The 2013-14 Budget puts Australian jobs and economic growth at its core, makes room for the smart investments critical for Australia's future and provides a clear pathway to return the budget to surplus.
This Budget is Stronger, Smarter, Fairer.
Stronger - Supporting jobs and growth, while investing in the infrastructure we need for our future and putting our budget on a sustainable path to surplus.
Smarter - Investing in our classrooms and our kids to give them the best possible start in life and set them up for the high skilled, high paid jobs of the future.
Fairer - Delivering DisabilityCare Australia so Australians with significant and permanent disability are not left behind.
In this Budget, the Gillard Labor Government makes the choice to keep our economy strong and invest in Australia's future. We make the choice to support the jobs of today and build the skills that our children need for the jobs of tomorrow.
A stronger economy
The Australian economy remains the stand out performer in the developed world. Our nation's outlook is bright, building on our impressive record of resilience over the past five years.
Under Labor's economic leadership:
We avoided recession during the Global Financial Crisis - in fact, our economy is more than 13 per cent bigger than before the Government came into office. By mid‑2015, our economy will be 22 per cent bigger than before the Government came into office, outstripping every major advanced economy.
More than 950,000 jobs have been created under Labor with more Australians in work than ever before in nation's history.
We have a Triple-A credit rating from all three global agencies - one of only eight countries to do so, with a stable outlook.
We have solid growth - the Budget forecasts real GDP growth of 2¾ per cent in 2013-14 and 3 per cent in 2014‑15, outperforming most of the developed world.
We have contained inflation, record low interest rates and strong public finances.
Just as Labor did during the GFC, this Budget will continue to put Australian jobs and economy first, while making the investments critical to Australia's future.
This Budget will make record investments in critical nation building infrastructure, the cornerstone of our competitive and productive economy.
The Government has a strong record on delivering high quality infrastructure to enhance Australia's productivity, address supply bottlenecks and support future economic growth.
We are now seeing the real dividends of the Government's $36 billion infrastructure investment program in roads, rail and ports over the six years to 2013-14.
This investment will increase our living standards for decades to come. Now we are continuing our ambitious program with a new $24 billion investment in the next wave of nation building infrastructure over five years.
It is critical to invest in both urban road and rail infrastructure. Traffic congestion costs commuters time with their families and is estimated to cost our economy up to $20 billion a year by 2020 if not addressed.
That is why we have committed more to urban public transport infrastructure than all our predecessors since Federation combined and are now investing in projects like Brisbane's Cross River Rail and Melbourne Metro.
These projects will change the way these cities work and allow them to grow into the future.
We will partner with the private sector and State Governments to deliver these critical projects as efficiently as possible.
We are also putting funds towards productivity-enhancing road infrastructure in our cities.
- The M4 extension and M5 duplication and the missing link between the F3-M2 in Sydney.
- The Gateway North upgrade in Brisbane.
- The M80 Ring Road in Melbourne.
- The South Road upgrade in Adelaide.
And we will continue our investments in our regions the with the Swan Valley Bypass in WA, the Bruce Highway in Queensland, the Pacific Highway in NSW, the Midlands Highway in Tasmania and Tiger Brennan Drive in the Northern Territory.
These investments will boost productivity, build capacity, improve safety, relieve congestion and improve the quality of life in our communities across the nation.
Sustainable public finances and a path way to surplus
The Australian economy is expected to undergo two large and important transitions over the forecast period. Following the largest investment boom in Australia's history, the resources boom will shift from the investment phase toward exceptional growth in production and exports. More broadly, the economy will move to non-resource drivers of growth.
The economy starts these transitions from a position of impressive resilience, an outlook of solid economic growth, low unemployment and contained inflation. However, the unusual combination of a sustained high Australian dollar and falling commodity prices is putting acute and enduring pressure on prices and corporate profitability across the board. This has resulted in unusually weak nominal GDP growth, which is expected to remain subdued.
The strength of our economy has been a mixed blessing, and has contributed to the sustained high dollar. The highly unusual combination of the high dollar and falling commodity prices is putting immense competitive pressure on many of our industries and has weighed heavily on company profits.
The sustained high dollar and weaker corporate profitability, combined with a slower recovery in capital gains tax and lower revenue from resource rent taxes, has resulted in substantial downgrades to government revenue. Tax receipts have been revised down from the 2012-13 MYEFO by over $60 billion in the four years to 2015-16, with the total write downs in tax receipts since the start of the global financial crisis totalling $170 billion over five years.
