That's its folks: night closes on Budget 2017
And this is where my story ends for the night. It being 10pm, we pull the numbers quilt over Budget 2017 to sleep on it and approach it with a fresh mind in the morning.
Like so much this government does, so much of this budget is a surprising about face. This time on taxes.
The biggest screams of the night, in reaction, have been from the big banks, who are contributing $6bn to help repair the budget, thanks very much.
But before you pull up the quilt yourself, have a read of First Dog on the Moon, who can cut through like nobody else on these big days.
In the meantime, I will say goodnight. And see you back here in the morning. Early. Truly.
We don't have an Australian aid budget, we have an Australian raid budget
Tony Milne, campaign director, Campaign for Australian Aid:
We no longer have an Australian aid budget, we have an Australian raid budget. We had cuts to Australian aid in 2014, cuts in 2015, cuts in 2016. Aid has been cut to the lowest level it’s ever been … [with] a further $303m of cuts. This is a budget to appease One Nation, not a budget that expresses our common humanity.
Nicole Lessio, The Parenthood:
Scott Morrison talked a lot about fairness and opportunity and security, but unfortunately there seems to be a lot of uncertainty still for parents, particularly when it comes to paid parental leave. We’re obviously pleased that … there’s a Medicare freeze thawing, that going to the GP will hopefully cost less for parents.
But we’re still unsure about what is happening with the home doctor service, so until we get information on that we can’t judge the Medicare gains that we’ve had.
Marcia Balzer, Baptist Care Australia:
Baptist Care Australia is really pleased with the government’s commitment of $1bn for a housing bond aggregator model.
We think there’s a real opportunity here to start addressing the housing crisis for people on lower incomes.
But it’s going to be very dependent on how that scheme is designed.
Amanda Bresnan, Executive Director, Community Mental Health Australia:
We welcome the leadership shown by the federal government tonight for people with a mental illness who aren’t eligible for the NDIS, with the $80m commitment.
We are, however, concerned about the punitive welfare measures that have been introduced, particularly around drug testing and increased activity requirements.
We know this is likely to have an impact on people with a mental illness, as they are overrepresented in these groups.
Big bucks for inland rail, you say?
Regional Australia Institute chief executive officer, Jack Archer, praised the investment in inland rail, suburban rail, and the regional grant fund.
Overall I think the government put its money where its mouth is for regional Australia. We’ve seen a really significant investment, particularly in regional rail,” Archer said.
Mental Health Australia chief executive officer, Frank Quinlan, welcomed the funding for veterans’ mental health, shutting down suicide hotspots, and the funding of telemedicine for those in the regions.
Quinlan also welcomed the $80m expenditure to close the gap on psychosocial support, which he said put the onus on state governments to bring their own resources.
In tonight’s budget, minister Greg Hunt, prime minister Malcolm Turnbull, and treasurer Scott Morrison are really going to help some people out in relation to their mental health issues. Most importantly they’re going to help out people who were missing out on services with the move to the national disability insurance scheme.
Combined Pensioners and Superannuants Association’s Elise Wakey said measures to give a one-off energy assistance payment and return the pension concession card for victims of the 2017 age pension asset test change.
But she was highly critical of increases to the pension age.
This government will not rest until the pension age has been increased to 70, and that’s a real worry for all Australians.
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Consumer Health Forum of Australia chief executive officer, Leanne Wells, said the budget was “commendable” for lifting the Medicare rebate freeze, reinstating bulk billing incentives, and favouring generic scripts for medicine.
Wells also praised the decision to allow consumers to opt-out of the MyHealth records system.
We think we’ve got a really coherent package in the budget, and we’ve got a commitment from Mr Hunt to a stage national health plan.
Legal centre reversal of cuts welcomed
Federation of Community Legal Centres executive officer, Serina McDuff, welcomed the late-minute reversal of 30% in planned cuts to community legal centres.
But McDuff warned that, as recommended by the productivity commission, more funding was needed to prevent legal centres turning away one-in-three vulnerable clients seeking help every year.
She said the federation was “greatly concerned” about the punitive changes to the social security compliance regime.
People that are doing it tough financially … they need support, not punishment. This will push people into homelessness, it will drive them into our prisons.
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Farmers give budget a solid B
Fiona Simson of the National Farmers Federation welcomed the inland rail equity funding and the extension of the $20,000 instant asset write off. But she was disappointed that the anticipated surplus had been pushed out to 2020-21.
We hope the treasurer’s plans to return the budget to surplus by 2020-21 are realistic and achievable, to avoid damaging business confidence.
As an export-dependent industry, we can’t afford unnecessary upward pressure on the currency, and a healthy budget is crucial to maintain our farm sector’s international competitiveness.”
Tonight’s budget has earned a solid B+ grade for its deliverables to the agriculture sector.
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Lovely photo from Mike Bowers.
Scott Morrison: We love Medicare, we promise
Gareth Hutchens details the Medicare changes.
The Turnbull government has attempted to quash concerns about its commitment to Medicare, lifting the freeze on the indexation of bulk-billing incentives for general practitioners from 1 July.
It will also “phase in” the reintroduction of indexation for other items on the Medicare benefits schedule over the next two years, scrapping its plan from last year’s budget to keep the freeze on indexation in place until 2020.
The treasurer, Scott Morrison, says it should “put to rest any doubts” about Medicare and the PBS, a direct response to Labor’s powerful attack in last year’s election campaign.
He says the government will also establish a new Medicare guarantee fund to pay for expenses on the MBS and Pharmaceutical Benefits Scheme, with money raised from an increased Medicare levy paid into the fund.
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Welfare crackdown: three strikes and you're out
Paul Karp has dug deep into welfare changes.
Under the new penalty system during the “personal responsibility phase” a failure to fulfil mutual obligations without a reasonable excuse will result in accrual of demerit points and payment suspension until a recipient re-engages with Centrelink.
People who accrue four demerits in six months will enter a three-strike “intensive compliance phase”, in which:
- The first strike without a reasonable excuse will see them lose 50% of their fortnightly payment
- At the second strike they will lose the entire fortnightly payment
- The third strike will see their payment will be cancelled for four weeks.
Budget papers said the new demerit point system would provide vulnerable people with support and include individualised assessments to ensure financial penalties were not imposed unfairly. The measure was estimated to achieve “efficiencies” of $632m over five years from 2016-17.
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Moody's rating agency gives a tick but about that deficit...
Marie Diron, Associate Managing Director, Moody’s:
Taking the budget and our forecasts into account, we assess Australia’s fiscal strength as very high, one key support to the government’s AAA rating and stable outlook.
Today’s budget is closely aligned to last year’s budget and the mid-year update, projecting a net cash balance moving towards balance at the end of this decade. These projections denote ongoing commitment to fiscal consolidation.
The removal of the [$13bn] saving measures pending parliament approval from the budget enhances the transparency and predictability of budget outcomes, a credit positive.
[However] we continue to forecast a slower deficit consolidation than projected in the budget.
Reaction from property council and accountants
Ken Morrison, chief executive, Property Council of Australia:
We’ve got some really serious policy solutions on the table, most of which are extremely welcome.
A focus on housing supply, a focus on closing the deposit gap, and providing rental accommodation for people at need are the right [thing to do].
Unfortunately we also see another round of demonising foreign investors, which is not helpful and won’t do anything for housing affordability.
Paul Drum, head of policy, CPA Australia:
Mums and dads, self-managed super funds, can breathe a sigh of relief that negative gearing was left alone, that capital gains that applies to those properties, was left alone [in this budget].
It’s certainly not a pre-election giveaway budget, but it’s not a budget where we saw a lot of new taxes either, unless you’re a big bank.
For small business, we’ve seen an extension of the $20,000 immediate write-off for small business … but only for a year, we would have liked to have seen that extended [permanently].
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Reaction from the aged groups, Infrastructure Australia and commerce chamber
Council on the Ageing chief executive, Ian Yates, said older Australians would feel “mildly positive” about the budget overall.
He welcomed the ending of the Medicare rebate freeze, and the government’s housing affordability package.
The only regrets that we have is that they’ve done nothing … about older people and dental health, or about older people continuing to miss out on mental health services. As an overall budget, although it has more coherence than maybe in the past, it does not yet address the ageing of the Australian population in a coherent way.
Aged and Community Services Australia chief executive, Pat Sparrow, welcomed the announcement of $1.9m for a strategy to grow the aged care workforce to deal with Australia’s ageing population.
