Unlike a post-election Federal Budget, this year’s pre-election event does not have any “nasty” surprises or cuts.
But for those hoping the stronger budget bottom-line might deliver some pleasant surprises for seniors, support has been limited to the areas of health and aged care.
While not targeted at seniors specifically, one of the other major spending announcements was significant cuts to income tax, albeit with some delay to their implementation.
Below, we summarise the major spending announcements that will impact on seniors.
Only minor – but positive – changes were made to superannuation rules.
“Ever-changing superannuation rules” is one of the biggest gripes we hear from members, so it’s positive to see the government progressing only positive improvements to the super system.
The government has moved to align specific contribution rules with the changing rules for age pension eligibility.
From 1 July 2020, people aged 65 and 66 will be able to contribute to super without meeting the work test of 40 hours over a 30-day period.
Further, the age limit for spouse contributions to super has been extended from 69 years to 74 years. At present, people aged 70 and over cannot receive third-party contributions.
Australian women are still at a big disadvantage when it comes to superannuation. They retire with a fraction of the super of their spouse. More needs to be done to bridge the gender gap. This will help change that situation.
The government has also announced funding to identify options for the establishment of a Superannuation Consumer Advocate.
This is important because it will provide further opportunities to harness consumer input into policy discussions on superannuation and provide a means of delivering information and education to consumers to help them navigate the superannuation system.
At a cost to the government, it has also changed or delayed implementation of legislation to reform superannuation. Most notable of these are amendments to the Protecting your Super Package legislation announced last year to deal with inactive accounts, and delays to introduce an opt-in regime for insurance for accounts with balances of less than $6,000.
Increased spending on health is one of the features of this budget. Of special interest is the 10-year $185 million Dementia, Ageing and Aged Care Mission. This will provide much needed funding for research focused on:
· Dementia (diagnosis, treatment and prevention);
· Fall prevention and avoidable hospitalisations;
· Assistive technology to support independence.
Another positive was re-indexation of Medicare Benefits Schedule (MBS) items for ultrasound and diagnostic radiology services over three years from 1 July 2020. Rebates for about 90% of all diagnostic imaging services will now be indexed.
We were also pleased the freeze on Medicare payments to GPs will end. The re-introduction of indexation to all remaining General Practitioner services on the Medicare Benefits Schedule will occur one year ahead of schedule.
Increasing the rebates on services should result in higher bulk billing rates and lower out-of-pocket expenses for health care.
National Seniors has been campaigning to address rising medical specialists’ fees and out-of-pocket costs and welcomes the $7.3 million over two years allocated for a strategy to target medical specialist’s fees. This will be used to develop a website to create more fee transparency and an education campaign to inform patients about the costs of specialist services. Information will be provided nationally, with an initial focus on specialist fees for gynaecology, obstetrics and cancer services.
We also welcome funding to address chronic disease, given an increasing number of older people are dealing with three or more persistent health conditions. Significant funding of $448.5 million over three years has been provided for improved continuity of care for patients 70-plus who have chronic conditions, as well as $17.2 million for a chronic disease grants program.
Other health highlights included:
- $331 million over five years for new and amended listings on the Pharmaceutical Benefits Scheme (PBS);
- $7 million upgrade to Fraser Coast Hospice Facility;
- Establishment of a new Medicare heart check item.
While there were a range of measures and new funding for aged care, it was disappointing more was not provided to ensure older Australians have timely access to quality care.
Despite this, several important initiatives were announced as part of a $724.8 million package, including:
- An immediate boost of $320 million for the subsidy provided to people in residential care, which will provide an extra $1,800 per resident per year to assist providers to meet their care needs.
- $8.4 million over five years to make participation in the National Aged Care Quality Indicator Program mandatory. National Seniors called for this and strongly welcomes efforts to improve safety and quality of care.
- $4.6 million over two years to develop a new funding tool to replace the Aged Care Funding Instrument.
- 15% increase in the home care supplement paid for dementia sufferers and veterans.
Other aged care initiatives included funding for:
- A new compliance program for home care;
- A business advisory tool for aged care providers;
- New risk-based compliance and information sharing systems;
- Improved payment administration arrangements for home care packages for unspent funds;
- Funding to address the use of chemical restraints and the inappropriate use of antibiotics in residential aged care;
- Ongoing implementation of the Aged Care Workforce Strategy; and
- Preparatory work for a new Serious Incident Response Scheme in residential care from July 2022.
