What happened to those big budget announcements?


With the Federal Budget less than a week away, we look at how some of last year's big announcements are tracking.


Every second Tuesday in May, the federal government publishes four little white books outlining its financial plan for the next four years. Every budget is different – some are full of spending splurges (especially in an election year) while others are all about belt tightening (remember the "budget emergency" of 2014?).

The biggest announcements might be debated for months or years ahead. Others simply drop off the radar, becoming law without fanfare or quietly sitting on the books, unloved and unlegislated, but still counting towards the bottom line.

Last year the government officially dropped a few dozen "zombie measures" it had given up on passing into law, some of them dating way back to its first budget in 2014.

With budget 2018 less than a week away, we take a look at where some of the big budget announcements of previous years have ended up.

  • Child Care Subsidy

The plan: Replace the Child Care Rebate and Child Care Benefit with the Child Care Subsidy. The subsidy will be based on your income, the type of child care you use, and an activity test based on the hours you work or study.

What happened: It was deferred for a year in the 2017 budget, and will now come into effect on 2 July 2018. If you currently receive the Child Care Benefit or Child Care Rebate you have to complete an assessment to get the new payment.

  • School funding overhaul

The plan: The Commonwealth will provide 20% of public schools' funding needs and 80% of private school funding by 2027. State governments are to ensure that schools reach at least 95% of their funding requirements.

What happened: In order to secure the support of the crossbench, the 10-year implementation period was reduced to six.

  • "Gonski 2.0" report into improving educational standards

The plan: Announced at the same time as the school funding overhaul, the architect of the funding model, David Gonski, was commissioned to investigate evidence-based ways to improve educational standards.

What happened: The report was released in April and recommended an end to the "industrial model" of school education, towards a system that equips "every child to be a creative, connected and engaged learner". The government accepted all of the report's recommendations, which include giving principals greater autonomy, prioritising literacy and numeracy in early years, and a review of the national curriculum.

  • Make "No jab, no pay" fairer

The plan: Parents of unvaccinated children without a medical exemption will have their regular Family Tax Benefit Part A payments reduced by up to $28.28 a fortnight. Previous "No Jab, No Pay" rules that targeted Part A End of Year Supplement (available only to families with an income under $80,000) will be abolished. The new rules mean that all families have benefits reduced for failing to vaccinate their kids.

What happened: The bill has been before the Senate since February, with the new rules scheduled to come into effect on 1 July.

  • Increase retirement age to 70

The plan: Between 2025 and 2035, gradually increase the Age Pension eligibility age from 67 to 70. The current eligibility age is 65, but it's already set to increase to 67 by July 2023.

What happened: Introduced in the 2014 budget, this plan is yet to be legislated. With a couple of election cycles to go until it takes effect, the government isn't prioritising this.

  • Enshrine the objective of superannuation in law

The plan: Give certainty to the super industry by actually defining what it does. This short bill seeks to define the primary purpose of the superannuation system as "to provide income in retirement to substitute or supplement the age pension". Future superannuation rules and laws will be required to be compatible with this objective.

What happened: The bill has sat before the Senate since November 2016. The details don't have Labor support and the Opposition want a superannuation objective that aims to give as many people as possible a "dignified retirement" without reliance on the Age Pension.

  • Give empty nesters a super incentive to downsize

The plan: Take away some of the disincentive for older home owners to sell the family home. People 65 years and older will be able to contribute up to $300,000 each to their super from the proceeds of selling their primary residence, provided they've lived in the home for 10 years or more. The non-concessional contributions won't count towards your cap. The goal is to encourage empty nesters to downsize, releasing housing stock for larger families.

What happened: The bill passed in December 2017.

  • Three-strikes rule for jobseekers

The plan: Demerit points for jobseekers who fail to meet their obligations. After racking up four demerit points in six months you enter a three-strikes phase. One strike loses you a week's Newstart payment; two weeks for the second strike, and four weeks for the third.

What happened: Legislation passed the Senate in March, and the new rules come into effect on July 1.

  • Drug testing young and unemployed people on welfare

The plan: Five thousand new recipients of Newstart and Youth Allowance will be subjected to random drug tests. Those who fail the test will have their payments quarantined for up to two years, limiting the amount they can withdraw as cash.

Further positive drug tests might result in a referral to a health professional for possible treatment. The two-year trial will target Canterbury-Bankstown (NSW), Logan (QLD) and Mandurah (WA).

What happened: The Opposition and the Greens were against the proposal. It was dropped from a broader welfare reform bill (which included the demerit points plan above) after concerns were raised about the scheme's cost and reliability, and the availability of treatment services to meet the potential increased demand. A similar plan has been reintroduced to Parliament, where it has sat before the lower house since February.

