Under Labor’s proposal, families on incomes up to A$174,000 with children under five would be better off on average by A$26 a week, or A$1,200 a year per child. Most families earning up to A$69,000 would get their childcare free. Currently, they receive a subsidy of 85%. Labor’s proposal would save them up to A$2,100 annually per child.
The current subsidy gradually tapers down as earnings increase. The lowest subsidy available is 20% for the highest-earning families, before it cuts out at A$351,258.
Families on incomes above A$174,000, under Labor’s plan, would continue to receive the same level of support as under current arrangements.
This is where early childhood policy gets complicated. Policies can be motivated by different goals. The Coalition reforms were aimed at encouraging parental workforce participation. Labor’s proposal for the childcare subsidy seem similarly motivated.
But parents are not the only beneficiaries of childcare subsidies. Quality childcare also benefits children’s learning. Many childcare programs for four-year- olds (and increasingly, three-year-olds), incorporate preschool. For children of all ages, Australian childcare providers must provide a play-based learning program, guided by the national framework.
Educators can also help families recognise these opportunities, so learning continues at home. Children in low-income households often have fewer opportunities to learn, due to factors such as stress and limited resources for investment.
By supporting access to quality early childhood services, governments can help families learn everyday ways to enhance their children’s learning.
Low wages place downward pressure on the quality of early childhood programs. Educators’ qualifications are lowest in low-income communities, where families cannot afford to meet the costs of higher wages. Government subsidies can help to break the link between educators’ wages and families’ ability to pay fees, so the best educators can reach the children who most need them.
Close monitoring of the impact on childcare costs will be essential. Labor’s plan includes asking the Australian Competition and Consumer Commission to investigate “excessive” childcare fees. But can support for families be increased without stimulating an increase in fees? Can educators be supported to earn a fair wage, while keeping prices fair for families?
There is much to be gained by engaging with these questions. When parents are working, the economy benefits. When children are learning, everyone benefits, as the impact of early learning lasts throughout school and beyond. Countries like Sweden and Finland show what may be possible when parents’ and children’s needs are prioritised equally.
We owe it to Australia’s children to keep these issues on the election agenda.
The Coalition has made up ground in Newspoll, now trailing Labor by just 49-51%, compared with 48-52% a fortnight ago.
The tightening of the May 18 race, coming after Scott Morrison was seen to out-campaign Bill Shorten early on, will boost Coalition morale as pre-polling begins on Monday.
But both sides have lost support on their primary votes in the Newspoll, published in the Australian, while Clive Palmer’s United Australia Party is polling 5%, becoming the leading minor party behind the Greens.
Labor is down 2 points to 37%; the Coalition has fallen a point to 38%. The Greens remain on 9% and One Nation is static on 4%.
Shorten’s personal ratings are encouraging for him – he has had a 2 point rise to 39% in his satisfaction rating and reduced the gap on the better prime minister measure.
While Morrison still has a substantial lead as better PM, Shorten has increased his rating by 2 points to 37% and Morrison has fallen a point to 45%.
Morrison’s approval stayed on 45% while his disapproval was 46%, up 2 points, in the poll of 2136 voters taken Friday to Sunday.
Morrison and Shorten have arrived in Perth for Monday evening’s debate, their first face-to-face encounter of the campaign, which has under three weeks to run.
In a day of mega spending, Shorten on Sunday promised A$4 billion over three years to provide 887,000 families with relief on their child care costs; $2.4 billion over the forward estimates for a pensioner and seniors dental plan, and $537 million over the forward estimates to lift the pay of child care workers.
Under Labor’s dental plan, age pensioners and those holding a Commonwealth seniors’ health card would be entitled to up to $1000 worth of free essential dental care every two years. Some three million people would be eligible under the plan, which would expand Medicare.
Shorten told a rally of volunteers in Melbourne: “Under a Labor government, after May 18 if you’re a pensioner or a seniors health care card holder your dental work will be backed by Medicare for the rest of your life. This is the fair go in action”.
Shorten said an ALP government over the next eight years would boost the average wage of child care workers by about $11,300. This would be on top of any rise in the award rate.
It would be “a 20% pay rise for the early educators because we value early education,” he said.
“This is an investment in quality early education, for good jobs and a strong economy of the future.
“And this is an investment in pay equity for a female-dominated industry. A fair reward for a workforce that has about 96% women, has been undervalued and underpaid for too long.”
Labor says the pay rise would not increase child care fees because the government would fully fund it.
In an initiative on cyber security the government is announcing it would to invest $156 million “to protect older Australians, small businesses and national security assets from the risk of cyber-attacks”.
