What does the budget mean for you?

After all the speculation and predictions, the budget finally arrived in a hail of benefits cuts and levies last night.

In what Treasurer Joe Hockey described as a “Contribute and build” budget, cuts were plentiful. The government is taking away $800 million in subsidies, including changes to Family Tax Benefit B that mean families with a child over the age of six will no longer be eligible (previously the benefit was available to a family until a child reached the age of 18). The benefit will also now be cut off at $100,000 instead of $150,000 as it was before and every family benefit is being frozen until 2016 or 2017 (essentially the same as a drop).

Seniors certainly haven’t been left out of the firing line. Not only will the pension age be raised to 70 by 2035, as expected, which will affect Australians born after 1958, but the Seniors supplement (currently $1320.80 for couples and $876.20 for singles) is being eliminated entirely and it will be more difficult to qualify for the Seniors Health card, as untaxed superannuation will be taken into account during the income test. Changes also mean that instead of pensions rising in line with wages, as they do at the moment, they will be linked to the consumer price index (CPI) – saving the government $449 million over four years. Extra hits for the over-60s include: The Dependent Spouse Tax Offset, which had been available to anyone with a dependent spouse aged 60 or above, will end, and the Mature Age Worker Tax Offset will be abolished, as will the Pensioner Education Supplement. The proposed pilot of Supporting Senior Australians: Housing Help for Seniors, a $173 million program designed to encourage older Australians to downsize, has also bitten the dust. Hockey did, however, announce a new scheme, “Restart”, that it’s hoped will encourage businesses to employ older workers by offering bonuses of up to $10,000 for taking on over-50s who have been on unemployment benefits or the disability support pension for more than six months.

Our youngsters didn’t fare much better, with a higher interest rate on students’ loans, universities being allowed to set their own tuition fees as of 2016 and the minimum income threshold for paying back student debt lowered by 10%. NewStart eligibility has shifted from age 22 to 25 and unemployed under-30s will have to wait six months before they are eligible.

Another significant factor for the average Joe on the street was the planned cuts to state and territory purses, with the federal government withdrawing a massive $80 billion, which will hit schools and hospitals hard. The move has led experts to speculate that the government is bringing the states to their knees with the hopes they will end up begging for a rise in the GST. Only time will tell whether that prophecy is accurate.

The biggest “winner” on the night was undoubtedly medical research, with the surprise announcement of a $20 billion research fund, which Hockey described as “a new and historic commitment” and said would be “the biggest in the world within six years”. Describing research as something Australians “are damned good at” and outlining the possibility that important breakthroughs could well be made thanks to the extra resources, sceptics described it as a cynical ploy to make sure the Opposition would help pass the $7 Medicare co-payment for GP visits, after Hockey linked the co-payment directly to the creation of the fund.

Whilst high-income earners are indeed going to be paying a 2% debt levy – those earning over $180,000 – it is only temporary and will be removed after three years. Critics argue, therefore, that the hardest hit will definitely be those on the lowest incomes, forced as they will be to rustle up an extra $7 for a GP visit and more money for their fuel (the excise will be rising twice a year from now on) at the same time as their income from benefits is reduced.

Economists are describing this budget as the toughest since 1997, but Hockey simply called it “the first word and not the last word on budget repair”. Now it’s time to have your say: does the budget hit the vulnerable where it hurts, or are the measures necessary and manageable? How much do you think the cuts are going to affect you? Are you worried about the future? Let us know your thoughts in the comments below…