She said there were otherwise “no surprises” for the sector in Tuesday’s budget. “This is really important because the aged care workforce has to grow significantly to meet the needs of an ageing population,” Sparrow said.
The Australian Chamber of Commerce and Industry chief executive, James Pearson, said the budget was a pragmatic document, that recognised his group’s calls for government spending to be restricted to 25% of GDP.
Pearson said the budget “recognised the political realities, particularly in the Senate”, and welcomed the projected return to surplus by 2020-21.
“What’s worrying is that the government is expecting revenue, that’s taxation, to increase much more than spending is going to decrease in order to meet that target,” Pearson said.
Infrastructure Partnerships Australia chief executive, Brendan Lyon, slammed the budget as an effective $7.4bn cut to overall infrastructure spending.
Despite many seeing the budget as one that delivered on big infrastructure – including inland rail, the western Sydney airport, and Snowy Hydro – Lyon said it was “not an infrastructure budget we were hoping for”.
Tonight’s budget is a cut in real infrastructure funding, not an increase. It means that we’re going to see less infrastructure build over the next four years not more. This is the lowest level that we’ve seen in general government infrastructure funding in the past decade.
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One more from Anna Bligh, Australian Bankers Association:
I don’t think we should be under any illusions here – this is a money grab from a sector of the economy that the government thinks is an easy target and there should be no illusions about what this is.
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Customers beware! Bankers Association warns levy has to come from somewhere
The treasurer today said the bank levy brings Australia into line with other countries around the world and that the banks would be lying if they said they had to take the money off deposit-holders because it was a levy on bank liabilities.
Anna Bligh, of the Bankers Association:
I think it would be good for the treasurer to come and tell banks exactly where they should take it from. You know, once you take it off the profits of banks it hits shareholders. Once you hit the bank’s bottom line, it has got to come from somewhere. There’s not a secret money-making machine out there that the banks can just turn up with. They have to take a from somewhere.
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Bankers Association's Anna Bligh: there is no secret stash
The former Queensland premier says the bank levy on the big five banks is risky policy.
It’s policy made on the run and it’s policy that’s inherently risky and it’s something that every Australian is going to pay for.
So the banks are going to pass this cost on?
The banks don’t have a secret stash of money ... there’s only three places they can get this from – borrowings, deposits or shareholders or a combination of all three and every Australian has an interest in one of more of those parts of a bank’s operations.
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Greg Jericho will take you through the numbers here but here is his lead:
What do you do when you are a Liberal party and delivering Liberal party budgets makes you as popular as poison? Deliver one that with a bit of slight rebranding could almost look like a Labor one. This budget does not quite bring home the bacon as Paul Keating once said, but Scott Morrison and Malcolm Turnbull sure as heck will hope it brings an end to people talking about Joe Hockey’s 2014 budget.
While the budget on the surface does look quite fair, we should remember the context. The budget still includes cuts to company taxes, which will in time offset the bank levy. It still includes the end of the 2% deficit levy for those earning over $180,000. Yes such people will now be paying an extra 0.5% points on the Medicare levy, but so will most other taxpayers, and no one else is getting an income tax cut to more than offset the impact.
Next, some comment pieces.
Scott Morrison says budget 2017 is about fairness, security and opportunity.
In reality, it’s about laying the bedrock of political recovery. It’s about re-prosecuting the 2016 election campaign, this time with something to say about the issues voters care about and with a strategy to neutralise Labor’s attacks.
The Coalition has travelled a journey from the grim austerity budget of 2014 – the tough love budget – to an economic statement in 2017 which is intended to reassure you that the government in Canberra not only knows what’s going on in your life, it feels your pain.
The prime minister is fond of branding his various inspirations and reversals 2.0.
This version of a Coalition government, Coalition 2.0, is high taxing and high spending: it builds things, and cares about your health, and wants to do a little bit on housing affordability – even fiddling with negative gearing to the tune of $800m, surprise!
This reformed mob doesn’t mind whacking business with a levy if they employ foreign workers – and belting the banks, for being, well, banks. In lieu of a royal commission, the big banks will cough up $6.2bn ...
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The Business Council’s Jennifer Westacott welcomed the budget as practical and workable “in the face of sustained political gridlock in Canberra that has stifled much-needed, wider reform”.
She welcomed limits on real spending growth to 1.9% over the forward estimates.
But she warned the surplus was fragile and she said the banking tax was a double-dip.
The banking levy effectively represents double-taxation of some of Australia’s most successful companies, which already pay $11bn in company tax each year, employ about 130,000 Australians and contribute to the superannuation of millions more.
Westacott said the government faced an impossible political situation.
We recognise the impossible position in which this government finds itself, with a Senate and opposition that have raised Australians’ expectations of big spending measures with no means to pay for them. But imposing a tax on some of the institutions that helped Australia weather the global financial crisis creates a worrying policy precedent. We cannot afford to drift towards Mining Tax 2.0.
(I’m not sure if Westacott thinks a mining tax is coming after the banks tax or if it is just a play on Turnbull’s penchant for a second policy version.)
But she finishes the statement with a big, rather surprising endorsement. (Surprising in the sense that the council does not normally come out so openly to endorse the Coalition in between elections.)
On balance, this budget and the Turnbull government’s broader economic policies remain the only credible plan to drive economic growth and ensure that Australia can continue to afford the quality of services we expect. The Business Council now calls on all members of parliament to break the gridlock of recent times. Australia’s political representatives cannot continue to peddle false hope and insist on greater spending measures, while resisting sensible steps to make our economy grow faster.
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Bowers reports this was a very slow clap from Tony Abbott.
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There was a long press conference in the lock-up, which involved lots of graphs.
Scott Morrison spent some time on funding the NDIS, saying that, while he did not favour a 0.5% increase in the Medicare levy, it was his only option, given the Senate did not pass other savings.
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The Australian Medical Association’s president, Michael Gannon, said the budget “claims back a lot of goodwill” lost in the 2014 budget because reindexing the patient rebate will ensure that the neediest “have bulk-billing restored”.
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Richard Di Natale: the government has been dragged to the revenue side
The Greens leader, Richard Di Natale, said the budget particularly hits young people with higher education cuts and no real solution to housing affordability.
He described compulsory drug testing before one gets welfare as “deprivation of individual liberty” that ignored that it wasn’t young people’s fault they can’t find work when there are more job seekers than jobs.
Asked about the bank levy, Di Natale said the government had been “dragged kicking and screaming” to the conclusion Australia has a revenue problem.
Di Natale said the Medicare fund is simply “a bank account that does bugger all to guarantee Medicare can be funded” because the government can still raid it at will.
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Consumers, PricewaterhouseCoopers, Chartered Accountants and CPSU react
Alan Kirkland, chief executive, Choice:
I wouldn’t want to be a CEO of one of the big four banks tonight. This is a budget that is bad for banks, which means that it’s a budget which is good of consumers. Choice calls on the CEOS of the big four banks to guarantee that they will not pass on a single cent of the new banking levy to Australian consumers.
Jeremy Thorpe, chief economist, PricewaterhouseCoopers:
This is the Star Wars Rogue One budget; the government has the plans but it hasn’t yet tackled the Debt Star. This budget … is built upon increases in taxation rather than some of the heavy lifting required on the expenditure side. We’ve kicked down the road the issue of debt. It’s an intergenerational challenge.
Andrew Conway, chief executive officer of the Institute of Chartered Accountants:
We welcome this budget for small businesses in Australia, it provides every small business with certainty about the future in the short term.
We want to see the extension of the instant asset write off a permanent feature of our taxation system.
We’re pleased there are no new taxes for small business. In fact, there’s actually an injection of $300m to ease the regulatory burden on small businesses at local and state government levels.
Nadine Flood, national secretary, Community and Public Sector Union:
This budget does nothing to undo the damage of $7.5bn cut from the public service.
Shockingly, after ‘robo debt’ and CensusFail, this budget cuts almost 1200 jobs from the Department of Human Services, meaning people who need services from Centrelink, Medicare, and child support will see a lot more than 36 million unanswered calls this year.
This budget is a disaster for families, pensioners and students who rely on the Department of Human Services.
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Education union calls Gonski 2.0 a $22bn cut
The Australian Education Union federal president, Correna Haythorpe, attacked the Coalition’s Gonski 2.0 schools funding model. Haythorpe said the budget papers clearly showed the package represented a $22bn cut for schools over 10 years.
