01.How will the Budget affect you?
How will the Budget affect you?
With the 2014-15 Budget finally out, the fear of the unknown and persistent leaks and rumours have been replaced with a degree of uncertainty about how this Budget, touted by many as one of the toughest in recent times, will affect consumers. CHOICE has analysed the Budget papers and can reveal what the Budget means for Australians' bottom line. Read on to see how you will be affected.
If you or your family gets sick
If you’re one of those Australians who sees a doctor (and most of us do), prepare to take a hit to the hip pocket after July 2015. Those who visit a GP or get a blood test or X-Ray and are currently bulk billed will soon pay a Medicare co-payment of at least $7 every visit, with an annual cap of 10 payments for children under the age of 16 or concession card holders. And you may not have much luck avoiding the hike by visiting the emergency room instead of the GP - patients who go to public hospitals with non-emergencies can now be charged a co-payment too (though whether the states take this measure up remains to be seen).
Even if your doctor doesn’t bulk bill, you won’t be spared any pain. The Medicare rebate for GP and pathology services will be cut by $5, and you’ll have to pick up the shortfall – prepare to cough up an extra $5 with every visit (and ain’t that a kick to the throat?).
The cost of medicine will also go up. Medication listed on the Pharmaceutical Benefits Scheme (PBS) that costs more than the co-payment rate (currently $37.70) will go up by $5 too. And in case you were counting on the PBS safety net to kick in to help you out with all those skyrocketing health costs, think again. The safety net, which protects patients who buy lots of medicines by reducing co-payments once they’ve spent a certain amount on medication in one calendar year, will also take a hit. Under current arrangements, general patients in 2015 would have gotten more government support once their PBS medication bill hit $1,452.50. But the budget will now see that jump to $1,597.80.
Concession card holders won’t be spared the pain either – expect to pay 80c more for PBS medicine, and spend an extra $61.80 before the safety net catches you.
So what’s all that money going to be used for? The government is redirecting it to a new Medical Research Future Fund, which it claims will be the largest of its kind in the world.
If you drive a car
You may want to think about swapping your thirsty SUV for something a little more fuel efficient (or perhaps even electric), because petrol prices will jump in August. The government is unfreezing the indexation of the fuel excise, with the excise set to rise in line with inflation twice a year. This should add roughly $2 or so to a tank of petrol, and reportedly, according to the NRMA, an average motorist driving a Ford Falcon from Penrith to Sydney and back daily would pay about $30 extra in the first year, and $159.69 extra in the fifth year. The NRMA is opposing the move.
If you’re planning to have a baby
You could be in luck – the Paid Parental Leave scheme is set to kick in from 1 July 2015. Under the scheme, you’ll get paid parental leave provided by the government up to the value of $50,000 – six months at full pay, matching salaries up to $100,000.
If you have young children
This budget will be a blow to the bottom lines of single income families, where the breadwinner is on an income of between $100,000 and $150,000. Families will only be eligible for Family Tax Benefit Part B payments if neither parent earns above $100,000 and their youngest child has yet to turn six. Though existing recipients of Part B with children six or older will continue to receive payments for two years.
Currently, Family Tax Benefit Part A is means tested and paid per child, with a maximum of $224 per child per fortnight. The benefit reduces with increasing joint income, particularly after about $95,000. Part B is a separate payment, and is paid out to families with one income earner. It is paid regardless of the number of children you have, with payments decreasing as children get older. Part B payments are means tested and aren’t paid to income earners on over $150,000 a year. The current annual maximum for Part B payments is $4,171.95.
If you’re a single parent
It’s a tough time to be a single parent. Last year, 100,000 single parents receiving the Parenting Payment were shifted onto the Newstart Allowance. Now, those receiving Family Tax Benefit Part B (see above), whose children are six years or older, will take a hit to the hip pocket. To alleviate the pain, they will now be eligible to receive a $750 payment annually for each child aged between six and twelve.
If you’re planning on retiring/going on the pension soon
Get set to work for longer - the pension entitlement age will be increased to 70 from 2035, affecting anyone currently under 50.
If you’re a pensioner
Things are going to get tougher once you’re on the aged or disability support pension too – they’ll be indexed to growth in the Consumer Price Index rather than increasing to keep pace with average wage growth from 2017.
If you’re a student or planning on studying
This budget is a particularly tough one for uni students. University prices are going to be deregulated, opening the door for institutions to set their own fees. This means you’re likely to have to pay more for prestigious degrees at top universities, though some degrees at less desirable universities may be in the bargain basement bin soon.
Additionally, the average proportion of higher education costs paid by the Commonwealth will fall by 20%, and students will have to start paying back HECS debt when they earn a minimum of
$50,638 from July 2016. This means university students will have more debt, and will have to start paying it back sooner.
And just in case the prospect of all that debt puts you in the mood for an overseas holiday to escape your woes, beware – Youth Allowance payments won’t be paid to students while they’re holidaying overseas unless they’re studying or there’s a family emergency.
On the up side, the government will now provide the same funding and HECS loans as currently available to public university students to those at private colleges and TAFEs.
If you’re a high income earner
You’ll be forking out the dough come tax time – the Temporary Budget Repair Levy will see two percent added to all income above $180,000 for three years. If you’re on $200,000, you’ll be hit with an extra $400. If you’re earning $300,000, you will pay $2400.
If you visit an optometrist
Visiting the optometrist could soon be more expensive, with the government reducing their rebate from 85% to 80% for all services from 2015, and lifting the charging cap that currently exists, meaning optometrists will be able to set their own prices.
For more budget coverage
Head to CHOICE's wrap-up of the winners and losers in the 2014-15 Federal Budget.