Thoughts on the Federal Budget 2020-21

As has been my practice for more years than I care to remember, the night the Federal Budget is brought down will see me glued to my computer screen for more hours than any reasonable person would consider healthy.

No, I am not watching the Treasurer’s budget speech online. I am scrolling through hundreds of pages of Budget Papers, and particularly the 308 pages of Budget Paper No 2. That is where all the details reside.

Last night was a little different than most years, for a couple of reasons:

1. The Budget was delivered in October, whereas it is normally a feature of the second Tuesday in May
2. I live in Queensland – we don’t have daylight saving which means I got to start work on the Budget an hour earlier than normal
3. Most of the key Budget announcements were made before the Treasurer’s Budget speech

As part of my job, I get to read the Budget Papers and prepare a summary for financial advisers and their clients. There is always a rush to get this prepared so that it can then be dispatched to an eagerly waiting audience first thing the following day.

Of course, that is all fine so long as the Budget doesn’t contain any significant or unexpected measures.

My mind goes back to the 2006, and again to the 2016 Budgets where extensive superannuation reforms were announced. We are still struggling with some of the more obscure concepts introduced following the 2016 Budget.

There can be no argument, Australian has experienced massive economic and social turmoil over the past six months. The coronavirus pandemic has thrust us into a world we could never have imagined.

And of course, the Government responded by introducing economic stimulus and financial support to help Australian’s adversely affected. The Government’s response was swift and purposeful.

We have had JobKeeper, JobSeeker, the Coronavirus supplements, household financial assistances, as well as support for businesses, like the “Boosting Cash Flow” package.

So, what did the Budget have in store for us?

• The tax cuts originally scheduled for 1 July 2022 have been brought forward and even back-dated to 1 July 2020
• Tax concessions have been announced for small and medium business, along with several other incentives to encourage businesses to start employing more staff.
• The First Home Loan Deposit Scheme has been extended for a further 10,000 aspiring first home buyers
• Eligible pensioners will receive two additional tax-free payments of $250 each
• A further 23,000 home care packages have been funded to enable older Australians to continue living in their own homes
• The superannuation system is to be tweaked to help reduce the number of accounts a person may have
• Transport infrastructure will get a significant boost with money being allocated to a range of road and rail projects designed to not only increase the safety of road trave but to create jobs.

Perhaps more notably was what was missing from the Budget. We were half expecting a number of announcements, including:

1. A deferral of the planned increase in the Superannuation Guarantee rate from 9.5% to 10%, which is scheduled to occur from 1 July 2021
2. An extension of the early access to superannuation arrangement
3. An increase in the JobSeeker payment rate
4. The introduction of a tax levy for high income earners to help repair the Budget

On reflection, I appreciate that my role in life is to write an article or two on what is contained in the Budget and try to keep abreast of the legislative changes that follow.

My thoughts and thanks go out to the multitude of bureaucrats, and the politicians, that spend their lives managing an economy and, at the same time while trying to keep the voting public happy, and healthy.