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The Budget in Review

 

This budget seeks to achieve several goals simultaneously including helping the economy continue to recover from the COVID-19 pandemic; responding to the findings of the aged care royal commission; announcing several policies that primarily benefit women; as well as laying the groundwork for the next federal election. In brief, there is no shortage of spending.

 

Of course, this budget is in the context of record iron ore prices and a quicker economic recovery than expected. Hence, even with all this spending, the deficit is not as large as was expected even six months ago.

 

In respect of Australia’s retirement income system, there were no direct responses to the recent Retirement Income Review. Instead, the planned increase in the Superannuation Guarantee (SG) to 10% from 1 July 2021 will occur, and the long-standing $450 per month earnings threshold for the SG will be removed, along with smaller improvements largely directed at older Australians.

 

Federal Budget

Key changes:

 

  • Superannuation and retirement changes

     

    • The SG  rate will increase from 9.5% to 10% from 1 July 2021.    

    • The current $450 per month minimum earnings threshold for SG will be removed from 1 July 2022.
       
    • There are a number of changes to provide greater flexibility for older Australians to contribute to their superannuation and access their housing wealth, including repealing the Work Test for voluntary non-concessional and salary sacrificed superannuation contributions for those aged 67 to 74.

     

  • Personal tax changes

     

    • The low and middle income tax offset (LMITO) will be maintained for the 2021-22 income year, providing further targeted tax relief of up to $1,080 for low- and middle-income earners. 

     

  • Aged care initiatives

     

    Additional funding of $17.7 billion allocated over five years in response to the final recommendations by the Royal Commission into Aged Care Quality and Safety, consisting of:


    • $6.5 billion new funding for 80,000 new home care packages over the next two years. 

     

    • Commitment to a new vision for a new single “Support at Home” system delivering individualised care by the end of 2023. 

     

    • $3.9 billion over the next four years for mandated “care minutes” to reach a minimum of three hours and 20 minutes (200 minutes) per day for each resident in residential aged care.

     

    • A new government funded “Basic Daily Fee” supplement of $10 per bed a day, requiring $3.2 billion additional funding, for residential aged care providers to improve the sustainability of their services and operations. 

     

    • $798 million funding allocated over the next five years to support informal and family carers for older Australians with greater respite care and support services.

     

    • Measures to grow and upskill the aged care and home support workforce, including 33,000 new training places for personal carers and retention bonuses for nurses within residential aged care.

     

    • $200 million allocated to improve the ease in which Australians can navigate the system.

     

    • $365 million funding to enhance primary health care for older Australians, with improved connectivity between aged care and health care. 

     

    • Reforms to aged care are underpinned by new governance structures, including a new Aged Care Act, a new independent Pricing Authority for residential aged care funding settings and continuing to strengthen the capability of the sector’s regulator.

     

  • Investment implications

     

    • The Budget is balancing short-term issues with longer term megatrends, such as biosecurity, defence, digital technology and energy, while also considering aged care, natural disasters and deregulation as the private sector needs to take over as government spending winds down. 

       
    • From an investment perspective, the benefits will be very sector specific.  

     

  • Workforce initiatives

     

    • The budget spending program is designed to drive and support a lower unemployment rate and an increased participation rate and training across the Australian workforce – recognising that skilled workforce growth needs will need to be accommodated without access to immigrant pools while international arrival restrictions remain.
       
    • The program includes significant spending on:
       
    • Additional child care funding of $1.7 billion.
       
    • Vocational and leadership training specifically targeted to women already in or entering the workforce.
       
    • Respect@work training across the workforce.
       
    • Indigenous people (in particular women) focused programs.
       
    • Job Trainer Fund ($6.4 billion) to up skill the workforce.
       
    • Apprentices scheme expanded ($2.7 billion).
       
    • Range of programs to develop and enhance: cyber security skills (cyber security skills partnership innovation fund) ; AI and digital capability; emerging technologies capability (almost $100 million).

     

  • Health initiatives

     

    • $2.3 billion for mental health and suicide prevention.
       
    • Increased bulk billing payments for doctors based on remoteness to improve rural health.
       
    • Measures to improve the sustainability and affordability of private health insurance.
       
    • Telehealth services extended for a further six months.

     

 

 

Time to learn, time to prepare

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