Immigration

Migrants to wait three years for welfare as government chases $1.3 billion in savings

Federal Treasurer Scott Morrison has delivered his mid-year economic and fiscal outlook, revealing changes to welfare payments and university funding.

Migrants who arrive in Australia from July next year will have to wait three years before they can access certain welfare payments, extending the current two-year waiting period.

The government estimates the measure will save $1.3 billion over the next four years.

The extended waiting time will apply to paid parental leave, the Carers Allowance and the Family Tax Benefit.

Those bringing relatives over to Australia on a family visa will also need to guarantee their financial independence for three years.

There will be some “exemptions” for “vulnerable groups”, according to MYEFO paperwork, as well as for some New Zealand citizens with children in their care.

The migrant welfare reforms and the cuts to university funding are the two biggest saving measures revealed in the MYEFO, which was released by the Turnbull Government on Monday.

"Turning the debt ship around was always going to take time and we are continuing to make considerable progress," Treasurer Scott Morrison said. 

The budget update shows Australia is still on track to be out of debt and into a surplus by the financial year 2020-21, when the surplus is forecast to reach just above $7 billion.

Deloitte economist Chris Richardson said the slower debt growth was largely thanks to an improved Chinese eocnomy that was able to buy more Australian export goods. 

He said the longer waiting times for migrants were "tough".

Several hours after the MYEFO was released, Labor indicated its unease at the proposal. 

Shadow treasurer Chris Bowen said the opposition would "take some time" to unpack the measures. 

"However, we are deeply concerned about the impact on those who can least afford it," he said.  

"We are honoured to represent a highly multicultural electorate."

Government moves again on uni cuts

The government will also try a new set of measures to save money on university funding after the Senate defeated a package of cuts announced at the Budget back in May.

The combined measures will save the government $2.1 billion over the forward estimates - but some of those dollars are contingent on the government passing new legislation.

If the Turnbull Government can pass the legislation, there will be a new lifetime cap on the total amount of money the government will loan to any one student for their tuition.

HECS loans will be capped at $104,440 for most students, and a little higher at $150,000 for those studying dentistry, medicine or veterinary sciences.

The government will also try to pass reforms that force students to start repaying their loans once they start earning more than $45,000 per annum, after a previous attempt to lower the threshold further was voted down in the Senate.

One further university savings measure can be done without new legislation. Uni grant funding from the Commonwealth will be frozen at 2017 levels for the course of 2018.

Budget improves but wage growth doesn't

The prediction for wages was reduced over the next four years.

The treasurer, like Reserve Bank governor Philip Lowe, expects as the labour market continues to tighten as the unemployment rate falls, wages should rise.

More investment and stronger economic growth will also deliver higher wages.

"The money won't fall from the sky for wages. It won't fall from the government," Mr Morrison says.

However, it's a vicious circle.

If wage growth doesn't improve, household consumption will remain subdued, imposing a drag on economic growth and the budget.

While the treasurer indicated personal tax cuts would be announced in the May budget, given the budget will remain in deficit until 2020/21, it's difficult to see how far they will go.

Big spending on medicines

The government will spend just over $2 billion on subsidising new medicines, and reducing the cost of some already covered on the Pharmaceutical Benefits Scheme.

Among the new medicines are therapies for bowel cancer, panic-related disorders and chronic skin conditions, among others.

A further 37 medicines will have their prices adjusted. 

Migrants who arrive in Australia from July next year will have to wait three years before they can access certain welfare payments, extending the current two-year waiting period.

The government estimates the measure will save $1.2 billion over the next four years.

The extended waiting time will apply to paid parental leave, the Carers Allowance and the Family Tax Benefit.

Those bringing relatives over to Australia on a family visa will also need to guarantee their financial independence for three years.

There will be some “exemptions” for “vulnerable groups”, according to MYEFO paperwork, as well as for some New Zealand citizens with children in their care.

The migrant welfare reforms and the cuts to university funding are the two biggest saving measures revealed in the MYEFO, which was released by the Turnbull Government on Monday.

The budget update shows Australia is still on track to be out of debt and into a surplus by the financial year 2020-21, when the surplus is forecast to reach just above $7 billion.

Big spending on medicines

 The government will spend just over $2 billion on subsidising new medicines, and reducing the cost of some already covered on the Pharmaceutical Benefits Scheme.

Among the new medicines are therapies for bowel cancer, panic-related disorders and chronic skin conditions, among others.

 A further 37 medicines will have their prices adjusted.