Good morning to everyone and thank you for inviting me to speak to you this morning about what is, in my opinion, one of the most far-reaching and forward thinking Budgets delivered by the Howard Government.
This is the seventh time, since the Government came to office, that we have delivered a Budget surplus. And the strong economic growth which underpins that is set to continue.
The fiscal outlook for Australia remains positive, with a forecast underlying cash surplus of $2.4 billion in 2004-05.
And across the forward estimates, the Government will maintain the Budget in surplus after meeting necessary and vital spending priorities.
The outlook for the Australian economy is for continued growth, with low unemployment and low inflation.
GDP growth is forecast to moderate slightly from 3 per cent in 2003-04 to 3 per cent in 2004-05.
This result is testament to this Government's unrivalled and continued record of sound economic management and has meant that we can now deliver one of the most significant and substantial packages of assistance ever made to the Australian people.
The 2004-05 Budget provides $36.7 billion in new assistance with more help for Australian families, further tax cuts, boosts to retirement savings and investment in Australia's future.
This Budget continues the Government's long-term vision for the continuing well-being of the Australian population, the Australian economy and Australian families.
The Budget is about paying a social and economic dividend to the Australian population.
The Budget provides significant boosts to health, aged care, education, welfare, national security and defence. It delivers for rural and regional Australia and recognises the importance of support for our national infrastructure.
This is not just a Budget for the 'now', it is a Budget for the future.
Strong and effective economic management isn't an accident or a fluke.
Last night's Budget is underpinned by one of the best economic news story in the developed world. Australia's economy has been resilient in turbulent economic waters while many larger countries have languished in recession.
Through sound Budget management, the Government has reduced debt. We have strong economic growth and low inflation and Australia has the lowest unemployment in a generation – it's at 23 year lows and currently below six per cent.
The benefits of sound economic management must be returned to the Australian people after spending priorities are met – and this Budget well and truly embodies that principle.
The Government recognises that Australians need assistance to balance their work and family responsibilities – it's about helping people that 'struggle to juggle' to meet their competing priorities.
Families:
This Budget includes the largest package of assistance for families ever, with an additional $19.2 billion over five years.
More generous Family Tax Benefit arrangements will help families with the expense of raising children and improve the rewards from working.
The increase of $600 a year to the rates of FTB (A) for each dependent child and an immediate lump sum payment of $600 per child by the end of this financial year, provided at a cost of more than $2 billion, are about removing the disincentive for parents to return to the workforce.
A new Maternity Payment and the expansion of outside-school-hours child care and family day care places will also assist families juggling their commitments.
The Government will provide $3.5 billion over four years to introduce a new universal maternity payment that will streamline and increase assistance available to families when they have children.
From July 1, 2004 this means $3000 to families for each new child born rising to $4000 from 1 July 2006 and to $5000 for babies born after July 1 2008.
And to assist parents when the children get a little older, an additional 40,000 outside school hours child care places and an extra 4000 family day care places are provided in the Budget.
This will help meet demand for such places and provide extra help for those families that are combining work and family responsibilities and currently have difficulty in finding a child care place.
This will mean that since 1996, the Government has increased child care places in child care centres, family day care and outside school hours care by 266,000 places – an increase of 85 per cent.
Since 1996 total assistance to families will have increased by more than $6 billion a year. The base rate of family assistance has increased from less than $600 per child in January 1996 to almost $1700 per child in January 2003 – a real increase of more than 100 per cent.
Cutting Income Tax:
Since coming to office the Howard Government has provided the largest income tax cuts in Australia's history which builds on the principle of giving something back to the Australian people on top of improved services and support.
We introduced $12 billion work of tax cuts with the introduction of the New Tax System and in last year's Budget the Treasurer announced $10 billion worth of tax cuts over four years.
The 2004-05 Budget provides for further reductions in personal tax rates – worth $14.7 billion – by raising the top two marginal tax rates to allow more taxpayers to earn more before they start paying the top marginal tax rates.
The thresholds will be lifted in two stages resulting in the 42 per cent threshold increasing to $63,000 and the 47 per cent threshold to $80,000 1 July 2005.
Raising the top two thresholds is something the Government committed to when we introduced the New Tax System. We're hoping resisted opposition to these necessary reforms will have abated when Parliament returns in June.
These reductions in personal tax mean that more than 80 per cent of taxpayers will face a marginal tax bracket of 30 per cent or less.
The tax cuts improve incentive, make Australia more competitive and make sure Australians receive reward for effort. This is about encouraging productivity and participation in Australia's workforce.
Retirement Savings:
The Government believes there should be incentives for those Australians who are able to save for their retirement.
As the Minister responsible for the superannuation savings of Australians, nothing pleases me more than last night's announcement that the Government will enhance the retirement savings of Australians with a $2.1 billion package of assistance.
This package includes incentives for low and middle income earners to save for their retirement through an extended Government co-contribution and a commitment to reducing the superannuation surcharge which acts as a disincentive for those who can afford to save to do so.
The Government will now match eligible, personal super contributions by $1.50 for every dollar contributed and will extend the eligibility for the maximum payment to those earning $28,000 (up from $27,500).
The co-contribution will now be available to people earning up to $58,000 per year (increased from $40,000) and will be phased out by five cents in the dollar instead of eight cents.
For a person on $25,000 making contributions over a 30 year working life the improved co-contribution could increase their retirement savings by $106,000. That's an 86 per cent improvement on what their balance would be if only superannuation guarantee savings were made.
For a baby-boomer on $40,000 with 15 years of working life left – the co-contribution would make an 11 per cent difference to their end balance.
The Government has also committed to taking the burden off those who can afford to save for their retirement by further reducing the superannuation surcharge.
Already we have committed to reducing the surcharge from 15 per cent to 12.5 per cent and now the Government will reduce it to 7.5 per cent by 2006-07.
Both of these measures build on the Government's commitment to making the retirement income system more flexible and adaptable and by providing more choice about how and when to retire.
More than three quarters of the benefits of this package will go to low and middle income earners. This is about helping Australians to retire when they're ready.
While support for families, personal tax cuts and greater incentives for retirement savings are major planks of this year's Budget, the Government has also committed substantial spending on essential services.
Part of this is recognition of some of Australia's 'unsung heroes' – carers who look after people with disabilities.
$255 billion will be paid to carers in a series of one-off payments and we will extend the Carer Allowance eligibility criteria to people who provide substantial levels of care but do not live with the care recipient.
Ages care will also receive a significant boost with a $2.2 billion package over five years and an immediate payment of $3500 for each aged care resident for an immediate capital injection for necessary improvements.
Importantly, for those of you gathered here today, the Budget also has measures that assist small business. To reduce the compliance burden small businesses who are below the registration threshold and voluntarily registered for the GST will now report GST annually instead of quarterly.
These measures will benefit around 740,000 small businesses and 30,000 non-profit organisations. I'm sure these changes will be welcomed.
As I mentioned earlier, this is a forward-looking Budget that doesn't simply provide for now, but will provide for Australians well into the future.
Sustained, sound economic management has enabled us to deliver this substantial package of benefits and reforms and to pay a dividend to the Australian people.
Thank you.