Workers could see an increase in their take-home pay within weeks as the Federal Government seeks to quickly implement $50 billion in fast-tracked tax cuts.
Key points:
- The Government wants its tax cuts legislated and in peoples' pockets as soon as possible
- The changes would put more than $1,000 in the pockets of millions of workers
- Labor is raising concerns a new wage subsidy for some under-35s excludes older workers
Last night's Budget confirmed tax cuts will be implemented two years ahead of schedule, and retrospectively from July this year, as the Government seeks to stimulate an economy in recession.
The change has millions of Australians set to take home at least an extra $1,000 this year.
The budget also included billions of dollars for a wage subsidy to encourage employees to hire unemployed workers aged under 35.
Treasurer Josh Frydenberg will introduce the legislation today, and hopes it will pass the Parliament this week, which would allow the Australian Tax Office (ATO) to implement the cut.
Labor supports the Government's plan to bring forward personal income tax cuts, but Shadow Treasurer Jim Chalmers said he wanted some time to consider the business tax incentives, including billions of dollars for instant asset write-offs.
"One of the measures alone costs $27 billion, so we will go through the detail of it and make sure that that's the right and responsible way to spend so much money," he said.
The Treasurer has said Australia's finances are facing their biggest challenge since the Great Depression because of coronavirus.
He has vowed his priorities are to get people who lost their jobs to coronavirus back into work, while also hoping the tax cuts will encourage people to spend more and stimulate the economy.
Susan Franks, a senior tax advocate with Chartered Accountants Australia and New Zealand, said she was optimistic the tax cut would deliver the stimulus the Government wanted.
"I think if you give people a large amount of money they would be cautious about just spending it," she said.
"They would want to put it towards the mortgage and to try and build a savings nest, but when you are receiving $20 to $50 a week its probably easier to treat yourself."
The Budget includes a record deficit of more than $213 billion, with net debt forecast to peak at $966 billion — the equivalent of 44 per cent of gross domestic product (GDP) — in 2024.
Unemployment to take years to recover
Unemployment is forecast to be 7.25 per cent this financial year, down from a peak of 8 per cent in December.
The Government expects it won't drop below 6 per cent until the 2023-24 financial year.
Australian Council of Trade Unions president Michele O'Neil said the Government wasn't doing enough to push unemployment down.
"We think the Budget fails to deliver on both saving existing jobs and creating the new secure jobs of the future," she said.
"Workers need that job security and money in their pocket to be able to help the economy to recover."
But the Business Council's Jennifer Westacott endorsed the Budget's measures and insisted the policies would help businesses employ more workers.
"Those million people who are out of work need a business to be up and going again, they need a business to be investing again, they need the economy to open, they know that as we open the economy up, half of those jobs are replaced.
"That's the task this Budget had, we believe it's done a very good job of that."
Wage subsidy to get young people into jobs
A so-called JobMaker Hiring Credit will be paid for a year to businesses who hire an unemployed worker aged 16 to 35 from the JobSeeker program.
The rate will be $200 a week for people under 30 and $100 a week for people between 30 and 35, and they must work at least 20 hours a week.
The Budget forecasts that will support 450,000 jobs, and all businesses, except the major banks, will be eligible.
Mr Chalmers said Labor had concerns about the age limit on the new wage subsidy.
"There are 928,000 Australians on unemployment benefits who aren't eligible for any of these hiring subsidies," he said.
"They have been left out and left behind and left in the lurch, and that's very concerning to us."
But Mr Frydenberg defended the age limit.
"We settled on 35 [years old] because young people have been particularly impacted by this crisis," he said.
"And also because of the history of previous recessions in Australia in the 1980s and the 1990s, that it took a while for jobs to come back."
Cash for retirees, but disappointment for older workers
Ian Yates from the Council on the Ageing offered his support for two $250 cash payments for seniors, carers, families and disability support recipients.
But he said he was concerned that the key budget measures to get people back into work were focused on Australians under the age of 35.
"What we're worried about is there's not a parallel targeting for those old and mature aged workers who are also vulnerable," he said.
"They're often the first off … they find it very hard after an economic crisis to get back into the workforce."
Ms Franks defended the focus on getting younger workers back into work.
"Treasury put out a paper in June of 2020 highlighting the adverse impact on young people of graduating into a recession," she said.
"That paper indicated that it could take up to 10 years to mitigate the adverse consequences. So I can understand the Government focusing its efforts on trying to ensure this younger generation has stable jobs to get into."
But she said there also needed to be an effort to get older workers back into work.
"There does need to be some consideration of how to get them back into the workforce, particularly those over 50, because they're in that age where they can get age discrimination working against them."
Underlying the Government's assumptions is that a coronavirus vaccine won't be in place until late next year at the earliest.
The Budget expects all domestic borders, except for WA's, to reopen by the end of the year.
It expects WA's to reopen in April, shortly after the state election there.
A return of international students and permanent migration isn't forecast to happen until late next year, with international travel expected to "remain low through the latter part of 2021".
https://news.google.com/__i/rss/rd/articles/CBMiX2h0dHBzOi8vd3d3LmFiYy5uZXQuYXUvbmV3cy8yMDIwLTEwLTA3L2ZlZGVyYWwtZ292ZXJubWVudC1idWRnZXQtZGVidC1kZWZpY2l0LXJlYWN0aW9uLzEyNzM3Mjcw0gEnaHR0cHM6Ly9hbXAuYWJjLm5ldC5hdS9hcnRpY2xlLzEyNzM3Mjcw?oc=5
2020-10-06 16:41:00Z
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