A range of measures to combat cyber crime would include developing “a comprehensive online cyber security training program providing practical cyber advice for small businesses, older Australians and Australian families”.
The government says cybercrime costs the economy more than $1 billion a year.
In the vulnerable state of Victoria, the government is sandbagging the Liberal heartland seats of Higgins and Kooyong with a promise of $260 million to eliminate a level crossing on busy Glenferrie road in the suburb of Kooyong.
The project would take the train line under the road. The crossing is technically in Higgins but right on the border of Treasurer Josh Frydenberg’s seat of Kooyong. Frydenberg is being targeted by GetUp and various candidates especially on climate change.
In another Victorian seat, Flinders, Health Minister Greg Hunt has been dealt a blow by the decision of Liberal defector Julia Banks to preference Labor ahead of him.
Coalition campaign spokesman Simon Birmingham on Sunday accused her of walking away from her principles. “You’ve really got to wonder about the various positions of Julia Banks, who was until not that long ago urging people to vote Liberal and now is suggesting she will preference Labor. […] I think it shows gross inconsistency on her part”.
The plan is central to Labor’s campaign on cost of living, with Shorten describing it as “massive cost of living relief for nearly one million families struggling with the costs of child care”.
“Under the Liberals, the costs of child care has gone up 28%, costing families using long day care $3,000 more a year.
“Labor will increase the subsidy families receive, we will kick start the process to limit out-of-control child care price increases, and we will review the impact of the system on vulnerable and very low-income families,” Shorten says.
“This is a $4 billion investment in early education, in working parents and in helping families with the rising cost of living. Labor can pay for cheaper child care for working families because unlike Scott Morrison and the Liberals, we aren’t giving bigger handouts to the top end of town,” Shorten says. The $4 billion cost is over three years.
The main elements of Labor’s plan include:
More child care fee support
The subsidy rate would be increased from 85% to 100% up to the hourly fee cap (currently $11.77 per hour for long day care) for families earning up to $69,000 who meet the activity test. This would make child care free, or almost free, for up to 372,000 families.
The present tapered reduction would be updated to reflect the higher subsidy rate.
Families earning between $69,000 and $100,000 would receive a subsidy rate between 100% and 85%, up to the hourly fee cap.
Families earning between $100,000 and $174,000 would receive a subsidy rate between 85% and 60% up to the cap – an effective increase of 10%.
Families accessing approved Centre Based Child Care, Family Day Care and Outside School Hours Care, including holiday care, would all benefit from the higher subsidy.
Labor would give the Australian Competition and Consumer Commission a new role of investigating excessive fee increases and unscrupulous child care providers. Findings would be made public through mychildcarefinder.
The ACCC would also look at mechanisms to ensure greater controls on child care fee increases to keep child care affordable.
Reviewing the system for vulnerable children
Labor says that in the nine months of the current subsidy system, the number of vulnerable and very low-income families using it has fallen.
“Reports suggest the numbers accessing the Childcare Safety Net have fallen by almost half, from 35,000 to 21,000.
“Labor will urgently review the new system to make sure that vulnerable and low-income families and children aren’t falling through the cracks,” Shorten says.
Labor has already committed to every three-year-old child being able to receive 15 hours of subsidised preschool. It has also said it would extend the current arrangement for four-year olds.
Shorten says this would create “a two-year program to support the most important years of a child’s development and ensuring our kids don’t fall behind the rest of the world”. For many children this would be free or nearly free.
Labor is also set to make an announcement on boosting the wages of child care workers, who are among the low paid.
The first votes will be cast at pre-polling stations on Monday, as the campaign ramps up in its final three weeks. Scott Morrison and Shorten will meet in Perth late Monday for their first face-to-face debate.
Scott Morrison will seek to bring the debate over immigration and refugees to the centre of the election campaign, with an announcement that a Coalition government would freeze the humanitarian intake.
He will contrast this with Labor plans for an increase in the humanitarian component, claiming this would cost many billions of dollars and challenging Bill Shorten to produce more detail about the consequences.
So far immigration has not had a prominent place in the campaign. The border security issue went quiet when the expected large number of applications for transfer from Nauru and Manus after the medevac legislation failed to materialise.
Morrison on Sunday will announce that the number of migrants coming to Australia as refugees will be frozen at 18,750.
He will appear at a rally with John Howard, who as prime minister was strongly associated with a tough border policy.
The government has already announced a cap on the migration program of 160,000. The previous cap was 190,000, although the actual intake had fallen to about 160,000.