This will have a devastating impact on our schools … and will entrench disadvantage and means we will not be able to close the achievement gap for our students.
There is nothing that is needs-based about this funding model and any politician, from any political party that supports these cuts to education will have to answer to … students and their parents.
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Chris Bowen: Morrison's credibility is in tatters
The Labor treasury shadow says the Coalition does try to catch up with Labor but falls short.
They have tried to catch up with Labor. I accept that. But they have failed miserably.
He points out the big achievement is a $20bn tax cut.
The treasurer’s credibility lies in tatters tonight. This is a treasurer who told us, who told you, who told the Australian people his big achievement as treasurer will be big swinging personal income tax cuts. That was going to be his big achievement.
He’s just increased tax by $20bn, including personal income tax rises on every working Australian. As well as the bank levy, which is 10 times bigger than the one we imposed in office and he and his team said would be the end of western civilisation.
This is a complete shattering of his credibility. Everything he has said and done up until tonight lies in tatters compared to his actions.
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The budget projects a return to surplus in 2020-21.
There are some pretty heroic forecasts, including wages growth to hit 3.75% in four years from a much lower base of 1.9%.
Morrison rejects that it is drastic.
That will go up ... All of our forecasts sit in the middle of the pack when it comes to consensus forecast on the economy.
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Scott Morrison rejects the view that this budget is a big turn around for the Turnbull government.
Q: You said in last year’s budget speech now is not a time to be splashing money about or increasing the tax burden on our economy. Such policies are not a plan for jobs and growth. Why such a drastic change?
The only people paying higher taxes are large banks and the crackdown on multinationals and foreign investors.
Q: A 0.5% rise in Australians in the Medicare levy.
For a very important purpose which Australians have generously agreed in the past.
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Could you be the first Liberal Treasurer in history to deliver a Labor budget?
Leigh Sales first question to Scott Morrison on 7.30:
Could you be the first Liberal treasurer in history to deliver a Labor budget?
Morrison:
We pay for our budgets and our budgets are honest about the numbers that are in them. What we’ve done is deal with the problems that are in front of us. We’ve had to reverse $13.5bn worth of measures, which the Senate would not pass and that has to be paid for, otherwise you have to increase the debt or the deficit.
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First reactions to the budget: industry, unions, Acoss
Australian Industry Group’s chief executive, Innes Willox, has criticised the bank levy as “regrettable” and “problematic”, arguing it “opens the way for other industries to be targeted in this way”. He said the training levy will create a “heavy impost on a range of businesses”.
But Willox praised the fact the budget cleared the deck of 2014 budget zombie measures, provided a credible path to surplus and was “strong on small business, skills and infrastructure”.
The Australian Council of Social Services’ chief executive, Cassandra Goldie, said she was “bitterly disappointed” because there was nothing in the budget to improve the living standards of people in poverty. She said that despite “some really good changes in direction” the budget “forges ahead with targeting people on social security and people who are unemployed”.
The Australian Council of Trade Unions’ president, Ged Kearney, said the budget did nothing to address unemployment or living standards of workers who faced the casualisation of work and penalty rate cuts.
It is attacking the most vulnerable people in our community, they are basically robbing Peter to pay Paul.
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Welfare crackdown
Morrison tells the parliament:
We will continue to stop people trying to take an easy ride on our welfare system to protect it for those who need it most.
The best way to get your welfare budget under control is to get Australians off welfare and into work.
There is an expansion of the successful ParentsNext program from 13,000 vulnerable young parents to 68,000 in 20 new locations, especially those with high Indigenous populations.
There is also a crackdown on those who do not turn up to a job interview, with penalties ranging from reduced to cancelled payments.
Then there is the drug and alcohol tests for welfare recipients. This is Morrison’s characterisation:
We want to support job seekers affected by drug and alcohol abuse but, to protect taxpayers, it has to be a two-way street.
We will no longer accept, as an excuse from repeat offenders, that the reason they could not meet their mutual obligation requirements was because they were drunk or drug-affected.
In addition we will commence a modest drug-testing trial for 5,000 new welfare recipients.
Job Seeker recipients who test positive would be placed on the cashless debit card for their welfare payments and be subjected to further tests and possible referral for treatment.
Morrison says other welfare measures include: strengthening verification requirements for single parents seeking welfare, a crackdown on those attempting to collect multiple payments, stricter residency rules for new migrants to access Australian pensions and denying welfare for a disability caused solely by their own substance abuse.
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Multinational crackdown
The budget also contains a crackdown on multinational companies, a taskforce to tackle the black economy and limits on negative gearing. Together, the government expects to raise $2.1bn over the forwards.
Scott Morrison:
The ATO has already raised $2.9bn in tax liabilities this year against a group of just seven large multinational companies and expects to raise more than $4bn in total this financial year from large public companies and multinationals.
Tonight we are toughening the multinational anti-avoidance law to extend the rules to structures involving foreign partnerships or trusts and clamping down on aggressive structuring using hybrids.
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Morrison admits there is no silver bullet on housing affordability
Scott Morrison outlined a range of measures, including tax deductions for buyers saving for their first home.
If a family or an individual has a roof over their head that they can rely on, then all of life’s other challenges become more manageable.
Whether you are saving to buy a home, spending a high proportion of income on your rent, waiting for subsidised housing, or you’re homeless, this is an important issue to you.
There are no silver bullets to make housing more affordable. But, by adopting a comprehensive approach, by working together, by understanding the spectrum of housing needs, we can make a difference.
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As foreshadowed ahead of the budget, there will be an open banking regime beginning in 2018, which will give customers greater access to their own data so they can swap accounts more easily.
There will also be a permanent team established within the Australian Competition Consumer Commission to investigate competition in the banking and financial system.
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Big fines for bank misconduct with senior bank executives registered
The government’s banking measures raise money via a levy to contribute to the deficit but also impose greater accountability on executives in a further attempt to ward off the calls by the Greens, Labor, Xenophon and others for a banking royal commission.
A new banking executive accountability regime will be introduced, requiring all senior executives to be registered with APRA. If in breach, they can be deregistered and disqualified from holding executive positions, and be stripped of their significant bonuses.
Banks will also be held to account if they try and hide misconduct by executives with new mandatory reporting requirements.
If banks breach misconduct rules, they will also face bigger fines starting at $50m for small banks and $200m for large banks.
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Medicare Guarantee Bill
Back to Morrison.
In order to underline the Turnbull government’s commitment to Medicare, following the caning on that issue at last election, there is a Medicare guarantee bill. Morrison:
This new law will set up a Medicare guarantee fund to pay for all expenses on the Medicare Benefits Schedule and the Pharmaceutical Benefits Scheme. Proceeds from the Medicare levy will be paid into the fund.
An additional contribution from income tax revenue will also be paid into the Medicare guarantee fund to make up the difference.
The bill will provide transparency about what it really costs to run Medicare and the PBS and a clear guarantee on how we pay for it.
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Let me interrupt ScoMo to give you Katharine Murphy’s budget wrap:
There is a a $472m regional growth fund including $200m in funding to support a further round of the Building Better Regions program. This was the National party promise, which began in the last term of government.
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There is a $10bn national rail program for rail projects to provide better connections for our cities and regions.
This is somewhat of a revision of Tony Abbott’s prior allergy to urban rail. Scott Morrison has raised the prospect of various projects such as Adelink, Brisbane Metro, Tullamarine Rail link, Cross River Rail in Brisbane and the Western Sydney Airport Rail link being eligible – if the business case stands up.
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There is also a promise to look at maybe sometime down the track. This is what it sounds like:
The Snowy Mountains Scheme is the benchmark for nation building infrastructure.
The prime minister has announced our intention to further develop the Snowy Hydro with Snowy 2.0. Tonight we announce our intention to go further.
The commonwealth is open to acquiring a larger share or outright ownership of Snowy Hydro, from the NSW and Victorian state governments, subject to some sensible conditions.
First, all funds received by the states would need to be reinvested in priority infrastructure projects.
Second, Snowy Hydro’s obligations under its water licence would be reaffirmed and we would commit to work together to expedite and streamline environmental and planning processes associated with Snowy 2.0, without compromising any standards or controls.
Third, Snowy Hydro would have to remain in public hands.
(You see this is still in the foetal ideas stage.)
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The government is putting $5.3bn equity into the Western Sydney Airport company (which will be off the books).
Earth moving works will commence on the 1800-hectare site in the second half of next year and Western Sydney Airport will be delivered in 2026.