  • Increase the Medicare Levy to fund the NDIS

The plan: Raise $8.2 billion over four years by increasing the Medicare Levy from two percent to 2.5%. Use that money to fund the National Disability Insurance Scheme.

What happened: This wasn't a particularly controversial announcement, although Labor did block it and call for the increase to apply to those earning more than $80,000. The government ditched this policy in April, when the Treasurer announced an increase in normal tax revenue meant the levy hike wasn't necessary.

  • Child and Adult Dental Scheme

The plan: Combines the Child Dental Benefits Schedule with the national partnership agreement on adult public dental services. It would subsidise dental services for more than 10 million people for $2.1 billion over five years. The ADA slammed it as a "smoke and mirrors" accounting trick that would do nothing to alleviate public dental waiting lists.

What happened: Not a lot. After being announced before the 2016 budget, it was deferred in the 2017 budget. It remains on the books, but there is no legislation pending.

  • Make graduates pay back their student debt earlier

The plan: Reduce the income level at which HELP debts begin to be collected through the tax system, from around $56,000 to $45,000. People on $45k will pay one percent of their income towards their student loans. The more you earn, the higher your repayment rate is.

What happened: The bill is currently awaiting debate in the Senate. Labor and the Greens oppose reducing the threshold. Derryn Hinch's Justice Party want the minimum threshold moved to $50,000, while Pauline Hanson's One Nation Party wants to bring it down even further, to $30,000.

  • Increase university tuition fees and decrease government funding

The plan: Increase tuition fees by 1.8% for four years, and apply a 2.5% cut to the Commonwealth Grants Scheme in 2018 and 2019. Introduced as an alternative to the fee deregulation plans mooted in earlier budgets. It wouldn't change the share of tuition fees paid by the Commonwealth to eligible students.

What happened: Also opposed by the Opposition and the Greens, this bill has sat before the Senate since September 2017.

  • Let first home buyers use their super to save for a deposit

The plan: Called the First Home Super Saver Scheme, it allows first home buyers to contribute an extra $15,000 a year (up to a total of $30,000) to their superannuation. From 1 July they will be able to withdraw this to use a deposit. Super accounts are a low tax, high return way to save money, so the goal is to help people save for a deposit faster, and keep up with rising property prices.

What happened: The bill passed in December 2017. The first deposits will be able to be withdrawn on 1 July. If you're interested in this scheme, get in contact with your super fund to set it up.

  • Cheap loans for affordable housing development

The plan: Establish the National Housing Finance and Investment Corporation, which will encourage institutional investment in affordable housing. It will operate a bond aggregator, in which it essentially borrows huge sums of money at lower rates than individual developers could, and then issuing low cost loans to affordable housing corporations.

What happened: The legislation is being reviewed by a Senate committee, and its report is due next week.

  • Company tax rate cuts

The plan: Reduce the company tax rate from 30% to 25% over time, beginning with the smallest businesses and gradually introducing tax cuts to bigger companies. It will reduce the tax take by $65 billion over 10 years.

What happened: Since announcing this in 2016, the government has only got some of the way there. Businesses with a turnover less than $25 million will have a 27.5% rate in 2017–18, and on 1 July that threshold will increase to $50 million.

The tax rate for these companies will gradually decrease as planned. However, there isn't enough support in the Senate for extending the tax cuts to bigger businesses, so for now this plan has stalled.

  • "Google tax"

The plan: Officially known as a Diverted Profits Tax, this imposes a 40% tax rate on big multinationals who seek to avoid paying their fair share of tax in Australia.

What happened: Another 2016 budget item, this tax came into effect in July 2017. It's expected to raise $100 million a year.

  • Increase penalties for dodgy businesses

The plan: Bring the penalties in the Australian Consumer Law into line with those in the Competition and Consumer Act, and make sure that the fines you pay for ripping off your customers can't be factored in as the cost of doing business.

For companies, the maximum penalty will be $10 million or three times the benefit received from breaking the law or, if the value of the benefit can't be determined, 10% of the previous 12 months' revenue.

What happened: Set to come into effect on 1 July 2018, the bill is still in the lower house.

  • Major bank levy

The plan: Raise $6.2 billion over four years by levelling a tax of 0.015% of the liabilities of all banks with liabilities over $100 billion – that is, the big four banks.

What happened: Unsurprisingly, it sailed through Parliament and became law in July 2017, less than two months after being introduced.

The Federal Budget will be handed down on May 8. Visit choice.com.au on Tuesday night for comprehensive coverage of how it will affect you.


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