The federal government is tipped to offer tax sweeteners in the pre-election national Budget on 11 May.
“The government will be looking to spend money on the policies that will help them win at the polls in 2022,” BDO tax partner Mark Molesworth told nestegg.com.au.
“This year’s Budget will be a ‘Push Me, Pull You’ scenario. The need for budget repair will push the government in one direction, but the whiff of an upcoming election will pull them in the other,” the tax partner said.
“However, there are likely to be tax sweeteners for voters, in particular personal tax rate cuts for middle-income earners, with more than 10 million Aussies earning under $120,000 due to face a tax hike from next financial year.”
Seven News says the government is considering extending the tax offset of $1080 for workers earning between $48,000 and $90,000, which was introduced as a one-off stimulus measure last year, in response to the coronavirus recession.
Extending the offset is intended to ensure Australia “keeps spending its way out of the COVID-19 crisis”. It would cost the federal government around $7 billion.
Treasurer Josh Frydenberg says the Budget is aiming to encourage a “private sector-led recovery” that would lift employment levels.
Mr Molesworth predicts the scheduled superannuation increase to go ahead, despite months of debate over the topic within Coalition ranks.
“When it comes to superannuation, the chances of stopping the superannuation guarantee increase to 10 per cent on 1 July is very low, as the deadline is now too close. Instead, they may focus on reviewing the timetable for future increases and perhaps look at trading off other changes, such as the base on which contributions are made,” he said.
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Women’s economic security could be addressed by a rise in the maximum childcare subsidy to 95 per cent and the scrapping an annual cap on support, Nine reports.
“At least 15 organisations, including the Business Council of Australia and Chief Executive Women, have asked the government to lift the childcare subsidy from 85 per cent to 95 per cent for families earning less than $80,000 and scrap an annual cap that effectively acts as a barrier for women in higher-income families from taking on more work.”
Business Council of Australia chief Jennifer Westacott says the proposal means people “can work to their full potential and advance in their chosen fields without being punished by high childcare costs when they get even a modest pay rise”.
After heavy criticism of the government’s treatment of women, there could also be measures to bolster women’s superannuation savings and tackle domestic violence.
The federal government has already announced that it will commit $539.2 million towards hydrogen and carbon capture, use and storage (CCS/CCUS) projects in the Budget, reports pipeliner.com.au.
Prime Minister Scott Morrison announced last week that $275.5 million will be spent to speed up the development of four more hydrogen hubs and implement a clean hydrogen certification scheme. And $263.7 million will be invested to support the development of CCS projects and hubs.
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Housing experts don’t expect social housing to be prioritised. Sydney University urban planner Professor Nicole Gurran told domain.com.au that a “massive step-up” in funding for social housing is required, because recent budgets have failed to tackle the housing affordability crisis.
The government has instead focused on HomeBuilder grants for buying or building new homes, and the First Home Loan Deposit Scheme that enabled first-home buyers to purchase with a 5 per cent deposit.
“There are little piecemeal gestures that are politically popular – anything that goes to a first-home buyer is a politically popular thing to do, things that give people money to build a new house or renovate their house,” Prof. Gurran said.
“But they happen in a policy vacuum.”
She says social housing would create jobs as well as homes for those most in need.
“A shortage of affordable rental housing for lower-income workers prompts some to drop out of the workforce, leaving employers without access to lower-paid staff.”
The First Home Loan Deposit Scheme has been “wildly popular”, says domain.com.au and the federal government is considering lifting eligibility thresholds to allow purchases at a higher price point.
Only 430 places out of 10,000 are left for this financial year.
The construction requirement for HomeBuilder is being extended from six months to 18 months.
“More than 121,000 Australians have applied for a program that was initially designed to build 30,000 homes by last Christmas before being extended.”
What do you want the government to address in the Federal Budget? Where would our money best be spent?
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