As per the good debt-bad debt distinction, Morrison points out that:
the Government will no longer be borrowing to pay for our everyday expenses from 2018-19.
(That’s the bad debt.)
The zombie measures are dead. Morrison:
Having exhausted every opportunity to secure savings from our 2014–15 and 2015–16 Budgets, we have decided to reset the Budget by reversing these [zombie] measures at a cost of $13 billion.
Despite this, I can confirm tonight that the Budget is projected to return to balance in 2020–21 and remain in surplus over the medium term.
The underlying cash balance will improve from a forecast deficit of $29.4 billion in 2017–18 to a projected surplus of $7.4 billion in 2020–21.
The budget theme has been Better Days Ahead. Scott Morrison is speaking to the house.
Not all Australians have shared in this hard won growth. Many remain frustrated at not getting ahead.
This is especially true in areas where technological change, globalisation and the end of the mining investment boom has had a significant impact.
Small business owners have gone without to keep their businesses open. Australians have taken second jobs, where they can, so bills can be paid.
And it’s been a fair while since most hardworking Australians have had a decent pay rise.
I know this has put real pressure on Australians and on their families. Terribly, this has meant some families have even broken apart.
I believe, though, that we are now moving towards the end of this difficult period.
The signs of an improving global economy are there to see.
There is clearly the potential for better days ahead.
Budget 2017: the main points
Good evening blogans and prepare to be amazed.
Welcome to the budget the Turnbull government had to have, to bastardise a quote from a former treasurer. The treasurer has discovered the revenue side of the books. Taxes are up, including the Medicare levy for the National Disability Insurance Scheme, and the treasurer underlined this was a result of previous savings measures not being passed.
In the main, banks have been hit and most of us will pay more for the NDIS, while businesses will pay more to use foreign workers in order to fund skills training for Australians.
There is a new drug test trial for 5000 new welfare recipients, which could be a sign of things to come.
Overall, it is a big taxing, biggish spending budget given the schools promise and some big equity off book promises for the $5.3bn Sydney airport and the $8.4bn inland rail with a few hidden nasties. Here are the broad points.
NDIS
The Medicare levy will be increased to 2.5% for every Australian earning over $21,655, an increase of 0.5% expected to raise $8.2bn over four years to go towards the national disability insurance scheme.
BANKS
Banks will pay a new tax worth $6.2bn in total over four years via a levy on institutions with licensed entity liabilities of at least $100bn. The levy covers corporate bonds, commercial paper, certificates of deposit and tier 2 capital instruments. The treasurer said it would assist with budget repair.
Under the new levy the big four banks – ANZ, Westpac, NAB and Commonwealth – will each pay about $300m to $400m every year.
In an effort to ensure the banks do not pass the cost to consumers, the Australian Competition and Consumer Commission will undertake a residential mortgage banking inquiry until 30 June. It will be able to require banks to explain changes to mortgage prices, fees and interest rates.
BUSINESS
Businesses with a turnover of more than $10m will pay $5,000 upfront for each foreign employee on a permanent work visa and $1,800 for each employee on a temporary skill shortage visa, which replaces the 457 visa.
Businesses with a turnover of less than $10m will pay $3,000 for employees on permanent work visas and $1,200 for employees on temporary skill shortage visas.
The replacement of the 457 visa will cost $65.3m over four years, the budget papers revealed, but changes to visa application charges across the board is forecast to raise $410m.
The foreign workers levies will fund up to 300,000 apprenticeships and traineeships over four years.
The government still intends to legislate the big end of company tax cuts (business over $50m) were confirmed.
The $20,000 instant asset write-off facility for small businesses below $10m turnover will continue for another year.
FOREIGN HOUSING RULES
Foreign owners of property in Australia who leave it unoccupied or not genuinely available for rent six months of the year will be taxed.
Foreign ownership will be restricted to 50% in new developments, replacing a cap removed by Labor.
Foreign residents will also not be eligible for the capital gains tax main residence exemption. The CGT withholding rate for foreign residents increases from 10% to 12.5% and the withholding threshold will be reduced from $2m to $750,000.
FIRST HOME BUYERS
Voluntary contributions to superannuation will be available for withdrawal for a first home deposit. Up to $30,000 can be contributed and withdrawals allowed from July 2018 onwards.
NEGATIVE GEARING
Negative gearing will be tightened up. Deductions of travel expenses for residential rental property have been scrapped with projected savings to the budget of $540m over four years.
Depreciations deductions to “plant and equipment” in rentals – such a dishwashers and ceiling fans – will also be limited. Currently successive owners have been able to claim depreciation deductions on items that were already in the property when purchased leading to inflated valuations.
Managed investment trusts (MIT) will be enabled to invest in affordable housing. To allow tax concessions, the affordable housing must be available for rent for a decade and the MIT must derive 80% of income from affordable housing. The MITs allows investors to pool funds and have them managed by professional manager.
WELFARE
There will a trial of drug testing for 5000 new welfare recipients. Anyway who tests positive will be placed on a cashless debit card and subject to further tests and possible referrals for treatment.
I will drill down further into these measures though the night.
Next, we come to the treasurer’s speech. He is speaking now.
Updated
We’re now less than 10 minutes away from the full release of the budget. I’ll hand back over to my colleague, Gabrielle Chan, when they finally let her out of the lockup.
Until then, just some late mail on the Medicare rebate freeze. Sky News is reporting that the freeze will be completely lifted, not partially as was thought earlier. Terry Barnes, a former advisor to Tony Abbott, has warned the issue poses a problem for the Coalition, regardless of what they do. Not acting on the rebate will leave them exposed to another Medicare attack campaign from Labor, which proved successful at the last election.
“So if they don’t do that, they’re in political difficulty, but doing it is going to cost a bomb,” Barnes told Sky News.
This just in from AAP:
The treasurer has lifted Australia’s credit limit to $600bn as debt continues to rise.
Scott Morrison on Tuesday issued a direction to increase the value of stock and securities that are on issue – how much the government can borrow.
The figure hit $490bn as of May 5, according to the Australian Office of Financial Management.
Updated
Hello it’s the ghost of Gabi, speaking on high from the budget lock-up.
Remember way back in the dark ages, like earlier in the year, when housing affordability was going to be the centrepiece of the budget?
This was the message that was coming from the government benches publicly and privately – though Scott Morrison now says it was never such a big a thing.
Part of the problem for the federal government on that issue was, apart from tax measures like the capital gains discount and negative gearing (owned by Labor’s policy), there is not a whole lot that could be done apart from some fiddles. States govern the supply, the Reserve Bank decides interest rates.
All smoke signals now say housing affordability measures will be more muted, when compared to things like infrastructure.
But there has been speculation on a number of tax fronts, including:
- Plans to charge foreigners up to $5,000 for leaving their Australian apartments empty.
- The so-called “ghost house” tax will be a new condition of Foreign Investment Review Board approval.
- Plans to ban foreigners from buying more than half of the apartments in new apartment builds, in a bid to help more Australians buy a property.
Malcolm Turnbull ruled out an earlier idea, which had traction amongst some government MPs, to allow young people access to their superannuation for a deposit.
I reckon there might still be some surprises in this area but hey, its based on nothing other than gut.
See you at 7.30pm.
Updated
Just before suspending, the senate has tabled an inquiry report scrutinising the government’s plans to impose a goods and services tax on low-value imports, which would impact companies like Amazon and eBay.
Currently, imports of goods worth less than $1,000 are GST-free, but the government wants to abolish the concession.
Under the plan, the Coalition wants to use a so-called “vendor model” to force companies such as Amazon and eBay to collect the GST on online goods imported to Australia. The plan was referred to a senate inquiry, and its report has just been tabled, right before the budget. The committee has recommended that the bill be passed, but that the implementation date be delayed to 1 July 2018.
Labor has offered qualified support for taxing low-value imports, but has slammed the government’s policy development processes and urged it to find a more workable model.
Senator Chris Ketter, who chairs the senate economics references committee, said the final report, which contained only one recommendation, made it clear that Liberal senators had been gagged.
“This is despite the committee hearing from Treasury officials that they only expect a compliance rate of 25-30 per cent, and that the government was in breach of best practice rules by proceeding with this legislation without a Regulatory Impact Statement,” he said.
“Labor’s support is contingent upon the government finding a workable model. To ensure that there are no adverse outcomes for Australian businesses and consumers, Labor again repeats its calls for the Government to follow proper process and work with stakeholders.”