It will contrast its freeze on the humanitarian intake with Labor’s plan to increase it to 32,000 by 2025-26.
Morrison will also outline the proposed makeup of the humanitarian program for the first time. This will include an overall target of 60% of the offshore component allocated to women. Women made up 50.8% in 2017-18.
The Coalition’s Women at Risk program, as a proportion of the offshore component, would be increased from 14% in 2017-18 to 20% (3,500) in 2019-20.
The government also plans to try to boost the number of refugees and humanitarian entrants settled in regional areas from a target of 30% to 40% in 2019-20. But it stresses that people would not be forced to areas that did not want them.
Some 27% of the humanitarian program will be reserved for Women at Risk and the Community Support Program, which is private sponsorship from church and community groups.
In comments ahead of the Sunday announcement, Morrision said: “We’ve got our borders and the budget under control. We make decisions about who comes here based on what’s in Australia’s interests.
“Australia isn’t just about growing our population – it’s about quality of life. We’re capping and freezing our immigration growth so our government’s record A$100 billion congestion busting program for roads and rail can catch up and take the pressure off our cities.”
Morrison said the government had been upfront that it was reducing the migration intake cap and capping the number Australia let in under its humanitarian program – that was one of the most generous in the world.
“We are telling where we’ll be taking migrants from, who they will be, the skills we want them to have, and working with regions to settle people in towns that want and need more workers, skills and students.
“It’s time for Bill Shorten and Labor to front up and tell Australians about their $6 billion plan to massively increase immigration and where they’re going to house thousands of extra people.
“Labor’s immigration bill is going to go through the roof and the only way they can pay for it is taking $387 billion in higher taxes from Australians.”
The government some time ago put a costing of $6 billion over the medium term on increasing the government-funded humanitarian intake from 17,750 to 27,000 by 2025-26.
With 23 days to go until the May 18 election, Newspoll had seat polls of Herbert, Lindsay, Deakin and Pearce. All four polls were conducted April 20 from samples of 500-620. Clive Palmer’s United Australia Party (UAP) had the support of 5% in Deakin, 7% in Lindsay, 8% in Pearce and 14% in Herbert.
Seat polls are notoriously unreliable. In addition, the UAP has clearly been added to the party readout in these seats. Pollsters regularly ask for Labor, the Coalition, the Greens and One Nation. All other voters are grouped as “Others”, although a follow-up question can be asked – if Other, which other?
The strongest indication that UAP support is overstated in these seat polls is that the all Others vote is unrealistically low in three of the four seats polled. In Herbert, Pearce and Deakin, all Others are at just 2%, while they are 8% in Lindsay. It is likely that many of those who will vote for Others at the election said they would vote for the UAP as that party was in the readout.
Herbert was tied at 59-50, unchanged from the 2016 election. In Lindsay, Labor was ahead by 51-49, also unchanged. The Liberals led by 51-49 in Deakin, but this was a solid swing to Labor from 56.4-43.6 to the Liberals at the 2016 election. In Pearce, there was a 50-50 tie (53.6-46.4 to Liberals at the 2016 election).
Primary votes in Herbert were 31% LNP, 29% Labor, 14% UAP, 10% Katter’s Australian Party, 9% One Nation and 5% Greens. In Deakin, primary votes were 46% Liberals, 39% Labor, 8% Greens and 5% UAP. In Pearce, primary votes were 40% Liberals, 36% Labor, 8% Greens, 8% UAP and 6% One Nation. In Lindsay, primary votes were 41% Liberals, 40% Labor, 7% UAP and 4% Greens.
Relative to the national swing, Labor is expected to struggle in the Townsville-based seat of Herbert due to the Adani coal mine issue. In Lindsay, the retirement of Labor MP Emma Husar in controversial circumstances may have made it vulnerable.
Bad ReachTEL seat polls for Labor in Bass and Corangamite
There were two ReachTEL seat polls conducted last week from samples of 780-850. In the Labor-held Tasmanian seat of Bass, the Liberals had a 54-46 lead. In the Victorian seat of Corangamite, which is on no margin following a redistribution, the Liberals led by 52-48. The Bass poll was conducted for the Australian Forest Products Association, and the Corangamite poll for The Geelong Advertiser.
Bass and Tasmania have an older demographic than Australia overall. I wrote last week that, according to Newspoll data, those aged 50 or over are best for the Coalition. Corangamite also has an older demographic than the country overall.