The tax-to-GDP ratio in 2013-14 is estimated to be 22.2 per cent, 1.8 percentage points lower than the average of the five years prior to the GFC of 24 per cent.
If the tax-to GDP ratio was the same in 2013-14 as it was in the final year of the former government, tax receipts would be up by $24 billion and be in surplus in every year of the forward estimates.
The hit to revenues will see a budget deficit of $18.0 billion in 2013‑14.
The Government has responded to these changing circumstances by setting a pathway to return the budget to balance in 2015-16 and to surplus by 2016-17, before most of the developed world. It is achieving this while supporting jobs and growth and continuing to invest in our economy to keep it strong.
It is not only important the budget is returned to surplus, but that we do it in a way that supports jobs and allows us to make the smart investments for the future - even if it takes a little longer.
A more gradual return to surplus is appropriate given significant downgrades to revenue and the transition underway in the economy. Attempting to return to surplus too quickly by making drastic cuts in the near term would come at a significant cost to jobs and growth. Instead, the Government has chosen a sensible pace of consolidation, consistent with maintaining solid growth and low unemployment. Ensuring fiscal settings are appropriate for the economic conditions is a crucial element of the Government's medium term fiscal strategy.
Achieving this consolidation has required limiting spending growth and responsible new savings measures. Rather that cut so hard that it would come at a significant cost to jobs and economic growth, this Budget will make responsible, sustainable savings of $43 billion over the forward estimates.
Average real spending growth is only 1.3 per cent over the forward estimates, which is the lowest growth in any five year period in 25 years.
Since mid-2009 we have fully offset all new spending with savings measures and that continues in this Budget.
Savings have also been required to fund critical investments in our nation's future, such as the establishment of DisabilityCare Australia, the National Plan for School Improvement and nation building infrastructure projects.
The Government has been able to maintain fiscal restraint while still delivering on historic economic and social reforms. The National Plan for School Improvement provides a once in a generation reform to Australia's school funding arrangements. The establishment of DisabilityCare Australia, one of the biggest social policy reforms in our history, will help ensure that Australians with significant and permanent disability get the care and support they need.
A smarter nation
A smarter Australia means a stronger Australia.
Our current school funding system is broken - it's failing our children. That's why we are transforming our nation's schools with a new model that ensures funding grows for every school - that means more teacher training, extra resources for school libraries, specialist language assistance, and literacy assessments in the early years.
The investments we make tonight will ensure our children are equipped to take up the high-skill, high-wage jobs of the future.
Our unprecedented investment in early childhood education, together with the largest ever investment in school funding through the National Plan for School Improvement, will ensure our children have the education they need for the high-skilled, high wage jobs of the future.
These reforms will provide more support in the classroom, more training for teachers and support for those kids doing it tough. The Gillard Government will invest $9.8 billion over six years in once-in-a-lifetime school reforms to enhance Australia's future productivity and wellbeing. This investment will ensure every child has the opportunity to achieve their potential.
Building on our unprecedented investments in early childhood education and care with over $660 million for universal access to preschool, and the establishment of a $300 million Early Years Quality Fund.
Funding for higher education will continue to rise in this Budget, building on the $41.2 billion Labor has invested in higher education since 2007-08, supporting nearly 149,000 new university places.
This Budget contains an additional $97 million investment to boost the number of Commonwealth-supported university places, and an extra $186 million for research infrastructure.
A fairer society
The Gillard Government is determined that Australia no longer has a 'cruel lottery' where the support people with significant and permanent disability get depends on the kind of disability they have or where they live.
We are proud to establish DisabilityCare Australia - the National Disability Insurance Scheme.
Our current disability system is underfunded, unfair and fragmented. For too long, people with disability have been denied the opportunity to live a life many of us take for granted. This is a reform that is long overdue.
By 2018-19 around 460,000 Australians with significant and permanent disability will get the support they deserve.
The Government will provide $19.3 billion over seven years from 2012-13 to roll out DisabilityCare Australia across the country. This brings the Australian Government's total new investment in DisabilityCare Australia to $14.3 billion over this period (including the funding allocated in the 2012-13 Budget).
This investment in DisabilityCare Australia will ensure all Australians with significant and permanent disability get the support they need. This is compared to the current approach where limited funds are rationed and people who get funding often have to accept a one‑size-fits all approach.
Support provided by DisabilityCare Australia will be subject to rigorous, fair, and nationally-consistent assessments. This will ensure resources are targeted to where they are needed, and that all people with a significant and permanent disability get the reasonable and necessary supports they need.