Labor wants the government to complete a full review of the regime within one year, and deliver a regulation impact statement to assure small businesses and consumers that measures will operate as intended
“A number of stakeholders, including online retailers, marketplaces and logistics companies have rightfully voiced their concerns around the costs and timeframes associated with implementing such a measure,” Ketter said.
“If the Treasurer cannot get this piece of legislation right, how can Australians trust him with delivering a comprehensive budget tonight?”
Labor senators wrote a dissenting report, accusing the treasurer of botching the policy development process and failing to consult with stakeholders.
The fairness test: A short history
Hello blogans. By this stage in the lock-up, I will have eaten too many biscuits and will be trying to sort my net operating balance from my underlying cash balance. But the bottom line for this budget – as outlined by Malcolm Turnbull and Scott Morrison – is the fairness test.
For those who were not with me this morn, Scott Morrison emoted in his traditional treasurer’s walk to parliament.
He was trying to underline that this budget will be maximus fair, via these three points:
- Even though Australia is doing well, we feel your pain. (We remember Brexit and Trump)
- We are responsibly optimistic and there are opportunities in the future. (That’s why we are spending.)
- We are going to be practical and we will reach across the aisle. (Instead of starting a fight.)
The 2014 Budget of Doom has dogged this government since Joe Hockey uttered the words “lifters and leaners”.
It has been acknowledged by senior government figures more times than I can remember. But the most formal acknowledgement was the Robb review that found the government was flying blind. Katharine Murphy reported on this earlier this year:
Abbott defended his first budget on Friday as the Liberal executive met in Sydney to consider the 2016 election campaign stocktake conducted by Andrew Robb, a former party director and Liberal cabinet minister.
The Robb review makes the point that the Liberals were flying blind for key periods after Abbott assumed power right through to the 2016 federal election, because the research and data analytics functions were severely under-resourced.
Sources have told Guardian Australia the review says no significant research was done before the 2014 budget, which proved the beginning of the end for Abbott as prime minister.
Probably the most surprising thing about the Robb review was the idea that focus testing and polling was needed to determine whether the 2014 budget was fair.
If you need reminders, there are a plethora of stories we wrote at the time about the machine gun style trajectory of hits.
Circling back to the ScoMo this morning, the judge will be the numbers, not the rhetoric.
Updated
The Australian reported this week that the budget will divert money from foreign aid to boost the resourcing of security agencies, including the Australian federal police.
World Vision Australia’s Tim Costello has spoken of his distress at the news, comparing the Coalition’s record on foreign aid with that of the US president, Donald Trump.
“When you realise that we actually committed, this government when it came to power, committed to increase aid to 50c in a hundred dollars,” Costello told Sky News.
“Now it’s at 22c and every year for the last five years we’ve had a cut. When you think it is now 50% less aid than what their promise was – even Donald Trump’s only going to cut aid by 28% and congress, Republican congress is fighting Trump.
“Here, Abbott and Turnbull have done what even Republican congress wouldn’t do.”
Updated
We’re closing in on the full release of the budget at 7.30pm. Many of the budget measures have already been released publicly, so it’s worth having another look at this handy “what we know” list put together by my colleague Nick Evershed.
Updated
As mentioned earlier, the Coalition is likely to announce a demerit point-style compliance regime for welfare recipients, which would see them punished if they repeatedly miss interviews or appointments with job service providers. The government already has broad powers to penalise welfare recipients who fail to comply with their mutual obligations but the human services minister, Alan Tudge, has recently complained that a waiver system, introduced by Labor, has allowed the vast majority to escape punishment.
The proposal for a demerit points compliance scheme has prompted concerns from the Australian Council of Social Service, which I detailed earlier. I’ve also spoken with the National Social Security Rights Network’s Matthew Butt, who expressed serious concern about the proposal. Butt was still waiting to see the full details of the Coalition’s announcement but warned against changes to the waiver system, which is designed to keep welfare recipients active in the job market and prevent them being pushed further into disadvantage
“There current system is not perfect. But it already has a graduated system of penalties, ranging from suspension, financial penalties and up to eight weeks without payment for job seekers who fail to meet their obligations without a reasonable excuse,” Butt told Guardian Australia.
“Employment services providers have discretion about how best to respond to a job seekers who miss appointments or interviews, but can apply significant financial penalties to job seekers. A job seeker who persistently fails to meet their obligations without a reasonable excuse may face up to eight weeks without payment.
“Given there is already a comprehensive penalty system in place, it is unclear what the government is trying to achieve by making such a potentially significant change and whether it can be justified, especially as there are real costs to this kind of change, changes to IT systems, staff training and so forth.”
Butt said the real problem with the current system was the “unacceptable level of penalties” applied to Indigenous jobseekers through the Community Development Program.
“Addressing this should be the highest priority for this government,” he said.
Updated
Hello all,
I am still in the lock-up but I wanted to bring those new readers up to speed with where the budget was at at the time of my incarceration.
The key structural thing, which Scott Morrison has already announced, is the change in accounting to acknowledge what he calls good debt and bad debt.
My colleague Greg Jericho has given the best explanation that I have found in a piece here:
“Budget papers are not the easiest reading – as with most accounting documents, they also involve a fair degree of obfuscation. For example, when we normally talk of the budget deficit, we refer to the ‘underlying cash balance’. But the budget papers also include the ‘headline cash balance’, the ‘fiscal balance’ and the ‘net operating balance’.
Each has its reasons for being but Morrison will now highlight the ‘net operating balance’. Normally the figure is found in Statement 3 of Budget Papers Number 1, presumably it’ll make its way in Statement 1.
This in itself won’t make much difference – it’s not a new measure and the two balances move in line with each other. The biggest difference is that because the operating balance excludes capital investment, it is usually smaller – a good thing if you want to argue that you are getting back to surplus faster.
So we will be looking closely at how that is structured and whether it makes the budget more difficult to read.
Apart from that structural change, some of the bigger stories have already been unveiled, such as schools up, universities down, infrastructure up, welfare (crack)down. We have seen a fair few funding boosts in the strategic drops ahead of the budget, so much so that in the past few days it has felt like an election document.
So I suspect the real news will revolve around what cuts will be made to fund the cash splash. For example, how will the government pay for the construction of the Badgerys Creek airport now that Sydney airport has declined to build it?
These puzzles and more will be revealed (I live in hope) at 7.30pm.
Updated
The business of parliament trudges on as we await the budget’s release. The House of Representatives is currently debating tougher laws to punish unscrupulous employers, franchisors and franchisees who take advantage of vulnerable workers. The bill was introduced after Fairfax Media’s investigation of the 7-Eleven wages scandal and introduces higher penalties for serious contraventions of workplace laws or record-keeping failures. The bill would also make franchisors and holding companies responsible for underpayment of workers, and strengthens the evidence-gathering powers of the Fair Work ombudsman.
Labor supports acting on underpayment and mistreatment of vulnerable workers but says the bill is “half-baked”.
Updated
The leaks are still coming, two hours out from the full release of the budget.
The ABC is reporting the budget will include a multibillion-dollar investment in suburban rail, as well as funding the Melbourne to Brisbane inland rail route.
ABC News can reveal a multi-billion suburban rail package will be unveiled as part of tonight's federal #budget, along with inland rail
— Andrew Greene (@AndrewBGreene) May 9, 2017
Sky News, meanwhile, has reported the federal government is planning a crackdown on multinational corporate tax avoidance and will fully fund the national disability insurance scheme.
.@jenniferbech: @ScottMorrisonMP has confirmed the govt will 'fully fund' the NDIS #auspol #Budget2017 MORE: https://t.co/i9NLwAjnID pic.twitter.com/ihbG4RZ6Ry
— Sky News Australia (@SkyNewsAust) May 9, 2017
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The government is expected to use the budget to announce some form of levy on the big banks to fund a compensation and support scheme for victims of financial misconduct. I asked the Consumer Action Law Centre earlier today what it made of such a measure. While yet to see the details, the centre’s chief executive, Gerard Brody, voiced support for a strong compensation scheme for those ripped off by poor financial advice, or dodgy brokers or credit providers. But he said it was crucial that the design and scope of any compensation scheme offered the right level of protection for Australians.
“We need a compensation scheme to ensure that victims of misconduct receive compensation they’re entitled to when there are no other options available,” Brody told Guardian Australia.
