Budget 2018
Budget 2018
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Budget 2018: Tax relief for workers, migrants wait longer for welfare

Budget 2018: Low and middle-income earners, pensioners are the big winners from Tuesday’s budget, but newly arrived migrants face longer wait periods for government help.

Published Tuesday 8 May 2018
By James Elton-Pym, Rashida Yosufzai

Millions of lower and middle-income workers will get immediate tax relief and some an extra $530 a year under measures announced in the Federal Budget.

But migrants will wait longer for welfare, and refugees will wait longer for job-search help, under the government plans to reduce the nation’s social services debt.

And the government will achieve one of its biggest savings measures by cutting the number of general practitioners brought to Australia on visas each year. 

Tax relief for workers

Tax refunds will increase for all Australians earning up to $125,000 year but will be most lucrative for those earning between $48,000 and $90,000.

At least 4.4 million Australians will receive the maximum benefit of $530 under a new tax refund plan.

The refund will be available to those earning between $48,000 and $90,000, as a lump sum on their tax return at the end of the financial year.

In addition, Australians earning up to $90,000 will pay a reduced income tax rate of 32.5 percent, when the middle-income tax bracket cap increases from $87,000 to $90,000. 

The government is also tackling “bracket creep” in future years – assuming future governments stick to the plan.

Those earning up to $41,000 will pay the lower 19 percent income tax rate by 2023, raising the bracket from $37,000.

By 2023, higher income earners will also pay less tax. Those earning up to $120,000 will pay 32.5 percent income tax.

By 2024, the 37 percent tax bracket will be abolished entirely.

Super charges

Australians with super balances under $6000 will only pay a certain amount of fees on accounts under government plans to cap charges at three percent.

In addition, those with lost super will get help from the Australian Tax Office to help source unclaimed super funds, potentially benefiting young workers, lower income earners and seasonal workers.

Pensioners' bonus

All age pensioners will be able to boost their retirement income by getting access to the Pensions Loan Scheme while some will be able to work and supplement their income.

Under the expanded loans scheme, all pensioners can boost their income by $11,000 if they’re single or $17,000 if partnered, every year.

Those with super accounts below $300,000 will no longer face a superannuation work test and can make voluntary super contributions.

An expansion of the Pension Work Bonus program will allow age pensioners to earn an extra $1300 annually without facing the prospect of a payment reduction.

Self-employed retirees, under the new plan, can now earn up to $7800 and still get the pension.

Aged care

There’s also help for older Australians hoping to remain in their own homes for longer.

The government will spend $1.6 billion to boost the number of aged care spaces with an extra 14,000 high-level home care packages by 2012-22.

This will include 13,500 residential aged care places and 775 restorative care places.

For Indigenous older Australians, the government is pledging $105 million over four years for residential aged care spots and home care packages in remote communities.

For those suffering from elder abuse, the government aims to spend $22 million to protect older Australians from being taken advantage of, including legal help and family counselling services.

Refugees wait for jobs

Thousands of refugees who’ve newly arrived in Australia will now wait six months to receive help finding a job if they’re receiving welfare payments.

Instead of waiting 13 weeks, around 3,500 refugees every year will wait 26 weeks, after they register for income support in order to receive help from the government’s 'jobactive' program.

Instead, in that time they’ll be required to focus on improving their English language skills.

However, refugees with good English skills can access some ‘light’ support for six weeks.

The $68 million in savings from these cuts will be used to repair the budget and fund other measures.

The government’s ‘jobactive’ program is a familiar service for Australians who access welfare payments through Centrelink.

It connects dole recipients with employment officers, who help applicants improve their resume, offer interview tips and check on progress with job applications.

Migrants wait for welfare

Newly-arrived migrants will also wait longer to access certain welfare benefits from July 1, 2018.

Instead of the current three years, they’ll now wait four years for certain types of payments including Newstart, paid parental leave, carers allowance and the family tax benefit.

There are some exemptions for vulnerable groups, including refugees and those who come into sudden financial hardship including victims of domestic violence.

The measure was already announced in the mid-year budget review, but the waiting period has been extended a further year in Tuesday’s Budget.

This will save the Budget some $200 million over five years.

Overseas doctor places cut

The number of general practitioners brought to Australia on visas each year will be cut from 2,300 to 2,100 in a bid to reduce Medicare costs.

The Turnbull government will achieve the biggest single savings measure in the 2018 Budget by cutting Australia’s annual intake of overseas-trained GPs by 200 places.

The total number of GPs granted visas each year will fall from 2,300 places to 2,100 in a move designed to limit an “oversupply” in some urban areas, officials told SBS News.

But the government will also “improve the targeting” of the visas to hit areas with doctor shortages, including regional areas.

Restricting the total number of doctors will reduce the demand for Medicare and medicine covered by the PBS, delivering massive savings worth $416 million over the next four years, according to government modelling.

Churches to hire migrants

Religious organisations will be able to hire temporary migrants as bishops, ministers and religious assistants without paying into a fund designed to support 300,000 Australian apprenticeships.

The Turnbull government announced the Skilling Australians Fund in last year’s budget, but the mechanism is yet to pass the Senate.

Employers who hire a migrant worker under a temporary skills visa or an employer-nominated visa would be forced to pay a “levy” into the apprenticeship fund.

But 2018 Budget papers reveal religious groups will be exempted.

Many churches in Australia hire foreign ministers, often from strongly religious Latin American countries, or Asian nations like the Philippines and South Korea.

The scheme would have forced churches to pay up to $8,000 per year for a temporary worker, or up to $5,500 for a permanent visa holder.  

Budget deficit

The 2018-19 budget deficit is $14.5 billion. The Government estimates a budget balance of $2.2 billion by 2019-20.

It comes after former treasurer Peter Costello said he believes he'll be dead and buried by the time the federal government has paid off the nation's debt.

On the eve of the budget announcement, Mr Costello warned Australia wouldn't be in a position to pay back money owed until spending was under control.

"It took us 10 surplus budgets to pay off last time. You would be doing well to pay it off in 10 surplus budgets this time," Mr Costello told ABC TV's 7.30.

"I think the probabilities are we will never get back to where we were, you and I will die before that happens."