The Government’s first Federal Budget announcement last night confirmed what many feared – most Australians will be hit in the hip pocket.
Treasurer Joe Hockey’s “contribute and build” budget will mean significant changes for many Australians, who may need to reassess their current financial situation and personal household budgets.
“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,” Alex Parsons, CEO of RateCity.com.au, said.
So which budget changes are set to impact everyday Australians?
The government has reintroduced a fuel levy tax resulting in a $2.4 billion rise in petrol excise for everyday Australians. The rise will take affect from August, increasing with inflation, with the extra money raised budgeted for further road infrastructure.
“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,” Parsons said.
Raising the retirement age
Treasurer Joe Hockey confirmed the age pension eligibility age will be raised to 70 by 2035.
“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,” Parsons explained.
“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
While details were scant during the delivery of the Budget, the Government’s much-hyped Paid Parental Leave scheme will be implemented.
“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.” Parsons said.
“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.”
High income earners deficit tax
High income earners who earn over $180,000 a year will now be hit with a 2 percent tax increase. The tax rise is set to affect around 400,000 Australians from July 1until mid-2017.
“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,” Parsons 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.”