Direct from the Budget Lockup tonight, and to coincide with our 300th Edition, here are the highlights of the 2019 Federal Budget. There were no major changes for superannuation.
In the next few days, Scott Morrison is expected to call an election, widely tipped for mid May, and nobody should doubt the context of Josh Frydenberg's first budget. The Government needed to strike a balance between retaining a surplus after $360 billion of deficits in the last decade, and spending to win votes. Treasury coffers have been boosted by strong commodity prices and personal taxes rising faster than wages. The political reality is a budget delivered at a time when the most recent Newspoll has the Government trailing 53 to 47 on two-party preferred.
Higher tax receipts have increased revenue by $55 billion more than expected in the last two years, and while voters like handouts, they also like fiscal responsibility. As Frydenberg said on the weekend, "There are lots of people we'll be speaking to on election night", which gave away the framing of the budget.
Budget 2019 delivers the first surplus since 2008, personal tax cuts, cash handouts for energy payments to welfare recipients, and plenty of money for infrastructure projects. In our coverage, we summarise the highlights and initiatives and the key superannuation and investment implications.
Ashley Owen also gives his background with an excellent historical context and graphic, and Graeme Colleyprovides a quick wishlist of the changes the superannuation industry was hoping for in the Budget. The Treasurer also announced new rules for super flexibility and energy assistance payments.
Government revenues as a share of GDP have risen to 24.9% now from 22.5% in 2013, driven by tax bracket creep. It finances the spending largesse which will not finish with the budget, as we can expect a steady stream of new announcements in the lead up to the election. At the moment, our minority Government holds only 73 seats, and the expanded House of Representatives will have 151 seats. With the speaker excluded, a party will need 77 seats for a majority.
We'll know in a little over a month whether this budget will win enough votes. The Coalition's challenge is that Labor's policies on franking credits, negative gearing and capital gains tax will give it more money to spend. Chris Bowen has announced a 'mini Budget' later in 2019 if elected.
Graham Hand, Managing Editor
(We will add more detailed commentary and papers from our sponsors to our website over the rest of this week, but we will not publish our usual newsletter on Thursday).
For a PDF version of this week’s newsletter articles, click here.