May 09, 2018
Federal Budget 2018-19 Key Measures
Hear Dr. Shane Oliver Chief Economist and Head of Investment Strategy Dr Shane Oliver outline the key measures from the 2018-19 Federal Budget. View the video below.
The Treasurer delivered a 2018 Federal Budget that focussed on reducing the budget deficit, cutting taxes for lower and middle income earners and supporting selective sectors of the economy, especially infrastructure.
Tax cuts were in fact more modest than some commentators had been expecting. In what is likely to be the last budget before a closely fought general election, these were targeted at those on lower and middle incomes.
The main tax cutting measure is the introduction of a low income tax offset, a rebate worth up to $530 per year, paid through the annual tax return.
The budget is forecast to finally return to a surplus in 2019-20, which is expected to increase in subsequent years, assuming a steady path of continued economic growth.
The budget delivered further support for infrastructure which will provide a boost to productivity over the long-term as journey times are reduced, e.g. quicker trips from Melbourne’s CBD to the airport on the new fast rail link.
It will also provide longer-term opportunities for investors as governments eventually privatise infrastructure assets in order to recycle funds back into new projects. This is positive for infrastructure investing, a sector that can offer reliable income with some potential for capital growth, which is attractive in a low interest rate environment.
The budget also announced extra places for aged care in the home, which will encourage retirees to stay in their own homes longer rather than move to aged
care facilities.
There were some very modest changes to superannuation. These relate to the provision of annuity products to manage longevity risk, the extension of the Pension Work Scheme, capping total fees on low balance super accounts and increasing the maximum membership of an SMSF from four to six people.
Measures were also announced to boost research and development and to support the medical research and biotechnology sectors. These are intended to grow industries that will diversify the economy whilst providing high income jobs. This is unlikely to have a major impact on the economy but will be positive for those directly affected.
Overall, the 2018 Federal Budget will have a limited impact on the economy in the next financial year, however it will have a more significant effect on income tax revenues in later years.
Important note: While every care has been taken in the preparation of this article, AMP Capital Investors Limited (ABN 59 001 777 591, AFSL 232497) and AMP Capital Funds Management Limited (ABN 15 159 557 721, AFSL 426455) makes no representations or warranties as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance. This article has been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the appropriateness of the information in this article, and seek professional advice, having regard to the investor’s objectives, financial situation and needs. This article is solely for the use of the party to whom it is provided.