Helping households with the cost of living
The Gillard Government has a proven track record of delivering cost of living relief to millions of Australian households.
A central part of this has been sound economic management – delivering jobs and growth amid global economic uncertainty, and low inflation and low interest rates in a strong economy.
This Budget supports jobs and growth, while improving the sustainability of Australia’s public finances and making room for critical investments in our nation’s future.
Through its strong fiscal discipline, this Government is providing a buffer to continued global uncertainty and giving the Reserve Bank of Australia more scope to cut interest rates should it want.
The cash rate is now a 400 basis points lower than when the Labor Government came to office, in contrast to the ten rate rises in a row that hit families under the previous Liberal Government.
The current cash rate of 2.75 per cent is lower than at any time under the previous Liberal Government.
A family with a mortgage of $300,000 is now paying around $5,500 a year less in repayments now than when the previous government left office.
A fair go for families
Despite strong economic fundamentals, the Government appreciates many working families face cost of living pressures and find it difficult to make ends meet.
This year families will continue to benefit from the Schoolkids Bonus, the Household Assistance Package, tax cuts and the Low Income Super Contribution.
This is the first full year of the Schoolkids Bonus – providing eligible families with $410 for each primary school child and $820 for each secondary school child.
The Gillard Government understands the types of costs families incur differ from child to child. The Schoolkids Bonus will help families whether they are meeting the costs of stationery, books and uniforms or broader educational activities such as school excursions and music lessons.
In June 2012, families also began to receive support for household bills through the Household Assistance Package, with an advance of up to $110 a child for families receiving Family Tax Benefit Part A and up to $69 for families receiving Family Tax Benefit Part B. In July 2013 this assistance will be locked in place, with these advances rolled permanently into the family payments system.
Families can also face today’s cost of living pressures with more confidence about tomorrow’s retirement savings.
For a worker aged 30 on full-time average wages who retires at 67, the boost to the superannuation guarantee will lift their super by $127,000 by the time they retire.
And the Government’s low income super contribution (LISC) will benefit 3.6 million Australians on low and modest incomes, including 2.1 million women, by providing up to $500 a year to help them save for their retirement.
A typical couple family with two children (aged 8 and 14) and a household income of $110,000 (split 70:30 between the parents) will find themselves $2,130 better off this year thanks to the Government’s cost of living reforms. These include:
- $1,230 in Schoolkids Bonuses;
- $381 in tax cuts;
- $73 in Household Assistance Package payments; and
- $446 in the Low Income Superannuation Contribution.
The Liberals have promised they would take every last cent of this assistance away from families.
And families with kids in child care benefit from up to $7,500 in child care assistance through the non-means tested Child Care Rebate which covers 50 per cent of out of pocket expenses – up from just $4,354 delivered by the Coalition. Families with one child in care on incomes below $142, 426 also receive additional targeted assistance through the Child Care Benefit. Higher income limits apply as the number of children in care increases.
And this budget delivers $12.9 million in funding to provide more flexible child care options for working families.
A big boost to pensions
The Government understands that pensioners face unique cost of living pressures and often have limited room in their budgets.
That’s why we’ve delivered the single largest increase in the Age Pension in its 100 year history.
And that’s why we’ve reformed the indexation system so it better reflects cost pressures on pensioners.
In the three and half years since the Government’s historic reforms, the maximum rate of the pension has increased by $207 a fortnight for singles and $236 a fortnight for couples combined.
This year has seen the Clean Energy Supplement, part of the Household Assistance Package, rolled permanently into the Age Pension. This alone provides an extra $350 a year for singles and $530 a year for couples to help with their household bills.
Only under Labor will pensioners get this level of support.
The Liberals have promised to take the axe to the Household Assistance Package, resulting in the first fall in the Age Pension since the Great Depression.
A proud record of tax cuts for all Australians
The Government has a proud record of delivering lower taxes for all Australians.
Building on three rounds of tax cuts delivered in the Government’s first three years, this year has seen the tripling of the tax free threshold – the first increase in more than a decade.
All up, these reforms have provided tax cuts right across the income scale, rewarding hard work and providing cost of living relief to all taxpaying Australians.
Even with a modest increase to the Medicare Levy, Australians will be paying $19.7 billion less in tax in 2014-15 than they otherwise would have under the tax scales in place when the Coalition left office. The impact of these tax cuts on individual Australians is significant, with a worker on average wages of around $70,000 paying nearly $1,000 less tax each year.
|Tax cuts since 2007-08
*Net tax cuts and Medicare Levy increase as a proportion of total income tax and Medicare Levy paid in 2007-08.
Delivering relief when it is needed most
The Gillard Government is delivering cost of living relief when it is most needed – as the bills come in.
A significant benefit of rolling the low income tax offset into the tax free threshold has been that working Australians are now receiving more money in their pay packets, as they earn.
After eleven years of the Howard Government, the amount you could earn before having tax withheld from your pay packet had crept up from $198 to $228 a fortnight.
Yet in just five years the Government has almost tripled this to $714 a fortnight.
Delivering tax cuts within the year means workers get more help when they need it, as the rent or mortgage payments and electricity and grocery bills fall due.
This complements other reforms, such as lifting the Child Care Rebate while allowing parents to receive it fortnightly, and converting the Education Tax Refund into the Schoolkids Bonus, meaning that families get the help they need as the kids head back to school.
This year, there is a choice – between the Gillard Government supporting Australian families, or Tony Abbott’s strategy of cutting to the bone by slashing basic services families rely on.
This budget keeps our economy strong, makes the smart investments for our future and ensures every Australian gets a fair go.
We are investing for the future, putting jobs and economic growth first and protecting the important services that Australians rely on.
The Gillard Government is doing this to keep our economy one of the most resilient in the world – we have low unemployment, solid growth, contained inflation and low interest rates.