Labor won Bass by 56.1-43.9 at the 2016 election, a 10.1% swing to Labor. But at the 2013 election, Bass was the best of the five Tasmanian seats for the Liberals, and this also occurred at the March 2018 state election. Labor’s big 2016 swing may have been caused by the unpopularity of hard-right Liberal MP Andrew Nikolic. In the July 2018 federal byelections, Labor had an underwhelming victory in Bass’s neigbouring seat, Braddon.
While seat polls are unreliable, the Corangamite and Bass polls are evidence that, as reported by The Poll Bludger originally from The Australian Financial Review, Scott Morrison appears to have a greater appeal to blue-collar and outer suburban voters than Malcolm Turnbull, and this has helped the Coalition in seats like Bass and Corangamite.
One Nation to contest 59 of the 151 House seats
Nominations for the election were declared this week. Labor, the Coalition, the Greens and the UAP will contest all 151 House seats. One Nation will contest 59 seats, with Fraser Anning’s Conservative National Party running in 48 seats, Animal Justice in 46 and the Christian Democrats in 42.
Until now, national pollsters have assumed One Nation was running in all seats for their polls. With One Nation only running in 39% of seats, most pollsters will reduce their national vote. This reduction may assist the Coalition on primary votes.
In the Senate, a quota for election is one-seventh of the vote, or 14.3%. Labor, the Greens and the Coalition are likely to be in the mix for the final seats in every state. It is possible that the small right-wing parties, such as Anning’s party, the UAP, the Australian Conservatives and Christian Democrats, could cause seats that should go to the right to go to the left instead if they do not tightly preference each other, One Nation and the Coalition.
Voters are told to number six boxes above the line for a formal vote, though only one number is actually required. At the NSW state election, left-wing micro-party voters preferenced more than right-wing micro-party voters, resulting in Animal Justice easily winning the final upper house seat.
At the federal election, it will be clear that left-wing micro-party supporters need to preference Labor and the Greens in their top six. It will be clear for right-wing micro supporters to preference the Coalition in the top six, but it is not likely to be clear which other right-wing party to preference.
Ahead of the first pre-pollers voting on Monday – and then switching off from the campaign noise – Labor will dangle more big bait – this time on child care.
Bill Shorten flagged the initiative on Friday, saying that “in the very near future, we’ll be announcing new plans to cut the cost of long day child care. And we will announce … a new national push for pay equity, starting with early childhood educators”.
The policy is both pitching to parents, and forming part of the ALP commitment to finding ways to lift wages, especially for the low paid.
Labor mapped out its early campaign weeks to focus on issues of very specific concern to voters. It started with health, featuring its big cancer package, and moved to wages. It will broaden into cost of living, and building for the future on various policy fronts.
While the ALP has handled the presentation of its issues in a very ordered fashion, the same can’t be said of its approach to one of the campaign’s formalities – the leaders’ debates.
The debate over debates
Shorten gave the impression of being dragged to the two now bedded down – in Perth on Monday (sponsored by the West Australian) and Brisbane on Friday (sponsored by News Corp outlets).
Morrison agitated for more; with Shorten pushed on Friday, Labor proposed a third be hosted by the National Press Club.
Morrison is confident on his feet and feels he has nothing to lose by multiple encounters. Shorten should have set out a debates’ proposal early on, rather than appearing to be on the defensive.
One might have expected the Labor leader to be enthusiastic for debates – he prides himself on all those town hall meetings. But he’s now risk averse and, as election favourite, knows debates potentially hold more pain than gain for him.
More broadly, in recent years leaders’ debates have lost a lot of their significance, falling victim to competitive pressure between media outlets. As has been often argued, we should have a “debates commission” to ensure at least two face offs are run as major set piece occasions, not owned by any media organisation.
The deal that’s “no deal”
Apart from the debate about debates, Friday’s campaign argy bargy centred on the Liberals’ preference deal with Clive Palmer’s United Australia Party, due to be announced by Palmer on Monday.
Morrison displays his usual chutzpah over this rather tawdry trade.
On the murky matter of preferences, the Prime Minister would prefer to hide behind the party organisation, an unconvincing line blown apart when he issued his edict about the Liberals putting One Nation behind Labor.
In particularly awkward timing, Morrison was in Townsville – where Palmer’s nickel workers were dudded in 2016 – when he had to field questions about the preference deal.
As one questioner succinctly put it: “Nowhere in the country knows better than Townsville the devastation and how that can be wrought by Clive Palmer. How can you look voters in this city in the eye and say they should direct their preferences to him, especially in the Senate?”
That is a question to which there is no answer that can sound half way good.
