In its landmark 2020 Federal Budget, the Australian Government has outlined a series of measures designed to assist Australian families through this difficult COVID-19 period.
Although the deficit will rise to $213.7 billion this year and net debt will grow to $703 billion or 36 per cent of GDP, these funds will aim to support the economic recovery and families in 2020 and 20211.
Tax cuts designed to help keep Australian families spending were a centrepiece of this year’s Budget. Under the Coalition’s estimates, about 95 per cent of taxpayers will move to a marginal tax rate of no more than 30 cents in the dollar by the 2024/25 financial year.
A raft of other measures to stimulate jobs growth, especially for women and young Australians, were also a central pillar of the Budget.
The Federal Government has brought forward a suite of tax provisions designed to put money in the hands of consumers to drive spending and create economic growth.
During his Budget speech, Treasurer Josh Frydenberg announced that more than 11 million taxpayers will receive a tax cut backdated to 1 July this year. The top marginal tax rate for people earning up to $45,000 a year will fall to 19 per cent, up from the previous threshold of $37,000. People earning $120,000 a year will see their top marginal tax rate drop to 32.5 per cent, up from $90,000.
According to the Treasurer, this will equate to tax relief of $5,490 for lower- and middle-income dual income families versus the 2017/18 tax year, with singles receiving tax relief of up to $2,745. The Federal Government is also maintaining the Low and Middle Income Tax Offset for another year. Under this incentive, people earning between $37,001 and $126,000 will receive an offset of between $255 and $1,0802 this year.
According to the Treasurer, low-income earners will benefit the most from the Government’s new tax regime. People earning $40,000 a year will pay 21 per cent less tax this year and people earning $80,000 a year will pay about 11 per cent less tax this year.
“Under our changes, more than 7 million Australians will receive tax relief of $2,000 or more this year,” he said in the Budget speech.
The Treasurer acknowledged lockdowns introduced at the start of the pandemic resulted in many women losing their jobs, and the Government is focused on ensuring female participation in the workforce returns to pre-COVID levels. The Treasurer has noted there has been some success in this area, with women being employed in 60 per cent of the 458,000 jobs created since May.
Under a new Women’s Economic Security Statement, the Federal Government has announced $240 million in programs to support women who have lost their jobs to get back into the workforce. New cadetships and apprenticeships for women in science, technology, engineering and mathematics (STEM) are key to this program.
Young people will also benefit through a new JobMaker hiring credit of $200 a week for people aged between 16 and under 30 and $100 a week for people aged between 30 and 35, to encourage Australian businesses to hire younger workers. Treasury estimates this will create around 450,000 jobs for young people.
This year’s Federal Budget also contains support under the JobMaker program for the manufacturing sector. This should help provide jobs across the nation for families with members working in a range of industry sectors, including:
The Government has also allocated $14 billion to new and existing infrastructure projects, which will support a further 40,000 jobs. Roads and rail projects have also been announced across the country, including $2 billion in road safety upgrades, as well as $1 billion for local councils to upgrade roads, footpaths and street lighting.
Recognising the tough times regional families have been through as a result of bush fires, floods and now COVID, a number of measures have been announced that will support families living in regional areas. These include $2 billion to help farmers, $350 million for regional tourism and $317 million for exporters.
To help Aussies into their first home, the First Home Loan Deposit Scheme will be opened up to 10,000 more people, in addition to $1 billion in low cost finance for affordable housing and $150 million for the Indigenous Home Ownership Program to help hundreds of indigenous families to buy a home.
The content in this page has been prepared by BT, a part of Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian Credit Licence 233714 (Westpac) and is current as at 6 October 2020.
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