The Budget has been received with intense analysis and criticism by different sectors throughout Australia, while embraced by many others.
Morrison says this Budget was created with the intention of strengthening Australia’s economic growth.
“This Budget makes the right choices for Australians who are working hard to secure the better days ahead for themselves and their families, and is based on the principles of fairness, security and opportunity,” said the Treasurer.
The Government’s forecast deficit for 2017-2018 is $29.4 billion, but they are projecting a return to surplus of $7.4 billion in 2020-2021.
To learn more about all the features of this Federal Budget, see Canstar’s summary.
As you think over the Budget and consider how it will affect you, it may be interesting to review the following reactions from industry experts, finance media commentators, and opposing government officials.
What are finance media personalities and economists saying?
Some of the top financial commentators have shared their opinions of the new Budget.
Money Magazine Editor Effie Zahos was featured on The Today Show talking about the ‘winners’ and ‘losers’ of the Budget.
Ms Zahos says the downsizing incentive for older Australians could allow people to go into aged care as they get older thanks to the boost of that $300,000 into their super from the sale of their home.
— The Today Show (@TheTodayShow) May 9, 2017
Nine Network’s Finance Editor Ross Greenwood says this year’s Budget showed a significant change in direction for the Australian economy.
Mr Greenwood says the strategy of Malcolm Turnbull and Scott Morrison has moved away from cuts, and is focusing more on the growth of the economy and maintaining Australia’s AAA credit rating, even if that involves going into debt for a few years before we return to surplus.
Mr Greenwood also stresses that the government’s Budget plan relies on wage growth, which means more tax revenue for them to work with.
— 9Finance (@9Finance) May 9, 2017
David Koch told The Daily Telegraph that this Budget is “among the better ones” he has seen over the years.
In terms of the housing affordability package laid out in the Budget, Mr Koch says they have been “quite smart” with the program for first home buyers, as well as in plans to free up more Government land to increase the supply of housing and ease prices.
Nine’s Political Editor Laurie Oakes, as always, delivered his verdict on the Budget this year.
Speaking to Nine News, he reflected on the bitter response experienced by many from the Joe Hockey Budget in 2014, and Malcolm Turnbull’s focus on “fairness” in this new budget.
“The tone of tonight’s Budget – if not quite warm and cuddly – was definitely optimistic, with plenty of assurances to the punters that the Government understands their problems,” said Mr Oakes.
— Nine News Australia (@9NewsAUS) May 9, 2017
ANZ Chief Economist Richard Yetsenga says the budget is surprisingly ambitious, with a “creative search for revenue” likely to be felt by the consumer.
“Indeed, how the push for new revenue marries with the view of an uninterrupted path to trend growth will be a big challenge,” said Mr Yetsenga.
“While signs of improved conditions offer comfort, much of the forecast pins its hopes on the back of rising tax revenue rather than disciplined spending.”
He advises that a reassessment of the Government’s economic plan will be required “should revenues disappoint”.
What is the Opposition saying?
As could be expected, the Opposition has had plenty to say following the release of the new Federal Budget last night.
Some of the key points outlined by various ALP representatives are:
- They view the Budget as unfair, labelling it a “Budget for millionaires and multinationals”, not for the average Australian family. This criticism comes from Shadow Treasurer Chris Bowen MP and Shadow Minister for Finance Jim Chalmers MP, who say Prime Minister Malcolm Turnbull has “chosen big business over middle and working class families”, “multinationals over Medicare”, and “big business over battlers”.
— 7News Yahoo7 (@Y7News) May 9, 2017
Speaking to Laurie Oakes on Channel Nine yesterday, Chris Bowen MP said the Coalition is “failing at every turn”.
“Whether it’s health where they fall short in saving Medicare, whether it’s education where they fall woefully short of our policy, whether it’s housing affordability where their package is a joke,” said Mr Bowen.
The Shadow Treasurer also criticised the decision not to immediately lift the Medicare Rebate Freeze, with Scott Morrison instead announcing it will be gradually removed over 4 years.
What are the big banks saying?
Who doesn’t like the new Budget? Big banks.
Australia’s five biggest banks will be hit with a new tax, which Scott Morrison says will secure $6.2 billion to “support Budget repair”.
The Australian Bankers’ Association (ABA) has expressed their displeasure with this levy on large banks, with Chief Executive Anna Bligh saying the tax will “hit Australians by hurting investment and could have unintended consequences”.
Ms Bligh also commented that it was “particularly disappointing” that there was no consultation with the banking industry on this matter.
— Sky News Australia (@SkyNewsAust) May 10, 2017
When it was suggested to Mr Morrison yesterday that the banks might be unhappy about the tax, he told them to “cry me a river”.
Customer Owned Banking Association (COBA) CEO Mark Degotardi says the levy on big banks will go some way to reducing an unfair banking system.
“The proposed new levy on major banks is an attempt to reduce the unfair funding cost advantage enjoyed by the biggest players, and COBA has put forward similar proposals in the past as a temporary measure,” said Mr Degotardi.
For those caught breaking the rules, the Government has also unveiled an investigation into the financial system called the Banking Executive Accountability Regime.
What are the housing and superannuation industries saying about the Budget?
