[smtm]

How does the May 2009 budget affect you? Let's take a look at some of the measures introduced in the federal budget that could impact your family's finances.

No surprise paid parental leave has finally made the budget YAH. A little disappointing given these tough economic times it couldn't be introduced earlier. However if you are looking at going on maternity leave as of January 2011 you will be entitled to a share of the $731 million set aside for paid maternity leave, to be paid over five years.

The parental leave payments which will be equivalent to the minimum wage, currently $544 a week, will be paid to stay-at-home parents for 18 weeks after the birth of a child. To qualify for the payment you need to have earned an income of less than $150,000 in the previous financial year, 2009/10. You will need to have been in paid work for at least 10 of the 13 months prior to the birth of a child, for at least 330 hours, or approximately a day a week.

Good news for first home-buyers, who have another six months to locate their dream home and still benefit from last year's boost to the first home owners grant. However it will be gradually phased out, first home buyers will be entitled to the full amount for the first three months of the new financial year ($7000 for existing homes and $14,000 for new homes). Beginning October 09, the amount will be halved for a further three months, taking the total payment to $10,500 ($7,000 original grant plus bonus $3,500) for buyers of existing homes and $14,000 for new homes before the boost comes to a complete end at the close of December 09.

Those with private health care insurance will take a hit. From the 1st July 2010, the 30 per cent private health insurance rebate will be reduced for families with an income greater than $150,000 and completely cut out for families who earn more than $240,000. The reduction of the health insurance rebate is set to increase the cost of private health insurance for many everyday Australians. This initiative will see the introduction of a "tiered" system.

Tier One
At the lower threshold, the rebate will be 20 per cent for families earning between $150,000 and $180,000. Those penalised for not having private health insurance good news, the Medicare levy surcharge will remain at 1 per cent of income.

Tier Two
Families earning between $180,000 and $240,000 will be entitled to a rebate of 10 per cent. The Medicare levy surcharge will be 1.25 per cent of income for that group.

Tier Three
Families earning more than $240,000, you will not be entitled to any private health rebate. And if you refuse to take out private health care insurance, look out, the surcharge is set to rise from 1% to 1.5 per cent.


Note these new arrangements, will not affect singles earning less than $74,000 a year and couples on less than $150,000 a year.

Cuts to superannuation tax concessions in the budget will impact lower income earners. For some time now the government has encouraged taxpayers, particularly low-income earners to personal contribute to their super funds by matching personal superannuation contributions 1 to 1.5. Taxpayers would be entitled to a maximum financial benefit of $1,500. This is an enormous financial benefit for low-income earners, trying to build up their super nest eggs, especially the mums who are forced to opt out of compulsory superannuation contributions, whilst out of the work force. Sadly this financial benefit is set to change, matching contributions will be reduced to dollar-for-dollar, maximum benefit of $1,000. By way of example, a worker who earns less than $30,342 who would ordinarily contribute $1,000 from their after-tax income will see their co-contribution cut from a maximum $1,500 this year to $1,000 for the next three years. The co-contribution is means tested, and the maximum payment is reduced for each dollar you earn between $30,342 - $60,342, your entitled cuts out once your income exceeds $60,342. This is just one of the changes proposed for superannuation, designed to save $4.2 billion over four years.

Because of a change to the indexation rate applying to FTB-A, as of July this year, low income families earning less than $42,000 a year will lose 35 cents per week equivalent to $18 a year for each child aged under 12, and $26 a year for each child aged 13-15-years-old. Families earning more than $112,000 a year will lose on average $16 a week per child - $832 a year. Families with a stay-at-home parent claiming family tax benefit B and families claiming the baby bonus will also be hit, with an income test placed on both payments at $150,000.

Sadly those in need of IVF services will take a hit in the May 2009 budget. A shake-up of the Medicare Safety Net (MSN) will result in the public subsidisation of specialist services, including IVF and obstetrics, capped for patients who qualify under the scheme. As of January next year, when a patient reaches the safety net threshold of $1,111.60 in out-of-pocket medical fees, or $555.70 for those on low incomes, safety net payments will be capped at:

- $200 for the planning and management of a pregnancy, including being booked into a hospital for delivery
- $30 for a pregnancy consultation, including blood, urine and weight checks
- $550 for the planning and management of an IVF pregnancy

Sadly these changes to the MSN could very well be the difference between whether couples struggling to have a family naturally, could afford to have a family or not. On the other side of the argument the changes to MSN mean nurse practitioners, and midwives will have access to the Pharmaceutical Benefits Scheme and Medicare Benefits Schedule, this means they will be able to offer taxpayer subsidised diagnostic tests and prescription medicines. This is all very well and fine for those who can get pregnant or after the changes to public subsidisation of specialist services, can afford to get pregnant. It doesn’t help those who can’t afford IVF services to actually get pregnant!

What a tough year we have ahead!

Well I think that about caps it off, given this post is quite late, I apologise in advance for any typos…. I was eager to report back on the changes that could impact your family.

Sonia Williams a mother of two, qualified accountant, author, author of several books, and founder of Show Mummy the Money www.showmummythemoney.com.au, where you can learn how to, save, make and protect your money. This information is correct at time of writing. It is general advice only and has not been tailored to your personal circumstances. Please seek personal financial advice prior to acting on this information.

[dawnclarke]

hi sonia, thx for this great summary, little miss of 3 mths is not feeling well and I have not had time to wake up go thru the details...

regards dawn

[strawberryblonde...]

Hi Sonia,

Thanks for this info, very comprehensive! Are you able to clarify how the safety net changes will affect those who choose a private hospital and obstetrician? Obviosuly hospital comes udner private health cover, but the ob doesn't. So say if an obstetrician charges $5000, what would you be able to claim from Medicare under this new system? Only $200?

Thanks

Strawberryblonde76

[Wishing2011]

Hi Sonia,

Thanks for this info, very comprehensive! Are you able to clarify how the safety net changes will affect those who choose a private hospital and obstetrician? Obviosuly hospital comes udner private health cover, but the ob doesn't. So say if an obstetrician charges $5000, what would you be able to claim from Medicare under this new system? Only $200?

Thanks

Strawberryblonde76

I'm interested in the answer to this too!

[justinajoseph]

Hi! Thanks for info!

[AbellaIvan]

Very good information. 2009 budget has affected many people. And i agree with sonia's answer.