Mr Speaker, in framing this Budget, foremost in our considerations are the Australians who work hard, pay their taxes, and demand little more than a fair go.
This Government understands the stress on working families in these difficult times. More and more family
income is being eaten away in mortgage repayments, rent, groceries and petrol – leaving so many families feeling the pinch.
That's why a key priority of this Budget is to deliver the Working Families Support Package. The $55 billion package comprises targeted initiatives in tax, child care, education, housing, and other essential components of family budgets.
Personal income tax cuts
For too long, working families have watched the proceeds of the boom directed elsewhere, in the form of tax cuts skewed to those already doing very well.
Tonight we tip the scales in favour of working families.
The Government will fully implement our promise to reduce personal income tax by $47 billion over four years. This tax cut is directed to low and middle income families – the backbone of the economy.
These tax cuts will allow low-income earners, including part-time workers, to keep more of their income and ease the financial pressure on families. And they will provide further incentives to participate in the workforce. From 1 July 2008, a worker on $48,000 – average weekly earnings – will receive a weekly tax cut of $20. And low income workers earning $14,000 or less will pay no tax at all.
We will make the Medicare Levy Surcharge fairer. The Government will increase the income thresholds from $50,000 to $100,000 a year for singles and from $100,000 to $150,000 a year for couples.
Child care costs
Mr Speaker, the Government will ease the burden of child care costs, and make it easier for parents who wish to return to work, by increasing the Child Care Tax Rebate from 30 per cent to 50 per cent. This will ensure that, in addition to any Child Care Benefit payable, half of a family's out of pocket child care costs will be met every year.
The cap on the amount that can be paid will be lifted from $4,354 to $7,500 per child, and the Government will pay the 50 per cent Child Care Tax Rebate quarterly, to ensure support is available when it is most needed. The total cost of these reforms is $1.6 billion over four years.
The Government will support parents who are providing opportunities for their children by investing in their education, with a new Education Tax Refund, costing $4.4 billion over four years. We have funded this in large part by redirecting tax cuts for people earning more than $180,000 a year.
From 1 July 2008, eligible parents will be able to claim a 50 per cent refund on eligible education expenses for children undertaking primary or secondary school studies – up to $375 for a primary schooler and up to $750 for a secondary school child each year.
Improving housing affordability
Mr Speaker, the Government's $2.2 billion housing affordability package will help working families who are struggling with the housing affordability crisis.
We will introduce enhanced First Home Saver Accounts. The first $5,000 of individual contributions will now attract a Government contribution of 17 per cent, earnings will be taxed at a low rate of 15 per cent, and withdrawals will be tax-free if used to buy or build a first home. The Government will provide assistance of $1.2 billion over four years through the Accounts.
To improve housing supply, and lower prices for homebuyers, the Housing Affordability Fund, worth $500 million over five years, will help reduce the cost of providing new housing infrastructure and cut red-tape in development approvals.
And to reduce rental costs, the National Rental Affordability Scheme will encourage the construction of up to 50,000 new affordable rental properties by 2011-12, at a cost of $623 million over four years.
Supporting older Australians and carers
Mr Speaker, the Government recognises the contribution of older Australians and carers to our community.
To assist them with rising costs, the Government will provide, by 30 June 2008, one-off lump-sum payments of $500 to eligible senior Australians, $1,000 to Carer Payment recipients, and $600 to Carer Allowance recipients for each eligible person in their care, at a total cost of $1.8 billion.
Pensioners have begun to receive a higher Utilities Allowance of $500, up from $107.20. Self funded retirees with a Commonwealth Seniors Health Card now receive a higher Seniors Concession Allowance of $500 per year, up from $218.
To offer further protection for older Australians against rising living costs, the Government will enhance indexation of the age pension.
The Government is making assessment rules for Carer Payment (Child) fairer by expanding eligibility to cases where a child's disability creates additional caring needs for parents or requires long periods of hospitalisation.
Under the new rules, an additional 19,000 carers of children with severe disability will be entitled to access this payment in 2009-10, at a cost of $274 million over five years. This measure brings the total additional assistance provided to carers to $1.1 billion over five years.
Aged care providers will benefit from an increase in the Conditional Adjustment Payment, resulting in an additional $408 million for the industry over the next four years.
Easing cost of living pressures
Mr Speaker, the Government is responding to legitimate community concerns about the cost of essential goods such as groceries and petrol.
We have provided the Australian Competition and Consumer Commission with tough new powers, and we will introduce the first ever National Fuelwatch Scheme, in December this year, helping motorists find the best possible deal at the bowser.
The Government is doubling funding to expand financial counselling services to help families better manage their finances and their mortgages.
Mr Speaker, this Budget begins a new era of responsible economic management.
The Government believes there is an economic case for cutting government spending.
It is this discipline that will place downward pressure on inflation, give us a buffer in a time of difficult economic
conditions, and begin overdue investment in our future.
We have honoured our commitment to deliver a budget surplus of at least 1.5 per cent of GDP, and gone further to budget for a surplus of 1.8 per cent. The previous Government forecast a surplus of only 1.2 per cent for 2008-09.
The Government is reducing spending on programs that do not meet our objectives in the most cost-effective manner.
We are applying an additional two per cent efficiency dividend to most Australian Government agencies, producing savings of $1.8 billion over five years.
Every single dollar of new spending is more than offset by savings. We have delivered our commitments by redirecting spending to more pressing priorities.
Fairness and integrity in the tax and transfer systems We have decided to redirect welfare payments to where they are needed most. The Government does not believe hard earned tax dollars are best spent on cash payments to the wealthiest Australians. It is simply not defensible.
So from 1 July 2008, an income test will be introduced so that Family Tax Benefit Part B will only be available to families in which the principal earner does not have an annual income exceeding $150,000.
From 1 July 2008 we will increase the Baby Bonus to $5,000. From 1 January 2009, an income test will be introduced so that it will only be available where family income is not more than $150,000 a year.
From 1 July 2008 the tax rate for luxury vehicles will be increased from 25 per cent to 33 per cent.
Tax rules for employee share schemes will be amended to prevent unfair tax minimisation.
We are removing the crude oil excise exemption for condensate, increasing the financial return to the community from the extraction of this non-renewable resource.
To those Australians we have asked tonight to play a role in the fight against inflation, I say this Government did not take these decisions to cut spending lightly.
Mr Speaker, some Australians have been asked to bear a greater burden than others, tha”s true. But in the end, if we're to beat inflation and build prosperity, we have no choice. We simply cannot go on as before, spending irresponsibly, and allowing inflation to build.
Mr Speaker, this Budget honours the Government's commitments, and allows us to look Australians in the eye and say we delivered the policies they voted for last November. We are doing what we said we would do.
We are providing new leadership in education, health, infrastructure, climate change and modernising the federation, to end the blame game.
And we will begin tackling the big challenges on Australia's horizon, by providing long-term plans, not short-term bandaid fixes.