First home buyers to benefit
In this Budget the Federal Government has finally introduced an initiative to give first home buyers a foot in the door.
The First Home Super Saver Scheme will allow people to make voluntary contributions of their income to their superannuation accounts to be able to save for a house deposit, at a lower tax rate than normal.
Morrison says these contributions can be made “over and above their compulsory superannuation contributions“.
Housing Industry Association (HIA) Deputy Managing Director Graham Wolfe welcomes this move, saying it is an important step by the government in addressing the key concern for many Australians of housing affordability.
“There are no simple solutions, but providing well targeted assistance to help first home buyers save for their first home and to providers of community housing through the ‘National Housing Finance and Investment Corporation’ will make a difference,” said Mr Wolfe.
Some industry leaders have expressed concern over the long-term effects to retirement for young people withdrawing their deposit of up to $30,000 from their super accounts.
Australian Institute of Superannuation Trustees (AIST) CEO Eva Scheerlinck says the AIST cautiously welcomes the changes for first home buyers.
Scheerlinck adds that if buyers manage investments well and engage with their superannuation more, it could be a positive move forward.
“Super is designed as a long-term investment for retirement income purposes, so using it as a vehicle to save for a home deposit is sending a mixed message about the objective of super (to substitute or supplement the Age Pensions in retirement),” said Ms Scheerlinck.
Industry Super Australia Chief Executive David Whiteley says the “proposal is deeply flawed and the thin end [sic] of the wedge for super savings – threatening workers future retirement”.
Older Australians to downsize from big homes
Another change mentioned in the Budget encourages older Australians to downsize, in a bid to free up housing.
Up to $300,000 from the sale of their home can be put into their super as a non-concessional contribution.
“These downsizing measures – while unlikely to have a significant impact on housing affordability – will at least give greater flexibility to those older Australians wanting to move into a smaller home, and also free up housing stock that may be better suited to larger families,” said Ms Scheerlinck.
Mr Whitely from ISA says that Australians aged 65 and older are “unlikely to take this up in great measure, as the proceeds will be counted in the pension assets test“.
SMSF Association CEO John Maroney says the change means “people can make a significant top-up contribution to their super funds, allowing them to fund a dignified and secure retirement”.
“While the measure may not be a significant trigger to encourage downsizing, we welcome the ability for older Australians to top up their superannuation where downsizing their home provides them with funds to do so,” said Mr Maroney.
In news that foreign investors will be put under pressure if they don’t comply with new property restrictions, HIA is concerned about the negative impacts this could have on foreign investment.
“Plans to tax vacant homes, limit the share of foreign investment in new projects, and increase foreign investor duties all send exactly the wrong signal to potential investors in Australia,” said Mr Wolfe from HIA.
Australian Labor Party (ALP) representatives say the lack of change on this matter “undermines the retirement incomes of young Australians”, and the current Budget provides no concrete solution to the housing affordability problem.
What is the health industry saying?
The Federal Budget announcement also included word that the Medicare Rebate Freeze will be lifted, and the National Disability Insurance Scheme will be funded by an increase to the Medicare Levy and taxable income.
— Nine News Adelaide (@9NewsAdel) May 10, 2017
The Australian Healthcare and Hospitals Association (AHHA) Chief Executive Alison Verhoeven says lifting the Medicare Rebate Freeze is great news for doctors and pharmacists, but there is still a need to ensure we have a stable and reliable health system long-term.
“We hope that doctors – and particularly specialists – will play their side of their bargain and commit to bulk-billing for the many services which currently have large out-of-pocket costs associated with them,” said Ms Verhoeven.
“Higher out-of-pocket costs lead to less use of primary health care by people who cannot afford any kind of co-payment, which in turn leads to increased public hospital attendances and higher health costs down the track.”
The lift of the freeze will also benefit many rural patients “who rely strong on bulk-billed consultations to afford their medical care”, said Rural Doctors Association of Australia (RDAA) President Dr Ewen McPhee.
In other Budget-related health news, the Heart Foundation has welcomed announcements by Federal Health Minister Greg Hunt.
In the announcement, the Coalition committed $10 million to invest in getting Australians out and walking, and another $5 million going towards helping GPs encourage patients to be healthy.
“Physical inactivity takes an immense toll on the Australian community, causing an estimated 14,000 premature deaths a year – similar to that caused by smoking,” said Heart Foundation National CEO Adjunct Professor John Kelly.
The Canstar perspective
Canstar’s General Manager of Wealth, Josh Callaghan, had been keeping a close eye on Budget updates, and has a few thoughts to share.
Mr Callaghan says that the consumer will ultimately bear the brunt of costs for the big bank levy, as banks try to remain profitable.
“This new levy will need to either be passed onto the consumer, result in job losses, or reduce the return to shareholders,” said Mr Callaghan.
On a positive note, he says the 2017 Budget brings good news for first home buyers, who now have a low tax savings option to make their first house deposit.
“In over-cooked markets, such as Sydney and Melbourne, most buyers need a deposit of $100,000 or more, so this new policy won’t be further fuelling a property bubble, but it will help millennials get to their savings goals a little faster, and therefore onto the property ladder sooner,” he said.
“Certainly compared to some of the alternatives suggested, like allowing people to access their super early, this is a welcome policy.”