“The banks and all in the finance industry should contribute to the cost of this last resort compensation scheme.”
“The Ramsay review led by Prof Ian Ramsay is examining the scope of a scheme and is consulting with stakeholders. It will be important to ensure the scope and design of the scheme offers the right level of protection for Australians. We don’t want to see a hal-fbaked scheme that sees victims of misconduct fall through the cracks.”
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Larissa Waters becomes first woman to breastfeed during parliament
The Greens senator Larissa Waters has breastfed her daughter, Alia Joy, in the Senate chamber. It’s the first time in the parliament’s history that’s occurred and it’s sparked congratulations from Waters’ colleagues.
Yay! So happy to be in @AuSenate as @larissawaters is breastfeeding daughter Alia in the chamber! First time in history of the Parliament.
— Janet Rice (@janet_rice) May 9, 2017
So proud that my daughter Alia is the first baby to be breastfed in the federal Parliament! We need more #women & parents in Parli #auspol pic.twitter.com/w34nxWxG0y
— Larissa Waters (@larissawaters) May 9, 2017
AAP photographer, Mick Tsikas, got these shots of the historic moment.
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The Australian Chamber of Commerce chief executive, James Pearson, believes a return to surplus will at least be put on the radar in the current budget, predicting a path out of deficit within the four-year forward estimates. The Coalition has previously pledged to return the budget to surplus by 2021. Pearson wants to see the budget cut red tape, address ballooning debt (gross debt is expected to reach half a trillion dollars) and focus on quality, sustainable expenditure. He wants government expenditure to be reduced to 25% of GDP.
“It’s got to be sustainable spend, it’s got to be good quality spend,” Pearson told Sky News.
“Recognise that as the workforce is getting smaller in relation to the number of people who depend on government payments ... We’ve got to make sure we don’t strangle that tax base in order to support welfare spending.”
Updated
We’re now 3.5 hours away from the public release of the 2017 budget. One area of particular interest is housing affordability. Stakeholders are hoping for big things from the federal budget, given the tenor of public debate in recent months. The government has ruled out any action on negative gearing or capital gains tax concessions but is reportedly considering introducing a bond aggregator to better fund community housing and allowing first home buyers to use their pre-tax income to purchase a home. The National Shelter executive officer, Adrian Pisarski, released the organisation’s checklist for federal budget success earlier today.
“We’re hoping to see real change and a commitment to a systematic approach to this issue which is squeezing almost all Australians,” Pisarski said.
To receive a pass mark from the National Shelter, the budget must:
- Not cut the national affordable housing agreement (NAHA)
- Make “inroads” to reforms to the tax setting currently distorting and inflating housing markets, especially in Sydney and Melbourne
- Boost the supply of affordable housing for both renters and buyers
- Give certainty to homelessness services by providing funding over the forward estimates
Updated
The Australian Council of Social Service have raised concerns about budget measures that will reportedly crack down on welfare recipients who fail to comply with their mutual obligation requirements – not attending interviews or appointments, for example. The details of the measure are yet to be revealed but News Corp has reported the government will introduce a demerit points scheme for welfare recipients. Failing to attend appointments or interviews would see a recipient accumulate demerit points, which will eventually cause them to lose payments.
Acoss’s chief executive, Cassandra Goldie, told Guardian Australia there was no evidence of any serious problem with job-seeker compliance. Goldie said Australia already had one of the toughest compliance systems for welfare in the OECD.
“The real problem facing people looking for work is that there is only one job for every ten people who need one,” she said. “If someone is deliberately avoiding their mutual obligation requirements, Centrelink already has the power to impose serious penalties.
Goldie highlighted the following statistics:
- unemployment payments comprise just 2% of total government spending
- 90% of people who are unemployed meet all of their compliance obligations, big and small
- there are 43 applicants for each entry-level job. And, in the past financial year, 589 people refused suitable work, comprising 0.06% of total job seekers.
“Rather than whacking people living on $38 per day with tougher rules, we need to focus on addressing the lack of jobs and the lack of investment in supporting people locked out of paid work get a job,” Goldie said.
Updated
St Vincent de Paul chief executive, John Falzon, has released a video message ahead of the budget, speaking of the importance of equality and fairness in the economy. He warns against the “perverse notion” of giving the most to those “who have much”. Falzon said the government was giving tax cuts for corporations and the wealthy, while overseeing cuts to penalty rates, social expenditure, health, education, and housing.
“What we yearn for is a sense of hope, what we seem to be getting is deliberate humiliation, particularly to those who have been left out,” Falzon said.
“The kind of society we want as ordinary people is one based on the very simple and fair principle of ‘from each according to their ability and to each according to their needs’,” he said.
I've recorded a little message on #inequality here:https://t.co/mNW2itYj2e
— John Falzon (@JohnFalzon) May 9, 2017
Thanks to @GetUp & @VinniesAust
Budget day question time sees sustained attacks on Gonski 2.0
And that’s a wrap from question time. Just to recap on the highlights:
- The schools funding package dominated question time. Labor ramped up its attack on the model announced by the Coalition, attempting to characterise it as a $22bn cut
- Labor highlighted the concerns of some Catholic schools about the funding changes, citing Sydney archbishop Anthony Fisher’s fears that they will cause fees to rise considerably
- Malcolm Turnbull sought to reinforce the Coalition’s central theme for the 2017 budget: “opportunity, security and fairness”
- Turnbull repeatedly dropped the name of David Gonski in his defence of the schools package, seeking to wedge Labor on needs-based funding. Turnbull said the Coalition’s model would increase funding by more than $18bn and see funding to Catholic schools rise overall
Updated
Back in the house, Malcolm Turnbull is ridiculing South Australia on energy security, again. The member for Port Adelaide, Labor’s Mark Butler, asked Turnbull about the absence of an emissions intensity scheme and rising power prices, referring to the ABC Four Corners episode on energy policy last night. Turnbull responded:
Speaker, I thank the honourable member, fresh from South Australia, that triumph of energy policy. Got 100% of your electricity windfarms one minute and then zero. Mr Speaker, no storage, no planning, no engineering, no economics, just ideology.
Updated
Just stepping away from question time momentarily. The Australian Bankers’ Association and Westpac have both aired concerns about unconfirmed reports that today’s budget may impose a levy on the banking sector. The ABA head, Anna Bligh, told the ABC this morning that imposing such a levy – touted as a way to help fund a compensation scheme for victims of misconduct – could be a slippery slope.
The chief executive of Westpac, Brian Hartzer, warned it would set a precedent to ask the banks to cover remediation for past issues sometimes not in their control, according to AAP.
“We’re supportive of people carrying their weight but we also note a lot of the big issues have actually been things outside the banking sector,” Hartzer said.
Updated
Labor is trying to turn the screws on the Coalition over its Gonski 2.0 model. Tanya Plibersek is characterising the school plan as a $22bn cut, while the opposition leader, Bill Shorten, is citing Sydney archbishop Anthony Fisher, who has warned the package will cause significant fee rises in Catholic schools.
Malcolm Turnbull said funding for the Catholic sector will rise overall by 3.7%.
There will be more money going into Catholic schools and that is readily demonstrable on the website. If the Catholic system is receiving the additional money, that is the proposition, and fees will have to go up at some schools, then presumably fees would go down at others.
Turnbull said Gonski 2.0 would see an increase to spending on all schools by more than $18bn over the next 10 years.
Updated
The foreign affairs minister, Julie Bishop, is now talking about the images that emerged this week of the young son of Australian terrorist Khaled Sharrouf posing in front of a crucified man.
Bishop says the image showed the “mindless hatred of violent extremism”. She said 200 Australian citizens are currently being investigated for supporting Isis in Syria and Iraq.
She has confirmed that a new “global watch office” will be set up within the foreign affairs department.
“This will ensure that we have strengthened capacity to monitor and respond to overseas events as they emerge,” Bishop said.
“There will be real-time information provided to Australians on a 24/7 basis ... to ensure those Australians citizens who are affected by a crisis receive information and support as it occurs.”
Updated
The shadow treasurer, Chris Bowen, is invoking the debt and deficit theme in his budget day attack on the government. Bowen has asked how, despite all of the Coalition’s cuts, the government is still expecting to rack up a gross debt of half a trillion dollars.
The prime minister reckons Bowen’s question should win the “prize for chutzpah”.
Turnbull goes on to blame Labor’s time in government and intransigence in the Senate for the debt levels.
