2005-06Federal Budget Overview

2005-06 Federal Budget Overview

Federal Treasurer, Peter Costello, brought down his 10th Budget saying it is framed for the future — the future opportunities of young people, the future care of the aged, the future health services that Australians will need and demand, the security of the nation, and the future growth of the Australian economy which is necessary to realise these goals.

Peter Costello said the economic management of the Australian Government affects the lives of everyone because the lives of our citizens matter — the decisions the Government makes affect their mortgages, their businesses, and whether they can find a job.

He said the Budget was brought down at a time when more Australians are in work than ever before. Our unemployment rate has fallen to a low unmatched for 28 years.

Key elements of the Budget include:

Fiscal Outlook

The 2005-06 Budget provides for an underlying cash surplus of $8.9 billion

A strong budget position is being maintained while delivering further personal income tax cuts and introducing significant reforms to the welfare system, aimed at improving workforce participation

Economic Outlook

The Budget indicates the prospects for the Australian economy remain strong with economic growth forecast to be 3 per cent in 2005-06

The unemployment rate is forecast to remain around 5 percent

Tax cuts

All taxpayers will received tax cuts over the next four years valued at a further $21.7 billion

The 17 per cent tax rate will be reduced to 15 per cent from 1 July 2005.

The tax threshold for the 42 per cent and 47 per cent rates will be raised on 1 July 2005 and again on 1 July 2006.

The Government will abolish the superannuation surcharge on contributions and termination payments made or received from 1 July 2005

Welfare to work

From 1 July 2006 a wider range of income support recipients will be obliged to seek work

Newstart Allowance will be enhanced from 1 July 2006 to improve the rewards from part-time work

More than $2 billion will be invested over four years to assist those seeking work have the necessary support services and training

Incentives to find work will be strengthened by a change to the compliance framework, incorporating payment suspensions

Business taxes

The 3 per cent tariff applying to business inputs where no substitutable goods are manufactured in Australia will be removed from Budget Night. This will cost $1.3 billion over five years

A broader range of expenses incurred by business will become tax deductible.

Health

Record spending on health and aged care by the Government – $45 billion in 2005-06

$196 million over five years for the Strengthening Cancer Care initiative, including funding for additional research, screening and prevention initiatives

$321 million package to make dementia a national health priority. This includes 2,000 dedicated places to provide high level care for people with dementia in their own home

Changes to Medicare Safety Net and the PBS

Skills and training

An extra 4,500 pre-vocational training places for people interested in a career in a traditional trade

An additional 7,000 School Based New Apprenticeships to enable students to begin their apprenticeship while continuing their school studies

Delivering on the Government's election commitment to establish 24 Australian Technical Colleges for 7,200 year 11 and 12 students

Increasing skilled migration intake by 20,000 places in 2005-06 to 97,500

Families families and carers

Since the last Budget, the Government has increased the maximum rate of Family Tax Benefit Part B, costing $2 billion over five years

The level of income allowed before Family Tax Benefit Part A is withdrawn will be increased to $37,500 a year from 1 July 2006

A bonus payment for carers will be paid in June 2005. $1,000 for recipients of Carer Payment and $600 for recipients of Carer Allowance

Australia’s security

$239 million over four years to further enhance the investigation and language skills of intelligence agency personnel

$522 million over four years to improve protective security, including in missions overseas

$580 million for additional quarantine screening

International engagement

$1 billion aid package to Indonesia to assist with tsunami reconstruction and development efforts

$841 million over four years helping the Solomon Islands restore law, order and sound public finances.