Mini-budget - what you need to know.
Back in 2008, Treasurer Wayne Swan promised to bring the federal budget back into surplus by the 2012/13 financial year. Back then he labelled it a new era of responsible economic management. Of course, that was before the still-ongoing (and likely to be ongoing for a long time) eurozone disasters, before the US economy lost its AAA credit rating and before Australians became a nation of cautious savers rather than carefree shoppers.
Nevertheless the government is determined to honour their surplus promise, and hence we have Swan’s “mini-budget”, unveiled today (click here for a full transcript). It outlines around $6.8 billion in savings and while a significant proportion of that will come from increased public service efficiency, there are also several cost-cutting measures that will directly impact families. The main ones are:
- Reduction of the Baby Bonus. From September 2012 the Baby Bonus will be reduced from its current level of $5,400 back down to $5,000. Interestingly, the government made no change to the Paid Parental Leave scheme.
- Freezing indexation. As well as reducing the Baby Bonus by $400, the government will also freeze indexation of this benefit for a further three years. As such the amount of bonus will not increase with inflation. This measure is expected to save the government approximately $320 million.
- Axing of the Maternity Immunisation Allowance: The government has announced that from July 2012 the Maternity Immunization Allowance will cease to exist. This benefit is two non-means tested payments of $129 each, paid for children who meet the immunization requirements at 18 months and again at 4 – 5 years of age.
- Compulsory immunisation for Family Tax Benefit (A) Supplement: From 1st July 2012 families will need to meet immunization requirements to receive the Family Tax Benefit (A) Supplement – currently an amount of $726 for the financial years that each child turns one, two and five years of age. To meet these requirements, children will need to be fully immunised, to be on a recognised immunisation catch up schedule or have an approved exemption. From 1 July 2013, children will also be required to receive vaccines for meningococcal C, pneumococcal and varicella to be assessed as fully immunised. From this date, Priorix‑Tetra®, a combination vaccine, will be added to the National Immunisation Program.
The government has also announced that they will defer the “tick and flick” tax returns that were promised in the previous budget. At the time Wayne Swan claimed that 6.4 million taxpayers would each save an average of $192 in tax by opting for the pre-filled tax returns; they now estimate that deferring the introduction of these will instead save them approximately $1.4 billion over the forward estimates period.
On the plus side, childcare operators will receive a small boost, with the government providing an extra $5 million to assist around 1,000 approved Long Day Care services to improve facilities and practices in preparation for implementation of the National Quality Framework for Early Childhood Education and Care and School Aged Services (NQF).
Earlier this month the Reserve Bank revised our economic growth downwards, from 4% o 3.25%. Employment is expected to rise. So perhaps these are the budget cuts that we had to have.
What do you think of the cuts to the Baby Bonus? Have your say on the Essential Baby forums.