Australia markets closed
  • ALL ORDS

    6,373.70
    -10.00 (-0.16%)
     
  • ASX 200

    6,167.00
    -6.80 (-0.11%)
     
  • AUD/USD

    0.7142
    +0.0024 (+0.34%)
     
  • OIL

    39.78
    -0.86 (-2.12%)
     
  • GOLD

    1,903.40
    -1.20 (-0.06%)
     
  • BTC-AUD

    18,622.25
    -24.81 (-0.13%)
     
  • CMC Crypto 200

    260.05
    -1.40 (-0.54%)
     
  • AUD/EUR

    0.6017
    -0.0001 (-0.02%)
     
  • AUD/NZD

    1.0666
    -0.0001 (-0.01%)
     
  • NZX 50

    12,470.34
    +63.05 (+0.51%)
     
  • NASDAQ

    11,692.57
    +29.66 (+0.25%)
     
  • FTSE

    5,860.28
    +74.63 (+1.29%)
     
  • Dow Jones

    28,335.57
    -28.09 (-0.10%)
     
  • DAX

    12,645.75
    +102.69 (+0.82%)
     
  • Hang Seng

    24,918.78
    +132.65 (+0.54%)
     
  • NIKKEI 225

    23,516.59
    +42.32 (+0.18%)
     

Federal Budget 2020-21: What we know so far

Anastasia Santoreneos
·10-min read
Here's what we know about the 2020-21 Federal Budget so far. Source: Getty
Here's what we know about the 2020-21 Federal Budget so far. Source: Getty

Updated: 6 October

For more Yahoo Finance stories on the 2020 Federal Budget, visit here.

The Federal Budget will be handed down on Tuesday, but various ministers have already let slip a few major policy changes we should expect to see.

This will be one of the most important Federal Budgets in our lifetime - it is the Government’s plan to pull the nation out of its first recession in nearly 30 years.

In July, Federal Treasurer Josh Frydenberg revealed the nation is expected to be in a total deficit of around $281.4 billion, which includes $85.8 billion for the 2019-20 financial year, and $184.5 billion for the 2020-21 financial year. That’s the highest budget deficit since World War II.

We will be following the budget closely on 6 October to see what policy measures are in place to reduce the unemployment rate, but in the meantime, here’s what we know so far.

Here’s what we know about the 2020-21 Budget so far:

If you’re a taxpayer…

The Government will be bringing forward income tax cuts in Tuesday’s Federal Budget, with millions of Australians set to receive thousands back in their hip pocket.

"Tax relief allows more Australians to keep more of what they earn," Frydenberg told Sky News today.

"It rewards effort, encourages the power of aspiration, but it also encourages and leads to greater economic activity as people with tax relief spend more."

The tax cuts were scheduled for 2022, and would see the 19 per cent tax rate threshold increased from $41,000 to $45,000. The 32.5 per cent tax threshold would be increased from $90,000 to $120,000.

Here’s how much you’ll pocket depending on your taxable income.

If you’re a welfare recipient...

Aged care, family and disability welfare recipients will receive a $500 cash boost from the Government, with one $250 payment arriving in December and another in March 2021.

If you’re a tradie...

Prime Minister Scott Morrison revealed the Government would pay half the wages of 100,000 apprentices or trainee workers.

Under the plan, employers will receive up to $7,000 per quarter until that 100,000 limit is exhausted.

The plan is an extension of the Supporting Apprentices and Trainees scheme, which only allowed for apprentices who were training as of 1 July this year.

If you care about infrastructure…

The Government has announced a new $7.5 billion investment into national transport infrastructure, in addition to its existing $100 billion infrastructure pipeline.

"These projects will keep commuters safe on the road, get people home to their loved ones sooner and provide better transport links for urban and regional communities,” Prime Minister Scott Morrison said of the projects.

The investment should create thousands of jobs, the Prime Minister said.

If you’re a small business...

The Government unveiled the JobMaker Digital Plan on Tuesday, which Prime Minister Scott Morrison said would underpin economic growth and jobs.

The plan includes a $1.67 billion investment in cybersecurity, a $4.5 billion investment in NBN and a further $800 million on a range of programs in infrastructure and security to help businesses engage in the digital world.

“The announcements we're making today on accelerating our work in the fintech sector, consumer data rights, upgrading automated regulation compliance, the end of phone books full of forms, where things can be done online and digitally, remembering your previous answers so you don't have to go through and fill out the forms later,” Morrison said.

He said it would mean businesses get a “digital identity”, that enables them to have “a seamless interface with government and e-invoicing, making that a key part of ensuring we pay businesses quicker and on time”.

“At the end of the day, [it means] small businesses getting paid on time and ahead of time and injecting much-needed cashflow into our economy.”

Treasurer Josh Frydenberg said the changes would also enable the execution of documents to now be undertaken digitally, and AGMs to be held virtually.

If you’re a pensioner…

Social Services Minister Anne Ruston revealed that Aussie pensioners would score a cash boost in the upcoming budget, although she did not specify exactly how much they would receive.

"Further support around our pensions is something that is contained in the budget," Ruston told the Sydney Morning Herald.

The Prime Minister also flagged further support for pensioners, revealing in August that the Treasurer had a plan to work through issues affecting older Australians.

If you’re a young Australian…

Young Australians may see some financial aid come their way in the October budget, with Prime Minister Scott Morrison hinting at support at the Youth Futures Summit in August.

“There's no shortage of attention on the issues that are impacting young people,” Morrison said.