National Seniors welcomed the budget commitment totalling $282.4 million to enable the release of 10,000 new home care packages at all levels. Our views about the inadequacy of the home care funding to address the waiting list of 128,000 are expressed by Chief Advocate Ian Henschke separately.
The government announced it will continue to fund the Commonwealth Home Support Program (CHSP) at $5.9 billion over the next two years. It had planned to integrate the CHSP with the home care program to streamline the process of accessing assistance in the home. It means consumers will have to wait longer to see any reform of the way the home care system operates.
The government also announced the retention of current incentives to GPs to treat people living in residential care. However, our members have told us access to medical care in nursing homes is lacking and they would have preferred funding that enhanced access to GPs rather than a business-as-usual approach.
A one-off budget measure for those on pensions and other government support payments will provide $75 for singles and $125 for eligible couples to help cover energy costs.
Much to our disappointment, the budget failed to reinstate indexation of the Energy Supplement. This would have given financial support to age pensioners facing energy cost blowouts. We have been campaigning for this for some time.
We are continuing to push for the reinstatement of the supplement and are calling on all candidates in the federal election to backing this.
For older people still in the workforce, the most important of a number of initiatives was a piloting of a new employment service model for jobseekers.
The new model is supposed to deliver a comprehensive assessment system to better identify support that jobseekers need when looking for work.
We know older people can struggle to find work or face discrimination when seeking employment. Older jobseekers need targeted assistance to help them to either find work that is suitable to their skills or to identify opportunities to retrain and reskill to find suitable work in a changing labour market.
The pilot program will run from 1 July 2019 to 30 June 2022, followed by a national rollout of the new model.
Other initiatives included:
- Establishment of a national institute to improve career advice and information for jobseekers.
- $62.4 million over four years to improve workers’ basic language, literacy, numeracy and digital skills.
- The continuation of several employment programs for mature age workers including:
- The Career Transition Assistance program, to assist people aged 50 and over, will be rolled out nationally from 1 July 2019 (one year ahead of schedule) and will include 45 to 49-year-olds.
- The $10,000 Restart subsidy for employers hiring people aged over 50 and the Entrepreneurship Facilitator program to support older people starting a business.
One of the biggest announcements of the budget was the bringing forward and strengthening of tax cuts, including breaks for small business.
With 1.8 million workers aged 55-64 and a further 572,000 workers aged 65 and over, these changes will undoubtedly be good news.
The most immediate change is the increase in the Low and Middle Income Tax Offset (LMITO) from 1 July 2019. The base amount will increase from $200 to $255 per annum and the maximum amount will increase from $530 to $1080. This means someone earning between $46,000 and $90,000 will be $1080 better off at the end of the 2019-20 financial year.
The government has also budgeted for other changes to personal income taxes that will not be available for several years.
- The Low Income Tax Offset (LITO) will increase from 1 July 2022 from $645 to $700. In addition, the upper threshold to receive the full LITO will increase slightly to $37,500 and the upper threshold at which the LITO will be withdrawn will be a taxable income of $66,667.
- Workers will also have to wait until 1 July 2022 for the threshold for the 19% tax bracket to move up from $41,000 to $45,000.
- On 1 July 2024, the 37% tax bracket will be abolished, and the 32.5% bracket lowered to 30%, resulting in about 95% of taxpayers paying a maximum of 30% income tax in the future.
Another announcement, of benefit to seniors with a small or medium-sized business, is the move to increase and expand access to the instant asset write-off scheme.
As at 2 April 2019, businesses with less than $50 million in annual turnover will be able to write off assets up to the value of $30,000. This is a $5,000 increase on the original figure. While the scheme has also been extended from small businesses to include medium-sized businesses.
With the ramifications of the Banking Royal Commission still to play out, we welcome the allocation of $606.7 million to deal with some of the problems identified, in-line with the government’s earlier commitments.
- Setting up an industry-funded compensation scheme of last resort;
- Funding to the Australian Financial Complaints Authority to establish a historical redress scheme;
- Providing compensation owed to consumers and small businesses from unpaid dispute determinations;
- Resourcing the Australian Securities and Investments Commission (ASIC) for better enforcement;
- Resourcing the Australian Prudential Regulation Authority (APRA) for better supervision and enforcement;
- Establishing an independent financial regulator to provide oversight authority for ASIC and APRA;
- Undertaking a capability review of APRA;
- Establishing a Financial Services Reform Implementation Taskforce; and
- Provision of additional funding for the Office of Parliamentary Counsel.
National Seniors hopes these and other reforms will ensure all Australians can be confident the financial services sector will act in their best interests into the future.