Federal Budget 2021: What we know so far

The Federal Budget is set to be unveiled by Treasurer Josh Frydenberg on Tuesday night but, as usual, there have been a number of pre-budget leaks ahead of the official announcement — so, we have a pretty good idea of what the 2021 budget is set to look like.

Some things we know we can expect so far include the much-anticipated response to the Royal Commission into Aged Care, a $1.7 billion increase to childcare subsidies, a $9 billion to lift the JobSeeker rate, and more than $12 billion in infrastructure funding.

Frydenberg addressed the media on Tuesday morning ahead of the budget reveal, foreshadowing “record commitments” on essential services, disability support, mental health, aged care and women’s safety, saying the budget would “secure Australia’s economic recovery”.

According to a recent survey by Finder, aged care, employment and the environment were all among the top three issues Baby Boomers thought should be addressed in this year’s budget — and the good news is, they are set to be some of the federal government’s largest expenditures in 2021.

Aged Care

Sarah Martin, The Guardian Australia’s chief political correspondent, reported that aged care funding will be the “centrepiece of the 2021-22 budget” as they unveil a package described as a “once-in-a-generation investment”. The government is expected to unveil a package worth more than $17 billion in response to the findings from the Royal Commission into Aged Care, which made 148 recommendations in March. The funding program will reportedly be spread across the next four years and go towards improving safety and quality standards, ensuring the sustainability of private providers and increasing the availability of home care packages.

Employment

The government is aiming for an unemployment rate below 5 per cent, with reports suggesting the budget will focus on stimulating the domestic economy and job creation.

According to The Sydney Morning Herald, changes made to boost employment levels will include a $50-a-fortnight JobSeeker increase, which is predicted to cost the government $9 billion over four years. The government is also predicted to introduce a $4 billion overhaul to the JobMaker Hiring Credit program, and a grant program aimed at encouraging Aussies to take up agricultural jobs. The grant will offer Aussies up to $2,000 in relocation assistance after two weeks of work, and up to $6,000 after four weeks.

Environment

The government will reportedly be announcing a raft of environment and climate-related expenses in the budget, including $600 million for a National Recovery and Resilience Agency. The funding will go towards resilience projects such as proofing houses against bushfires and cyclones, building levees for flood control, and improving the resilience of telecommunications and essential supplies.

Additionally, the Sydney Morning Herald reported a $210 million investment to establish an Australian Climate Service, $100 million for projects aimed at managing ocean habitats and coastal environments while reducing emissions, and $58.6 million for gas infrastructure and the development of new supply hubs. A further $30 million is reported to be budgeted to boost power systems in the Northern Territory and build microgrids in up to 10 remote Indigenous communities around Australia.

The government has already allocated $540 million for new clean hydrogen and carbon capture and storage projects, and another $560 million for international technology partnerships.

Superannuation

According to James Kirby, The Australian’s wealth editor, the ‘downsizer scheme’ is set to receive some tweaks to make it more appealing. The existing scheme allows people over 65 to sell their family home and make a one-off contribution of up to $300,000 (or $600,000 for couples) to their superannuation.

It’s understood that under the new budget, the scheme will be extended to anyone 60 years and over as of July 1, 2022. While the aim of the change is to encourage older Australians to take up the scheme, research suggests that most older Australians feel it isn’t worth the risk of losing access to the government pension. As homes are exempt from pension access tests, any extra capital produced from the sale or downsizing of a home could be counted against pension access.

The government is also set to abolish the work test rules, meaning self-funded retirees will be able to increase their super savings more freely. Under the ‘work tests’, you cannot contribute to super unless you are gainfully employed for 40 hours in a consecutive 30-day period. Currently, the work test applies to people aged between 67 and 74, however it will be abolished for that age group on July 1, 2022, making it easier for them to top up their super.

Tax

Low and middle-income earners will be happy to hear the tax offset will be extended for another year, costing the government about $7.2 billion. The scheme was set to expire in June, but it has been revealed that it will be extended. The tax rebate, which workers receive after completing their tax returns, is worth between $255 and $1080 for about 10 million workers earning between $37,000 and $90,000.

According to The Guardian Australia, controversial stage-three income tax cuts are also expected to be confirmed in Tuesday’s budget.

Housing

The Guardian Australia reports that we can also expect to see a host of updates to housing policies, including the introduction of the new family home guarantee, which will help single parents buy a home with a minimum 2 per cent deposit.

An extension to the HomeBuilder program, funding towards additional public housing and homelessness services, and an increase to the maximum amount people can withdraw from their super to put towards a house are all other announcements that are expected to feature in Tuesday night’s announcement.

These are just a selection of the budget announcements set to be unveiled at 7:30pm Tuesday on ABC.