Morrison’s message for the locals was “Vote for Phil Thompson, the LNP candidate. That’s where you should put your vote and that’s the vote I’m interested in.”
Never mind that this ignores the point that voters must allocate preferences and the Liberals are saying allocate them in Palmer’s direction.
Morrison insisted there were “no policy deals that were being done with minor parties” in preference talks.
It was really all a matter of Palmer believing “Labor’s tax policy would be devastating for the Australian economy.”
As far as Morrison was concerned, “ I’m interested in forming a government on the other side of this election. I’m going make sure I do everything I possibly can to ensure that we’re able to form that government”.
He was dismissive of a warning from former Western Australian premier Colin Barnett (still stung by his preference deal with One Nation) that preferencing a discredited Palmer could alienate soft voters, as well as the Chinese.
Both sides now
The preference issue seemed easy pickings for Labor, except it had had a dalliance itself with the big man.
Shorten said there had been “no formal negotiations”, but Anthony Albanese unwisely went further. “Not once have we been talking to Clive Palmer about preferences because we understand it’s a recipe for chaos”.
Palmer immediately blew the whistle on that, revealing Queensland senator Anthony Chisholm had put out feelers. Chisholm, as a former Queensland ALP state secretary, would know quite a lot about such things.
It took the gloss off Labor’s attack on a deal it wanted to cast, in the colourful wording of Penny Wong, as “a marriage of convenience between an ad man and a con man”.
Bill Shorten has promised his government would introduce a A$2.3 billion four year package to slash cancer patients’ out-of-pocket costs, and has committed $1 billion to give extra tax relief for low income earners, above what they would get from Tuesday’s budget.
In his budget reply on Thursday night, the opposition leader pitched to voters on a Labor strength – health – declaring his cancer care plan would be the “most important investment in Medicare since Bob Hawke created it”.
Shorten rejected the government’s second and third tranches of tax cuts, due to start in 2022-23 and 2024-25 and worth about $143 billion of the $158 billion ten year package. The last stage was a “radical, right-wing, flat tax experiment”, far off in time and skewed disproportionately to a relative few, he said.
Stressing Labor’s economic responsibility, Shorten recommitted to delivering “stronger surpluses, paying down debt faster” than the government.
“What we need is a fighting fund for the country, a strong surplus to protect us from international shocks”, he said.
He attacked the government – which has a $7.1 billion surplus in its budget for next financial year – for “shortchanging the NDIS [National Disability Insurance Scheme] by $1.6 billion, to prop up a flimsy surplus forecast”.
Shorten – who in his speech referred to his late mother Ann’s battle with breast cancer – said the cancer care plan would provide for millions of free scans and consultations, and cheaper medicines.
Cancer “is frightening, it’s isolating, it’s exhausting”. And all too often, it was impoverishing, he said.
“For so many people, cancer makes you sick and then paying for the treatment makes you poor. And that’s a fact that I think a lot of Australians would be surprised to learn.
“Because if you haven’t been through it yourself, you might not realise that all those vital scans and tests and consultations with specialists aren’t fully covered by Medicare. Instead, they cost hundreds of dollars, adding up to thousands, out of your own pocket,” he said.
One in four women with breast cancer paid more than $10,000 for two years of scans and tests, he said. Some men with prostate cancer were paying more than $18,000. Most people with skin cancer – and Australia has the highest rates of this cancer in the world – paid more than $5000 for the first two years of treatment.
Each year 300,000 people who needed radiology did not get it, because they couldn’t afford it.
People needing treatment for cancer were often not well enough to work, so they were already under massive financial strain, Shorten said. Those living in regional areas had the extra costs of travel and accommodation.
invest $600 million towards eliminating all out-of-pocket costs for diagnostic imaging, with up to six million free cancer scans funded through Medicare – reducing out-of-pocket costs from hundreds of dollars to zero. This would include MRIs too. At present only half the MRI machines were covered by Medicare, and regional patients often had to drive for hours or pay thousands of dollars. “If we win the election, not only will we provide more MRI machines to communities where they are needed most, but Labor will guarantee that every single MRI machine in Australia that meets a national quality standard is covered by Medicare for cancer scans.”
invest $433 million to fund three million free consultations with oncologists and surgeons. Over four years this would mean an extra three million appointments were bulk billed, reducing costs of hundreds of dollars to nothing
guarantee that every drug recommended by independent experts would be listed on the Pharmaceutical Benefits Scheme.
On tax, Shorten said people earning between $48,000 and $126,000, no matter who they voted for in May, would get the same tax refund.
But the Liberal plan did not do enough for the 2.9 million people who earned less than $40,000 – about 57% of whom were women.