The Labor party has opposed, again and again, our efforts to bring the budget back into balance. Again and again, they left us with a massive deficit, they left us with a structural deficit. And now they stand in the way of budget repair, reckless to the consequence of their waste in office.
The stress of budget day doesn’t appear to be having too great an impact on Turnbull or the deputy PM, Barnaby Joyce, who had a good chuckle at a presumably hilarious quip from their side of the House earlier today.
Updated
Question time has just kicked off in the House of Representatives and the opposition leader, Bill Shorten, has given us a fairly good indication of Labor’s plan of attack on the government’s budget.
My question is to the prime minister: why is the prime minister choosing in tonight’s budget to cut $22bn from schools to pay for tax cuts for millionaires and big business?
Malcolm Turnbull has hit straight back, name-dropping David Gonski a few times, before seeking to characterise Labor’s line on Gonski 2.0 as a backflip on needs-based funding for schools.
And, of course, now, now, of course, with one of his characteristic backflips, the leader of the opposition now wants to denounce it. And yet we have identified ... in excess of 75 occasions – he was certainly sticking to the script on this occasion – over 75 occasions he has said ‘fundamentally that needs-based funding will give our children across Australia the best start in life’.
Updated
The Northern Territory chief minister says tonight’s budget is a test of the federal government’s “passion and belief” for developing the north and closing the gap in Indigenous disadvantage.
Michael Gunner has today told reporters in Darwin his government wants to see a commitment from the federal government on policies it has already said are priorities.
“We are seeking from them a genuine investment against their own priorities and we do stand ready as a genuine partner here in the north with them against their priorities,” Gunner said. “Developing the north, closing the gap, we will make a co-investment with them.”
Gunner specified his hopes that the federal government would:
- Match the NT government’s $1.1bn commitment on remote housing
- Match the NT government’s commitment to the federal “cities deal” for Darwin and Alice Springs
- Deliver on the defence white paper
- Increase needs-based schools funding and support early education and family health programs
- Invest in infrastructure which unlocks private sector investment, including beef roads, defence, oil and gas and export facilities
- Assist with implementations of the royal commission into the protection and detention of children, scheduled to be delivered in August
“The Territory right now is doing it tough,” Gunner said. “The Territory government is doing the heavy lifting with our budget. We need to see from the Australian budget a commitment to the north. We are not asking for anything the Australian government hasn’t said is their priority.”
Gunner said he had spoken with Turnbull about the dilemma facing the Territory after the GST redistribution announcement.
“We need to see them put some money and investment to their words.”
Updated
I’ve just had a quick chat with the Australian Medical Association’s president, Michael Gannon, about reports that the Medicare rebate freeze may be partially lifted in this afternoon’s budget. Gannon was cautiously optimistic, and said it was time for the government “to get this monkey off its back”.
“We’re hoping that we’ll see confirmation of a thaw in the Medicare freeze, sadly I’m not expecting to see a re-indexation across the entire [Medicare benefit schedule],” Gannon said.
“We’re yet to see the details… but we hope that the government’s consigning this unhappy episode to history once and for all,” he said.
Doctors have lobbied hard for the lifting of the Medicare rebate freeze, first introduced by Labor as a temporary savings measure, which was then extended by the Coalition. The AMA says the freeze has driven up costs for doctors and patients.
Gannon said lifting of the freeze would put the issue to bed and allow public debate to return to a more positive focus on long-term health reforms.
“[The freeze] had an impact across the system, so what we’re hoping to see today is announcements on GPs, other specialists, diagnostic imaging... and then the opportunity to start to really talk about health reform, because we’ve been talking about little else about the freeze,” he said.
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Guardian Australia’s Mike Bowers has captured these shots of Senator Lucy Gichuhi’s swearing in. Gichuhi is entering the Senate as an independent, denying Cory Bernardi another senator for his Australian Conservatives party. Here’s the moment the pair met in the senate today.
Earlier, Gichuhi posted a short message on Facebook about her entry to the Senate.
“I am honoured and humbled to be sworn in today as the first-ever person of Black African descent in the Australian parliament,” she wrote.
“I thank God, my husband and daughters, my father and all other friends, family and supporters for your encouragement, and sharing the vision we hold to unite Australia as one.”
Updated
Lucy Gichuhi sworn in as senator
Senator Lucy Gichuhi has been sworn in to the Senate as an independent. Gichuhi replaced Family First senator, Bob Day, after the high court ruled him ineligible to remain in the Senate. Gichuhi found herself in a tricky position when Family First recently merged with the Australian Conservatives, Cory Bernardi’s party. Gichuhi chose to enter the Senate as an independent. She is the first person of African descent elected to federal parliament.
Updated
Good afternoon all. It’s Christopher Knaus here, taking over from my colleague Gabrielle Chan, who’s off to the lockup for the next six or so hours. I’ll be continuing our live coverage of budget day 2017, while the rest of the nation’s political media is incommunicado.
Updated
Apologies readers, I have been distracted temporarily to prepare for the impending incarceration.
Before Christopher Knaus takes over, government bills for today in the lower house include:
- Treasury Laws Amendment (Enterprise Tax Plan) – consideration of Senate amendments. (This is the amended company tax bill coming back for the final tick.)
- Fair Work Amendment (Protecting Vulnerable Workers).
Despite Tony Abbott’s warning that the schools funding debate in the Liberal party room would be “vigorous”, reports from the meeting suggest support for Gonski 2.0 was overwhelming, although not unanimous.
Abbott and Kevin Andrews criticised the effect on Catholic schools, Eric Abetz expressed mild reservations and Zed Seselja voiced concerns, as he did last night at a meeting of ACT Catholic schools.
The Gonski 2.0 hitlist, released on Tuesday, shows that 24 independent schools and 27 ACT Catholic schools are in line for funding cuts over four years if the funding formula is strictly applied.
There is a $39.8m over 10 years adjustment package, including for ACT schools, but it’s not yet clear they’ll be completely compensated.
It seems from the dozen or so speaking in favour of the policy and the stony silence that greeted Abbott’s contribution that the policy has held up under scrutiny.
Alia Joy arrives for #Budget2017.
Schools funding policy passes Coalition party room
Mail from the Coalition party room is that Tony Abbott and Kevin Andrews spoke against the schools policy. I’m told that Andrews was stronger than Abbott but that a dozen or more MPs spoke in support of the policy.
With that hurdle passed, the schools bill now has to pass the through the parliament.
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Budget tree Autumn loveliness for #budgetday2017 @gabriellechan @murpharoo @GuardianAus pic.twitter.com/drHWzivQjw
— Mikearoo (@mpbowers) May 9, 2017
GWS fan @Bowenchris puts his club tie on Bulldogs supporter @TimWattsMP the result of a lost wager @gabriellechan pic.twitter.com/jkgIeZMVBF
— Mikearoo (@mpbowers) May 9, 2017
The other thing Chris Bowen addressed was Labor leader Mark Latham’s move to the Liberal Democrats.
One of the mysteries of public life is why anybody takes this guy seriously. I mean, frankly, Mark Latham has become a parody of himself, he once had something to contribute to public life but that was a long time ago.
He is a desperate attention seeker who is suffering relevance deprivation syndrome sense he left the Labor party.
Just spare a thought too ...politics is about character, spare a thought for those hard-working Labor party branch members in Liverpool who years ago, despite the fact that they weren’t wealthy people, put money aside to help Mark Latham through university because they saw such potential in his future.
I think Mark Latham might want to quietly reflect on his own character.
Updated
Labor treasury shadow Chris Bowen has done a doorstop, re budget. He says Labor has led the policy debate on negative gearing, the capital gains tax discount and superannuation reform, among others.
Then he makes the broader point about the long road from the Abbott-Hockey 2014 Budget of Doom.
We had four years of missteps, missed opportunities, false starts, ‘lifters and leaners’ through now to ‘good debt and bad debts’, ‘the good times are here’. We get all the clichés, all the corny sayings but what Australia really needs is a plan for Australia’s future and only the Shorten Labor party is capable of providing that vision.
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A smaller pack without our Fairfax colleagues.
Nick Evershed has been slaving away, collating all the stuff we know so far about this year’s budget. If you think we have missed something, please let me know via the comments or the Twits.
The online tool for calculating your school funding is live now.
I would be interested to hear from readers about their own local schools and their impressions of the funding change.
Labor shadow Jenny Macklin, who oversaw the establishment of the National Disability Insurance System as minister, says it’s bollocks that Labor did not fund the NDIS. (Well she didn’t really, but that is the vibe).
