Federal Budget: Time to tighten the belt

14th of May 2014 | by Laine Gordon

Almost every Australian will have to tighten the belt on spending, following the delivery of the Government’s first Federal Budget last night, financial comparison website, RateCity, has warned.

Alex Parsons, CEO of RateCity.com.au, said this prudent Budget will hit most Australians in the hip pocket.

“This Budget is going to have a negative impact on disposable income for most Australians and, therefore, it’s time to consider implementing a few smart changes to withstand any financial pressures it may bring,” he said.

“It’s very difficult to increase your income and so the easiest thing to do is look at your expenses and one way to do that is really look at your personal finances and try to decrease your expenses in that area.”

The impact on Australians’ hip pockets:

Temporary deficit levy

“Despite the pre-election mantra of ‘no new taxes’, the Government has indeed come out, as expected, and delivered a new tax by way of the deficit levy, which aims at increasing tax revenue from the highest paid Australians,” he said.

“This of course could have a negative impact on spending across the Australian economy, so this is something we really want to be careful about.”

Fuel tax

Changes to the fuel levy, as announced by the Government as part of this Budget, are undoubtedly going to increase the cost of fuel, and also the cost of consumer goods and that will hit every Australian in the hip pocket.”

Raising the retirement age (age pension eligibility age)

“The government has announced an increase in the retirement age to 70 and so that’s going to have quite a big impact on ordinary, everyday Australians,” said Parsons.

“On one hand, there will be fewer aged pensions and more income tax. On the other hand, it will be very difficult for some workers to work until 70-years-old. If you think of a brick layer, or if you think of any manual labourer, 70 is getting quite old these days.”

Paid Parental Leave scheme

“Despite being told for many months that this Budget is in crisis, the government has decided to move forward with the Paid Parental Leave scheme, as expected.”

“Despite the fact this is going to cost this Government a substantial amount of money to implement, this is really great news for new families in that they will be able to bring their children into the world and spend that first bit of time with them while doing that in a cost effective manner,” he said.

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