In Labor’s first budget Labor would provide a bigger tax refund for low earners than the Liberals proposed.
“6.4 million working people will pay the same amount of income tax under Labor as the Liberals – and another 3.6 million will pay less tax under Labor,” he said. “All told, an extra billion dollars, for low income earners”.
Under further details provided by Labor, it said workers earning up to $37,000 a year would receive a tax cut of up to $350. For workers earning between $37,000 and $48,000 the value of the tax offset would increase up to the maximum tax offset of $1,080.
A worker on $35,000 would get a tax cut of $255 a year under the Liberals, compared to $350 under Labor. A worker on $40,000 would receive a cut of $480 under the Liberals compared to $549 under Labor.
On TAFE Shorten promised to double the size of Labor’s rebuilding TAFE program – up to $200 million – to renovate campuses.
Labor is committed to paying the upfront fees for 100,000 TAFE places to get more Australians in high priority courses. “I am proud to announce that 20,000 of these places will be allocated to a new generation of aged care workers and paid carers for the NDIS,” Shorten said.
Finance minister Mathias Cormann said Shorten had put forward an agenda for $200 billion in higher taxes that would weaken the economy and bring higher unemployment.
Another federal budget, and yet more tinkering to superannuation tax breaks. But the latest changes will only help older wealthier Australians. The losers are younger workers and taxpayers.
What’s the plan?
From July 1 2020, Australians aged 65 and 66 will be able to make voluntary pre- and post-tax superannuation contributions without having to pass the Work Test, under which they are required to work a minimum of 40 hours over a 30-day period.
About 55,000 Australians aged 65 and 66 will benefit from these changes at a cost of A$75 million over the next four years.
It’s another boost for tax planning
Treasurer Josh Frydenberg says the changes will help Australians save for their retirement.
But most 65- and 66-year-olds still working to top up their superannuation are already eligible to make voluntary super contributions, because they satisfy the Work Test. Working 40 hours over a 30-day period – or little more than one day each week – is hardly onerous.
For every dollar contributed to super that genuinely helps Australians save more for their retirement as a result of these changes, there will be many more dollars funnelled into super to make extra use of superannuation tax concessions.
The biggest winners will be wealthier retired 65- and 66-year-olds with other sources of income, such as from shares or property, which they will now be able to recycle through superannuation.
They will be able to put up to $25,000 into super from their pre-tax income and then – because super withdrawals are tax-free – take the money back out immediately. Their contributions to super are taxed at only 15%, whereas ordinary dividends or bank interest is taxed at their marginal tax rate. The tax savings can be as high as $5,000 a year.
Such strategies aren’t costless: other taxpayers must pay more, or accept fewer services, to make up the difference.
It will mean larger inheritances
The government is also allowing 65- and 66-year-olds to make three years’ worth of post-tax super contributions, or up to $300,000, in a single year.
These changes will mainly boost inheritances.
Most people who make after-tax contributions already have large super balances and typically contribute from existing pools of savings to minimise their tax.
Grattan Institute’s 2016 report, A Better Super System, found that only about 1% of taxpayers have total super account balances of more than $1 million, yet this tiny cohort makes almost one-third of all post-tax contributions.
These changes will turbo-charge so-called “recontribution strategies” that minimise the tax paid on superannuation fund balances passed on as inheritances. When inherited, super fund balances originally funded by pre-tax contributions can be taxed at 17% (including the Medicare levy), depending on the age of the deceased and the beneficiary.
To avoid this tax on their estate, individuals can withdraw superannuation funds tax-free and contribute them back as a post-tax contribution, up to the annual post-tax contributions cap of $100,000 each year.
It fails the government’s own test
In 2016, the government tried – but failed – to define the purpose of superannuation as providing “income in retirement to supplement or substitute the Age Pension”.
The proposed objective rightly implied that super should not aim to provide limitless support for savings that increase retirement incomes.
The benefits of super changes should always be balanced against the costs of achieving them. The government’s latest changes fail that test.
This year’s budget includes $448.5 to modernise Australia’s Medicare system, by encouraging people with diabetes to sign up to a GP clinic for their care. The clinic will receive a lump sum payment to care for the person over time, rather than a fee each time they see their GP.
The indexation freeze on all GP services on the Medicare Benefits Schedule (MBS) will lift from July 1, 2019, at a cost of $187.2 million. The freeze will be lifted on various X-ray and ultrasound MBS rebates from July 1, 2020.