The last time Scott Morrison tried to hold the NDIS to ransom he faced massive community backlash.
The NDIS was fully funded by the former Labor government in the 2013-14 budget.
This included a 0.5 per cent increase in the Medicare levy and a range of other revenue and savings measures including introducing a means test on the private health insurance rebate.
The figures underpinning these savings were developed and published by the Treasury—led at that time by Martin Parkinson, now the secretary of the prime minister’s department.
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Greens senator Rachel Siewert has denounced any demerit system for welfare recipients.
How audacious that whilst announcing a major act of harsh austerity, treasurer Scott Morrison has tried to describe this year’s budget as ‘fair’. Please stop pretending you’re on the community’s side, treasurer, you’re picking on the most vulnerable.
People out there in the community are doing it really tough and are struggling, now the government wants to make it tougher for those people because it will appeal to his base. When is he going to stop picking on our nation’s poorest?
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It’s a long walk.
Just a humble treasurer on the way to work...
School funding continues to dominate even in the lead up to the budget. Paul Karp has previewed an online tool released by education minister Simon Birmingham which shows how an extra $18.6bn in funding over 10 years (or $2bn over four) will be distributed. It shows that almost half of all schools will experience growth of 5% a year or more in the first four years.
From Paul’s story, Canberra Liberal senator Zed Seselja had a little break out over the policy.
Paul reports, Seselja said he believed the Catholic sector’s complaints about the limits of the socio-economic status model were “correct” and that, if applied in a “pure way” in the ACT, would have “significant negative consequences”.
He committed “to continue to push to get the best possible deal for the ACT” and noted the importance of supporting parents’ choice of school.
Some housekeeping.
Today, both houses are sitting.
The Labor party room meeting occurred last night.
The Coalition party room meeting happens this morning. This is the one where Tony Abbott threatened to raise merry hell over the school funding policy.
Family First senator (now independent since the Australian conservatives merged with FF) Lucy Gichuhi will be sworn in.
This returns the Senate to its full complement of 76.
Journalists, including me, will go into the lock up at 1pm/ish and you will have the wonderful Christopher Knaus to steer you through the afternoon. (Watch out for the annual ritual of “taking out the trash” while most of the gallery is locked up.)
Then I will be back with you at 7.30pm, the minute they unlock the doors to cover the treasurer’s budget speech to the parliament at 7.30pm.
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Meanwhile the Fin is reporting:
A key ratings agency behind Australia’s AAA credit rating is wary of today’s federal budget, which is expected to forecast a return to surplus by the end of the decade while at the same time spending big to win back disgruntled voters.
Moody’s Investors Service issued the warning ahead of the budget, which is believed to contain a number of so-called integrity measures – including a crackdown on welfare and the black economy, and public sector efficiency dividends – to pay for extra spending, including the dumping of up to $10bn of unpopular cuts to welfare and higher education that have lingered since the 2014 budget.
Moody’s has also raised questions over the economic growth forecasts that are expected to underpin this year’s budget.
The story also contains a warning from the former Labor premier Anna Bligh, now chief executive of the Australian Bankers Association, on any bank levy.
Any new tax or levy specific to banks could have serious unintended consequences. It has the potential to affect the stability of the financial system, compromise the ability of banks to finance economic growth and jobs, and would be a direct attack on the savings of mum and dad shareholders. It would also be inconsistent with the federal government’s objective of ensuring the financial system is unquestionably strong.
No word from Labor yet on their thoughts on the bank levy.
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No show without Punch. Brought to you by Labor senator Sam Dastyari:
Sam Dastyari and Malcolm Trumbull at Senate doors 1/2 #auspol pic.twitter.com/JtPKD8uElV
— Paul Karp (@Paul_Karp) May 8, 2017
"Malcolm Trumbull" part 2 pic.twitter.com/CgLPMb1usb
— Paul Karp (@Paul_Karp) May 8, 2017
Now there are a range of budget drops around this morning. I will just do a quick round-up to cover the papers. None of this has been confirmed though they look like strategic drops.
The government is believed to be considering a levy on the big four banks as part of today’s budget.
The proposed levy would not touch the savings of normal Australians, but target the hundreds of millions in institutional loans the big four banks make to each other.
This will avoid accusations that they are instituting a deposit tax on the retail side while targeting the institutional side, effectively targeting lending the banks make to each other every year.
The Australian understands a fully-funded NDIS will be the centrepiece of the budget’s social policy component following a three-year battle with Labor and the Senate to pass savings measures that would help pay for it.
Someone in the government has told the Oz that the government would need to find $6bn to fund it. *alarm bells*
The government claims that the NDIS funding gap created by Labor has left the Coalition to fund an extra $4bn in the 2019 outlays, rising to $6bn a year beyond that. It is understood that extra savings, beyond those secured through the Senate earlier this year in the government’s omnibus savings and childcare reform bill, HAVE BEEN FOUND WITHIN THE SOCIAL SERVICES BUDGET as well as other portfolios.
From the same story, the government would not rule out tax or levy increases in the budget to cover the entire $22bn cost of the scheme.
It seems a proposal to make the highest-income earners carry the burden of the required savings, through a compulsory 1% Medicare surcharge, was taken to the final pre-budget meeting of the expenditure review committee.
But the government didn’t confirm whether it survived the final budget package.
The government is also expected to introduce the changes recommended in the McClure report which streamlines 20 different income support payments and 55 supplementary payments down to five.
The small business $20,000 instant asset write-off, which was due to expire on 30 June, will be extended at least one more year in a move to encourage investment and jobs growth.
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Happy budget day: we feel your pinch
Good morning and welcome to our budget coverage.
I hope you have cancelled your appointments and put the kettle on. As the day progresses, don’t forget to stretch the legs to ward off deep vein thrombosis. It’s gonna be a long one.
It begins with Scott Morrison, treasurer, feeling your pain. Emoting on national television. It’s a long way from the 2014 Budget of Doom, where Tony Abbott and Joe Hockey did their best Freddy Kruger impression and cut, cut, cut.
Morrison has done the traditional budget walk to the ministerial entrance, as if he was going to work with briefcase in hand, though he has probably been in the building for hours.
Gone is the hard arse from immigration days.
If you don’t believe me, get a load of this from the treasurer:
We have been listening. We understand that while Australia has grown, ahead of the large advanced economies in all the world, and that our national growth against strong headwinds has been impressive, we understand that not all Australians have felt the experience of that growth personally.
We understand that many other Australians feel frustrated that they’re not getting ahead in the way they would like to. We understand that. And we understand that when wage growth has not been strong, that you feel the pinch of costs of living more, that the services that you rely on, you feel more. And it’s important that a government understands those pressures on Australians and families.
But in addition to that, Australians have been making big sacrifices to ensure that we’ve achieved the growth that we’ve had. And I want to tell them that it’s been worth it. And to get out of bed today, many of them would have been long up before now. And it’s worth it. It’s worth it.
Because the second point I wanted to make is, as we look around the world and we look here at home, I am responsibly optimistic that there are better days ahead. We can see them. But we have to secure them. Those opportunities are there.
Australia has worked hard to be well-positioned, and those better days are ahead. And we need to secure them.
And the third point is this. Tonight, what you’ll see, what the prime minister and the government have sought to do, is to be incredibly practical. There are issues that we need to address that Australians face every day ... Some of our politics, it’s not about any of those things for Australians. It’s about just honestly and practically trying to deal with the challenges and the opportunities that are ahead.
And so what you’ll see tonight is that we’ve sought to be practical about that. And we’ll be inviting the parliament to join the government in the middle, in our bid to ensure that we can address these challenges together.
Which is all well and good but mind the whiplash as you read the Daily Tele’s reports which have not been confirmed by the treasurer.
BLUDGERS will face a driver style demerit system in the Federal Budget which will cut off their payments for up to two months when they lose all seven points.
Welfare recipients who take taxpayers for a ride by failing to turn up to job interviews or work-for-the-dole appointments will start losing payments when they reach four points – and when they hit seven demerit points, they will have their payment cut-off, effective immediately for eight weeks.
There are plenty more rats and mice around this morning. The drops to various outlets just keep coming on this Budget Day 2017. Mike Bowers is roving the building so talk to us in the thread, on the Twits @gabriellechan or @mpbowers and on Facebook.
Get out of bed, bludgers. It’s worth it.
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