Budget 2017: Banks and taxpayers the saviours for Budget repair

Australians will be paying more every year in their Medicare levy, the big banks will face a new levy, those on the dole will face drug tests, while first home buyers will be able to save for a deposit.

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Treasurer Scott Morrison’s pathway to a Budget surplus by 2021 remains intact despite the deficit in 2017-18 increasingly slightly to $29.4 billion, up from $28.7 billion in Mid-year Economic and Fiscal Outlook.

Following years of fears around ‘debt and deficit’, the Treasurer declared on Tuesday that “we are now moving towards the end of this difficult period”.

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The heavy lifting will be done by the taxpayer, thanks to an increase in the Medicare levy delivering an $8 billion boost to the budget starting in 2019.

Mr Morrison tried to justify the increase by linking it to the costs of the National Disability Insurance Scheme.

“Even if we are not impacted directly, this is all our responsibility,” Mr Morrison said.

“Our decision to increase the levy reflects the fact that all Australians have a role to play.”

WATCH: Treasurer Scott Morrison talks to SBS

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The big five major banks have also been hit with a $6 billion levy.

“This represents an additional and fair contribution from our major banks, is similar to measures imposed in other advanced countries, and will even up the playing field for smaller banks,” Mr Morrison said.

Major reform was also announced in areas of housing, welfare, health, and infrastructure.

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Related readingHousing

The Turnbull government will let first home buyers save up to $30,000 in a super account but crack down on foreign investors as part of a widely-anticipated housing affordability package.

First home buyers will get a tax cut on their first home deposit by being able to salary sacrifice into their super accounts over their compulsory contributions.

Contributions will be taxed at 15 per cent and withdrawals taxed at their marginal rate less 30 percentage points.

Seniors will be encouraged to sell up their homes to free housing stock, by being allowed to make a non-concessional contribution of up to $300,000 into their super accounts from the proceeds of the sale.

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Tough new rules on foreign investors will mean they will only be allowed to buy up to 50 per cent of new housing developments.

Foreign owners will also face new charges if they leave homes unoccupied.

There will be an annual levy on residential property that’s not occupied or available for rent for at least six months per year. The charge will be the same rate as the foreign investment application fee. This will apply to those who make a foreign investment application for homes from May 9.

Foreign investors will also be barred from accessing capital gains concessions.

WATCH: Morrison on on welfare changes

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Related readingWelfare

Dole recipients will be drug tested, forced to spend more time looking for work, and have their welfare cut under a demerit point system in a tough, new stance on welfare.

Thousands of new welfare recipients will be reeled into a random drug testing trial in three selected locations.

Those who fail the first test will be put on the cashless debit card which will quarantine their payments from drug and alcohol purchases.

Anyone who tests positive twice will be referred to a doctor for treatment of their substance abuse problems.

The number of various welfare payments will also be reduced. One working age payment will replace seven – rolling in the Newstart allowance with the Sickness payment, wife pension, partner allowance, bereavement allowance, Widow B Pension and Widow Allowance.

The government is also imposing a “three strikes and you’re out” policy on those who continually fail to meet their mutual obligations such as looking for work, attending work for the dole, or showing up for appointments.

Jobseekers will accrue demerit points over six months for failing to comply with such obligations and once they reach four points, they’ll be assessed to see if they need more help or face the ‘strikes phase’, where they’ll have their payment reduced or cut entirely if they continually fail their obligations.

Anyone who turns down a job without a proper reason will have their welfare cut for a month. 

WATCH: Morrison on Medicare and PBS

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Health

Australians will be slapped with a 0.5 per cent increase in the Medicare levy to fund the National Disability Insurance Scheme. That will collect savings of $8.2 billion over forward estimates period.

It will end the years of debate between coalition and Labor about whether or not there’s enough money to ensure Australians with disability can access support under the scheme.

Mr Morrison says the measure will ensure the NDIS was fully funded.

“How do you look someone with a disability in their eye and say we just can’t agree on this, so you’re just going to live with uncertainty under the NDIS,” he told reporters.

He described it as the fair and right thing to do.

“Yes, it’s an insurance levy on all Australians. But it’s all our responsibility,” he said.

“We all can potentially be a recipient or could have been.”

The government is also lifting the freeze on the Medicare benefits schedule and reversing the cuts to bulk-billing incentives for diagnostic imaging and pathology services.

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Related readingBanks

The nation’s big four banks and Macquarie will be slapped with a new levy of six basis points, raising $6.2 billion over the next four years. They will also face bigger fines for misconduct.

Mr Morrison said the banks can afford to do the heavy lifting of budget repair.

In addition, disgruntled bank customers will be able to refer to a new ‘one-stop shop’ called the Australian Financial Complaints Authority where they’ll be able to obtain free binding dispute resolution services.

Banks will also face new penalties – up to $200 million – if they hide misconduct by executives who misbehave. A new regulatory regime will require all senior executives to register with the Australian Prudential Regulations Authority. If they breach any rules they can be disqualified and deregistered from holding executive positions and have their bonuses stripped.

WATCH: Morrison on banking

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Foreign workers

Adding to their crackdown on foreign workers under planned changes to the 457 visa scheme, the government is also imposing a new levy on businesses that employ foreign workers. They’ll be charged between $1200 and $1800 per worker every year on temporary work visas and a $3000 or $5000 one-off levy for those on a permanent skilled visa.

There’s also higher charges on visa application fees.

From July 1, 2017, fees will be indexed in line with inflation, generating $410 million over the forward estimates period.

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$17 Billion in ‘zombie savings’ killed off

The government has finally abandoned unlegislated budget measures from past years – termed “zombie savings” – that failed to pass parliament, which will punch a $17 billion hole in the Budget over five years.

That includes measures to cut the Family Tax Benefit Part B for single parents with a youngest child aged 13–16, and an unpopular policy to make young people wait one month for the dole.

Infrastructure

The government has pledged to spend $75 billion on infrastructure over the next decade. That will include $844 million to upgrade the Bruce Highway and $1.6 billion in road upgrades and other measures in Western Australia.

A $10 billion national rail program will be used for rail projects to link up cities with regions. The fund will also potentially pay for the Western Sydney Airport rail link.

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