More than 11 million Australians will receive a tax cut as the Morrison government spends up big to guide the nation out of the coronavirus-led recession.
Treasurer Josh Frydenberg has pitched the 2020/21 federal budget as being all about jobs after the pandemic ripped the economy to shreds.
“The Great Depression and two world wars did not bring Australia to its knees, neither will COVID-19,” Mr Frydenberg said on Tuesday night.
Under the coalition’s $17.8 billion tax cut plan, low and middle-income earners will receive relief of up to $2745 for singles and $5490 for couples compared to 2017/18.
Tax cuts will be backdated to July 1, with the 32.5 per cent threshold lifted from $90,000 to $120,000 and the 19 per cent trigger hiked from $37,000 to $45,000.
The plan’s final stage will remain scheduled for 2024/25 when someone earning $45,000 annually will be in the same tax bracket as a worker on $200,000.
All businesses – excluding the four big banks – who hire welfare recipients aged 16 to 35 will receive a credit to support an estimated 450,000 jobs.
Workers under 30 will draw a $200 weekly government subsidy, while someone between 30 and 35 will attract $100.
New hires must work at least 20 hours a week, with the scheme slated to cost the budget $4 billion.
After coming under immense pressure over aged care failures through a royal commission, the coalition will pump $1.6 billion into 23,000 additional home care packages.
Pensioners will also receive a boost with separate $250 cash payments in December and March.
From Tuesday, almost every business in the country will be able to write off the full value of any eligible asset until June 2022.
“Every sector of our economy, every corner of our country, will benefit,” the treasurer said.
Roads spending will be ratcheted up with the government’s 10-year infrastructure pipeline receiving a $10 billion boost, taking it to $110 billion.
There is more than $750 million to continue coronavirus testing and almost $376 million to add new drugs to the pharmaceutical benefits scheme.
The economic blueprint also locks in previously announced commitments to fire up manufacturing and pay a 50 per cent wage subsidy for apprentices and trainees.
Budget papers reveal an eye-watering deficit of $213.7 billion which is predicted to fall to $66.9 billion in 2023/24.
Government debt will exceed $1 trillion by 2021/22.
“Our economy has been hit, and hit hard,” Mr Frydenberg said.
Unemployment is now expected to peak at eight per cent by the December quarter, lower than the initial forecast of 10 per cent.
The economy is expected to shrink by 3.75 per cent this calendar year before growing 4.25 per cent in 2021.
Before the budget’s release, the Reserve Bank left the cash rate untouched at a record low 0.25 per cent.
Mr Frydenberg said people across the country were digging deep, banding together and getting on with it.
“The road to recovery will be hard – but there is hope,” he said.
The government will also reform superannuation to stop new accounts being created every time a worker changes jobs.
Funds will be forced to meet an annual performance test or face the threat of being banned from taking on new members.
The legislation to back up a range of the governments budget measures, including the brought forward tax cuts, will be introduced to parliament on Wednsday.