The budget announces $461 million for youth mental health, including 30 new headspace centres, some of which will be in regional areas. But it does little to address the underlying structural reforms that make it difficult for Australians to access quality and timely mental health care.
In aged care, the government will fund 10,000 home care packages, which have been previously announced, at a cost of $282 million over five years, and will allocate $84 million for carer respite. But long wait times for home care packages remain.
Other announcements include:
$62.2 million over five years to train new rural GPs
$309 million for diagnostic imaging services, including 23 new MRI licences
$331 million over five years for new pharmaceuticals, including high-cost cancer treatments
$107.8 million over seven years for hospitals and facilities including Redland Hospital, Bowen Hospital, Bass Coast Health and Ronald McDonald House
$70.8 million over seven years for regional cancer diagnosis, treatment and therapy centres
$114.5 million from 2020-21 to trial eight mental health facilities for adults
$43.9 million for mental health services for expectant and new parents
$35.7 million over five years for increased dementia and veterans’ home care supplements
$320 million this year as a one-off increase to the basic subsidy for residential aged-care recipients.
Here’s what our health policy experts thought of tonight’s budget announcements.
A hesitant step forward for Medicare
Stephen Duckett, Director, Health Program, Grattan Institute
Medicare funding is slowly creeping into the 21st century. The 19th-century model of individual fees for individual services – suitable for an era when medicine was essentially dealing with episodic conditions – is being supplemented with a new fee to better manage the care of people with diabetes.
The precise details of the new fee – including the annual amount and any descriptors – have not yet been released. But it should encourage practices to move towards a more prevention-oriented approach to chronic disease management, including using practice nurses to call patients to check up on their condition, and using remote monitoring technology.
The budget announcement contained no evaluation strategy for the initiative. The government should produce such a strategy soon.
Support for aged and disability care
Hal Swerissen, Emeritus Professor, La Trobe University, and Fellow, Health Program, Grattan Institute
The budget has short-term measures to address major issues in aged care and disability while we wait for the royal commissions to fix the long-term problems.
The National Disability Insurance Agency (NDIA) is struggling with the huge task of putting the National Disability Insurance Scheme (NDIS) in place.
There has been a major under-spend on the on the scheme. Price caps for services such as therapy and personal care are too low and nearly one-third of services are operating at a loss. The under-spend would have been more if there hadn’t been a last-minute budget decision to significantly increase service caps, at a cost of $850 million.
$528 million dollars has also been announced for a royal commission to look at violence, neglect and abuse of people with disabilities – the most expensive royal commission to date.
There is more funding for aged care. Currently, 130,000 older people are waiting for home care packages – often for a year or more. Nearly half of residential care services are losing money and there are major concerns about quality of care.
The short-term fix is to give residential care $320 million to try to prevent services going under. The budget includes 10,000 previously announced home care packages, at a cost of $282 million, but that still leaves more than 100,000 people waiting.
Little for prevention, Indigenous health and to address disparities
Lesley Russell, Adjunct Associate Professor, Menzies Centre for Health Policy, University of Sydney
Preventable diseases and conditions are a key factor in health inequalities and rising health-care costs. The two issues looming large are obesity and its consequences, and the health impacts of climate change.
There is $5.5 million for 2018-19 and 2019-20 for mental health services in areas affected by natural disasters, and $1.1 million over two years for the Health Star rating system – otherwise nothing for primary prevention.
The Treasurer did not mention Closing the Gap in his budget speech, and there is little in the budget for Indigenous health.
Just $5 million over four years is provided in the budget for suicide-prevention initiatives. And the Lowitja Institute receives $10 million for health and medical research.
$6.3 million to continue the development of the Health Data Portal for services funded under the Indigenous Australians Health Program.
Inequalities and disparities
Disadvantaged rural and remote communities will (ultimately) benefit from efforts to boost National Rural Generalist Training Pathway, with $62.2 million provided over four years. This was a 2016 election commitment.
Peter Sivey, Associate Professor, School of Economics, Finance and Marketing, RMIT University
There are no major changes to public hospital funding arrangements in this year’s budget.
Funding for public hospitals is predicted to increase at between 3.7% and 5.6% over the forward estimates. However, these figures are contingent on the new COAG agreement on health funding between the Commonwealth and states, which is due to be finalised before the end of 2019.
The states will be hoping to wring some more dollars from the federal government given their soaring public hospital admissions and pressure on waiting times.
Government spending on the private health insurance rebate is projected to increase more slowly than premiums at between 1.8% and 3.2% because of indexation arrangements which are gradually reducing the rebate over time.
