international broadcasting services as key instruments of public diplomacy. The ABC had negotiated a detailed strategy with DFAT to develop relationships with major broadcasters in the region and to target locals likely to trade, study in or travel to Australia. This partnership had resulted in expanded audiences in key markets and was on track to deliver all agreed targets.

“This decision runs counter to the approach adopted by the vast majority of G-20 countries who are putting media at the centre of public diplomacy strategies to engage citizens in other countries.

“It sends a strange message to the region that the government does not want to use the most powerful communication tools available to it to talk to our regional neighbours about Australia.

“The agreed strategy with DFAT based on broadcasting, online partnerships and social media was proving successful. This decision cannot be justified in terms of performance against agreed priorities.”

Mr Scott said the ABC Board would now have to examine how the ABC delivers its international Charter obligation, which requires it to broadcast programs that, among other things, “encourage awareness of Australia and an international understanding of Australian attitudes on world affairs”.

In addition to the funding cuts, the ABC will also have to manage the cessation of funding for the online disability website,ABC Ramp Up at the end of this financial year.

Mr Scott said the ABC was aware of the tight fiscal environment and constantly reviewed its strategy and performance to find better work practices and greater efficiencies.

“The ABC is very tightly geared. We have been diligent in reducing backroom costs over recent years to ensure the ABC can deliver better and more varied content to our audiences. That strategy has enabled the ABC to self-fund important new initiatives like iview, ABC News24, triple j Unearthed online and a range of other new digital services.”

Mr Scott said the budget made it clear the Lewis efficiency exercise would impose additional demands on ABC budgets over the next few years. The Department of Communications has been conducting a study into ABC and SBS efficiency with the assistance of ex-Channel 7 CFO and recently appointed CFO of Southern Cross Austereo, Peter Lewis.

“The task ahead will be extremely challenging for ABC management and staff,” Mr Scott said.

“We will need to make funding cuts, while trying to also save money to invest in new priorities to ensure the ABC remains a compelling feature of the Australian media landscape – a public broadcaster in the digital era.”

For more information

Media contact:
Nick Leys, ABC Communications  – 03 9626 1417 or 0413 621 484