To help pay for DisabilityCare Australia, the Government has announced that from 1 July 2014, the Medicare levy will increase by half a percentage point to 2 per cent of taxable income. The money raised from the increase in the Medicare levy will be placed into a fund which will only be drawn upon to fund the additional costs of DisabilityCare Australia. Additionally, from that fund, billions of dollars will be made available to the states and territories to help them meet their commitments to DisabilityCare Australia over the next decade.
A stronger, fairer retirement income system
Many of the Gillard Government's reforms to make the retirement income system stronger and fairer will start from 1 July 2013.
The Government's decision to gradually increase the Superannuation Guarantee (SG) rate from 9 per cent to 12 per cent will boost the retirement savings of 8.4 million Australians, and increase the pool of national superannuation savings by more than $500 billion by 2037.
The SG rate will increase from 9 per cent to 9.25 per cent from 1 July 2013, and will continue to increase each year until it reaches 12 per cent from 1 July 2019. This reform costs $3.5 billion over the forward estimates period.
The Government will enable older Australians to contribute more to their superannuation, by providing a $35,000 concessional contributions cap for those aged 60 and over from 1 July 2013 and those aged 50 and over from 1 July 2014. The higher cap is expected to benefit around 171,000 Australians in 2013-14 and around 363,000 Australians in 2014-15. The cost of providing the higher cap is $1.2 billion over the forward estimates period.
The Government will also abolish the maximum age limit on the SG from 1 July 2013 enabling workers aged 70 and over to receive the SG for the first time. This will increase the incentive for workers aged 70 and over to remain in the workforce, and will boost the retirement savings of 51,000 workers. This reform costs $65 million over the forward estimates period.
The Government will improve the fairness of the excess contributions tax system that was introduced by the Howard Government in 2007, by taxing excess concessional contributions made from 1 July 2013 at a person's marginal tax rate (plus an interest charge) rather than always taxing them at the top marginal tax rate. In addition, individuals will be allowed to withdraw any excess concessional contributions from their super fund. These reforms cost $60 million over the forward estimates period.
Fighting Cancer
This Budget invests $226 million to help fight cancer, building on the $3.5 billion Labor has invested since coming to office to improve the detection and treatment of cancer.
This includes $55.7 million to expand BreastScreen Australia's target age range for free breast screening by five years - to include women aged 70-74. It is estimated that this will mean 145,000 additional women taking up the screenings every two years (from 2016-17) that more than 1100 more breast cancers will be picked up every two years. It also includes additional funding for screening in both cervical and bowel cancer.
We're also going to be investing even more into prostate cancer research with an $18.5 million package to fund three Prostate Cancer Research Centres across the country to further their critical research work. This Budget will also include funding for Cancer Australia to improve the outcomes for people with lung cancer and additional funding for cancer data to better track and record treatment efforts.
This Budget also provides further support for critical chemotherapy medicines, and invests $23.8 million for life-saving bone-marrow transplants, funding of $18.2 million to expand CanTeen a support program for teenagers undergoing treatment for cancer and $19.5million to expand the McGrath Breastcare Nurses program.
Housing Help for Seniors
Labor is proud of our strong record of supporting older Australians. We introduced the largest single increase in the Age Pension in 100 years and the Superannuation Guarantee which we're raising gradually to 12 per cent from 1 July this year.
The Government is improving aged care services through our $3.7 billion Living Longer, Living Better package. This Budget marks another step in the Gillard Government's plan to turn Grey into Gold and harness the wisdom of our senior Australians.
We will invest another $127 million in to supporting senior Australians to continue their active engagement in society, including a pilot program to assist them to downsize their home without affecting their pension.
Support for industry and business
The Government's Industry and Innovation statement, A Plan for Australian Jobs, has three core strategies:
- backing Australian industry to win more work at home;
- supporting Australian industry to win new business abroad; and
- helping Australian small and medium businesses to grow and create new jobs.
Our $1 billion investment in boosting Australian innovation, productivity and competitiveness under the Plan is generating business opportunities and economic growth for the future
The Government is bringing in new laws to help Australian firms win more work at home. Any project in Australia worth more than $500 million must include an Australian Industry Participation Plan.
Small and medium‑sized businesses and start‑up companies will also be provided with expanded business assistance, as well as better access to finance through the $378 million Venture Australia package to stimulate Australia's venture capital market.
A fairer tax system
This Budget will also make changes to business tax laws to protect the corporate tax base by closing loopholes exploited by a few businesses to avoid paying their fair share of tax. This is part of a global effort by Group of 20 members to tackle base-erosion and profit-shifting. This will provide savings of over $4 billion over the forward estimates.