“And my government will continue to address those in every single budget. As we have.”

He said getting young Aussies back into jobs was a “huge priority” for him, and hoped the Government’s $2 billion JobTrainer program would work towards this goal.

If you work in the infrastructure sector…

The Government is planning on putting a tonne of cash behind infrastructure projects that can create jobs, Deputy Prime Minister Michael McCormack told the Sydney Morning Herald, saying it was likely one of the areas that would pull Australia out of the Covid-19 recession.

"Certainly through Covid-19, which has cost many people their jobs, infrastructure is going to be one of the saviours, along with the agriculture, resources and mining industries," he said.

McCormack flagged “significant” new spending on top of the existing $100 billion infrastructure pipeline.

If you have superannuation…

Financial Services Minister Jane Hume hinted in August that the superannuation system could see reform in this year’s budget.

Hume told the Australian Financial Review that “a more efficient default system” was in the works, as well as fee structures and the valuations of unlisted assets.

The Coalition has also been hotly debating the legislated increase to the super guarantee, or the amount your employer pays into your superannuation, which is slated to begin gradually increasing from 9.5 per cent to 12.5 per cent from 2021.

The Treasurer said he was “considering the issue”, given the recession and the effect it’s had on wage growth.

If you’re a parent…

The Federal Government has pledged a further $305 million towards childcare, largely targeted at Victoria as the state battles its second wave.

The support package would see the activity test, which determines how many hours of subsidised care parents receive, relaxed until 4 April next year.

It also includes a fee freeze for Victorian families until 31 January, and a continuation of the employment guarantee.

If you work in the tech industry…

Energy and Emissions Reduction Minister Angus Taylor unveiled a long-term plan which aims to reduce energy emissions by backing clean hydrogen, energy storage, low carbon steel and aluminium, carbon capture and soil carbon.

Taylor said the plan would support 130,000 jobs over the next decade, and reduce emissions by 250 million tonnes by 2040. However, several experts have called these numbers into question.

Given this is a decade-long plan, we should see some mention of this in this year’s budget.

If you work in aviation...

Deputy Prime Minister Michael McCormack revealed the Government would extend subsidies for airlines operating flights between capital cities and regional towns.

"Uncertainty affects the ability of airlines and airports to plan for recovery and undermines consumer confidence, which amounts to a significant cost to industry and ultimately the Australian economy," he said.

"The federal government is doing our bit by underwriting these flights to maintain minimum connectivity.

If you’re on welfare...

The government is committing $7.6 million for parents experiencing stillborn babies or the death of a child under 12 months of age.

They have also pledged $60 million to a “safe places” initiative, which promises 700 new refuges for women and children escaping domestic violence.

If you’re in regional Australia...

The Government has committed $100 million towards a Regional Recovery Partnership, which aims to engage projects in areas hit by droughts, bushfires and coronavirus.

We will see a further $30 million for the Regional Connectivity Program, which will establish local telecommunications projects, and $50 million towards a Regional Tourism Recovery initiative.

In healthcare...

Telehealth and e-prescription services are here to stay, with Morrison pledging to extend this.

Aged care will get a funding boost ahead of the Royal Commission Report, and the Government will commit $9 million for research into cancer in children and young adults.

What else can we expect from the 2020-21 Budget?

Industry bodies have some sway in what happens in the October budget, with many submitting proposals to the Government for it to consider when it hands down its spending plan.

Here’s what else we can expect.

If you’re a small business…

Businesses have been at the epicentre of the Covid-19 earthquake, and tax partner at BDO Australia, Mark Molesworth, thinks the Government will look at business investment incentives to increase consumer spending.

“More Australians are being frugal with their money so a tax cut will not inspire a spending spree even with Christmas approaching,” Molesworth said.

“To encourage consumer spending it would be better to look at business investment incentives.”

Molesworth said the Government could provide incentives to buy assets and expand business operations, or offer an employee headcount rebate. That rebate could be paid as a tax benefit in cash per new full-time employee.

If you’re in the tourism industry…

Travel and tourism were battered by closed borders and lockdown restrictions, so we could see some support here.

The Australian Federation of Travel Agents made a submission calling for several initiatives, like cash grants and establishing travel bubbles. The Caravan Industry Association also called for rebates for RVs, while the Accommodation Association called for a $1,000 per room monthly payment to offset fixed costs.

If you’re a woman…

Women have borne the brunt of job losses as a result of Covid-19, and yet there hasn’t been a lot of fiscal support come their way as of yet, leading experts across the country to call for a more female-focused budget.

"We want the budget to be looked at and the question asked, 'Does this help women as well as it helps men?',” Sue Morphet, president of Chief Executive Women, told the Sydney Morning Herald.

“Or, if we're doing things that are very male-centric, are there equal and opposite female-centric measures as we know this is helping all parts of our economy – including youth.”

If you’re a homeowner…

You might see the HomeBuilder scheme extended, with major industry groups calling for an extension as the construction sector continues to be decimated by Covid-19.

Currently, the $688 million HomeBuilder scheme provides singles earning up to $125,000 and couples earning up to $200,000 per year a grant of $25,000 to help them build or renovate a home.

Master Builders Australia has called for the government to extend the program for another 12 months in its October budget, at an estimated cost of $1.3 billion.

For more Yahoo Finance stories on the 2020 Federal Budget, visit here.

Make your money work with Yahoo Finance’s daily newsletter. Sign up here and stay on top of the latest money, news and tech news.

Follow Yahoo Finance Australia on Facebook, Twitter, Instagram and LinkedIn.