Senator the Hon. Mathias Cormann
Minister for Finance
Deputy Leader of the Government in the Senate
Senator for Western Australia
The Hon. Scott Morrison MP
The 2016 Budget is the Turnbull Government’s economic plan to ensure Australia continues to successfully transition from the mining investment boom to a stronger, more diversified new economy.
This economic plan is the foundation on which we can build a brighter, more secure future, in a stronger, new economy with more jobs.
Australians know it is no easy task to secure jobs and growth in a highly competitive, volatile and uncertain global economy.
Despite the challenges and the naysayers, we are already making it happen.
Our economy last year grew by almost $40 billion and added almost 300,000 jobs.
There have been more than 50,000 new jobs for young people in the last eighteen months.
We will ensure Australia continues successfully transitioning from the mining investment boom to a stronger, more diversified new economy in three key ways:
- Sticking to the Government’s plan for jobs and growth
- Fixing problems in the tax system to enable us to sustainably cover the Government’s responsibilities for the next generation
- Ensuring the Government lives within its means, to balance the budget and reduce the burden of long-term debt.
The Budget delivers on our plan for jobs and growth through a growth friendly, ten year enterprise tax plan to boost investment, create and support jobs and increase real wages, starting with tax cuts and incentives for small and medium-sized enterprises which are the engine room of our economy.
We will continue our investment in the National Innovation and Science Agenda, continue our defence industry plan to secure an advanced local defence manufacturing industry, open up more export opportunities and help more than 100,000 vulnerable young people into jobs to be part of our growing economy.
The Government is investing $840 million in an innovative Youth Employment Package to help up to 120,000 young people over four years secure jobs.
A Prepare-Trial-Hire Programme (PaTH) will increase young people’s employability and provide them with real work experience to get the start they need in the workforce.
We will combat tax avoidance, especially by multinational corporations to ensure everyone pays the tax they should on what they earn in Australia.
We will also give hard working Australians and the Australian businesses that employ them greater tax relief so they can earn more without being taxed more.
From 1 July the small business tax rate will be lowered to 27.5 per cent and the turnover threshold for small businesses able to access it will be increased from $2 million to $10 million. This means businesses with a turnover of less than $10 million will also be able to access immediate tax deductibility for asset purchases costing less than $20,000 until 30 June 2017.
This will see 870,000 businesses, employing 3.4 million Australians, have their tax rate reduced.
The Government will also extend the unincorporated tax discount to businesses with an annual turnover of less than $5 million and will increase the discount to 8 per cent capped at $1,000. Around 2.3 million businesses will potentially have access to this tax discount.
From 1 July this year, we will increase the upper limit for the middle income tax bracket from $80,000 to $87,000 per year.
This will stop around 500,000 taxpayers in each and every year from paying more than the 32.5 per cent marginal tax rate. They will be in the middle income tax bracket with all other average wage earners.
This is about providing room in our tax system for average full-time wage earners to earn more without being taxed more.
We need to ensure that our superannuation system is focused on sustainably supporting those most at risk of being dependent on an Age Pension in their retirement by reducing access to generous superannuation tax concessions for the most wealthy.
At the same time we will increase flexibility and choice in superannuation to support how people work and save in our modern economy.
96 per cent of Australians with super will be unaffected by or be better off as a result of our superannuation changes.
Government spending growth will continue to be controlled to ensure expenditure is as efficient, effective and well-targeted as possible.
The Government will better target and strengthen the integrity of our welfare system. Savings from these measures will contribute to the sustainability of the National Disability Insurance Scheme through the NDIS Savings Fund, helping the Commonwealth to meet its commitment to the NDIS.
We will also responsibly invest in infrastructure like roads, rail, dams and public transport and guarantee real, affordable funding for health and education services that Australians rely on.
This Budget keeps Australia on a sustainable path to bring the budget back into balance. We are achieving this by policies that continue to control spending.
The deficit in underlying cash balance terms is expected to reduce from $39.9 billion in 2015-16 to $37.1 billion, or 2.2 per cent as a share of the economy in 2016-17. The deficit is then projected to fall to $6.0 billion or just 0.3 per cent of GDP over the next four years to 2019-20.
This is not a time to be splashing money around or increasing the tax burden on our economy or hardworking Australians and their families. Such policies are not a plan for jobs and growth, they simply put our successful economic transition at risk.
The Turnbull Government understands the economic challenges that Australia faces.
The Turnbull Government’s strong plan to keep spending under control means we can afford to guarantee support for hospitals and schools and protect our strong social safety net for the most vulnerable.
At such a sensitive time for our transitioning economy none of us can become complacent or make decisions that could put our successful transition at risk. There is too much at stake.
That’s why we must stick to our national economic plan for jobs and growth, fix the problems in our tax system so we can cover our responsibilities for the next generation and ensure the Government lives within its means, just like Australians are doing in their homes and in their businesses.
This is the right plan for Australia to overcome the challenges of economic transition and to clear a path for long-term growth and jobs in a stronger, new economy.
Having set this critical direction and having laid out this plan, we must now commit to stay the course. The future of all Australians and their families depend on it.
Treasurer - Julian Leembruggen 0400 813 253, Kate Williams 0429 584 675
Finance Minister - Karen Wu - 0428 350 139