Smaller targets for mental health
Ian Hickie, Co-Director, Brain and Mind Institute, University of Sydney
Numerous reports and accounts from within the community have noted the flaws in Australia’s mental health system: poor access to quality services, the uneven roll-out of the NDIS, and the lack of accountability for reforming the system.
The next federal government faces major structural challenges in mental health and suicide prevention.
Not surprisingly, this pre-election budget does not directly address these issues. Instead, it focuses on less challenging but worthy targets such as:
continued support for expansion of headspace services for young people ($263m over the next seven years) and additional support for early psychosis services ($110m over four years)
support for workplace-based mental health programs ($15m)
support for new residential care centres for eating disorders ($63m).
A more challenging experiment is the $114.5 committed to eight new walk-in community mental health centres, recognising that access to coordinated, high-quality care that delivers better outcomes remains a national challenge.
Despite the commitment of health minister Greg Hunt to enhanced mental health investments, the total increased spend on these initiatives ($736.6m) is dwarfed by the big new expenditures in Medicare ($6b), improved access to medicines ($40b), public hospitals ($5b) and aged care ($7b).
It will be interesting to see whether mental health reform now receives greater attention during the election campaign. At this stage, neither of the major parties has made it clear that it is ready to deal directly with the complex challenges in mental health and suicide prevention that are unresolved.
New funding for research, but who decides the priorities?
Philip Clarke, Professor of Health Economics, University of Melbourne
The budget contains several funding announcements for research.
The government will establish a Health and Medical Research Office, to help allocate money from the Medical Research Future Fund (MRFF). This will be needed, as the budget papers commit to a further $931 million from the MRFF for:
Clinical trials for rare cancers and rare diseases
Emerging priorities and consumer-driven research
Global health research to tackle antimicrobial resistance and drug-resistant tuberculosis.
In addition, the budget includes:
$70 million for research into type 1 diabetes
a large investment for genomics (although that is a re-announcement of $500 million promised in last year’s budget)
a series of infrastructure grants to individual universities and institutions, such as $10 million to establish the Curtin University Dementia Centre of Excellence.
The government appears to be moving away from allocating medical research funding through existing funding bodies, such as the National Health and Medical Research Council (NHMRC), towards allocating research funds to specific disease areas, and even to individual institutions.
This is a much more direct approach to research funding, but it raises a few important questions. On what basis are these funding decisions being made? And why are some diseases considered priorities to receive funding? There is very little detail to answer these questions.
Australia’s allocation of research funding through the MRFF is diverging from long-held traditions in other countries, such as the United Kingdom, which apply the “Haldane principle”. This involves researchers deciding where research funding is spent, rather than politicians.
* This article has been updated since publication to clarify the 10,000 home care packages have been previously announced.
The government has extended the energy payment to people on Newstart – after excluding them only days ago.
Treasurer Josh Frydenberg said the decision was made at a meeting on Tuesday night of Scott Morrison, Finance Minister Mathias Cormann and himself. He indicated it was about smoothing the passage of the measure through the parliament.
There was widespread criticism of the exclusion of Newstart recipients from the payment, which will be A$75 for a single person and $125 for a couple.
The money is due to go out very soon and the government needed the legislation to pass immediately. While Labor had flagged it would support the one-off payment, the legislation could have been amended, because the government is in a minority in the House of Representatives.
The payment was originally set to be confined to those on the age pension, disability support pension, carers payment, parenting payment single recipients, and veterans and their dependants receiving payments.
The extension, which will also cover those on Youth Allowance and other working age payments, bringing the number of recipients to five million, will add some $80 million to the original cost of $284.4 million.
Labor seized on the backdown, seeking to suspend standing orders to move a motion in the House saying the government’s backflip “has already blown an $80 million hole in the budget”, and showed the budget was “unravelling less than 24 hours after it was delivered”.
The motion condemned the government for “only looking after the top end of town and treating vulnerable Australians as an afterthought”. The attempt to suspend standing orders failed.
Frydenberg, speaking to the National Press Club, explained the original exclusion by saying three-quarters of people on Newstart moved off it within 12 months, and 99% of people on it received another payment.
“They get a parenting payment or they get a family tax benefit payment, whereas when you’re on the Disability Support Pension or on the aged pension, you tend to be on it for longer, and that seems to be – that is your principal form of payment”.
Frydenberg said the change “will secure the passage of the piece of legislation through the parliament”.
Appearing on the ABC Q&A on Monday, Liberal senator Arthur Sinodinos could not say why Newstart recipients had been excluded from the payment. “The short answer is I don’t know why,” he said. He also said he thought Newstart was too low.