2005-06 Budget at a Glance

Fiscal Outlook

The 2005-06 Budget provides for an underlying cash surplus of $8.9 billion. This will be the Government’s eighth surplus.
A strong budget position is being maintained while delivering further personal income tax cuts and introducing significant reforms to the welfare system, aimed at improving workforce participation.

All taxpayers will benefit from a further $21.7 billion in tax cuts over the next four years.
The 17 per cent tax rate will be reduced to 15 per cent from 1 July 2005.
The tax threshold for the 42 per cent and 47 per cent rates will be raised on 1 July 2005 and again on 1 July 2006.
This means that taxpayers will not reach the highest marginal tax rate until they earn around 3 times average weekly earnings.
The Government will abolish the superannuation surcharge on contributions and termination payments made or received from 1 July 2005 to encourage private savings.

The Government is committed to increasing workforce participation.
From 1 July 2006 a wider range of income support recipients will be obliged to seek work.
Newstart Allowance will be enhanced from 1 July 2006 to improve the rewards from part-time work.
More than $2 billion will be invested over four years to ensure that those seeking work have the necessary support services and training.
Incentives to find work will be strengthened by a change to the compliance framework, incorporating payment suspensions.

The 3 per cent tariff applying to business inputs where no substitutable goods are manufactured in Australia will be removed from Budget Night. This will cost $1.3 billion over five years.
A broader range of expenses incurred by business will become tax deductible.

Record spending on health and aged care by the Government – $45 billion in 2005-06, up from $20 billion when the Government came to office.
$196 million over five years for the Strengthening Cancer Care initiative, including funding for additional research, screening and prevention initiatives.
$321 million package to make dementia a national health priority. This includes 2,000 dedicated places to provide high level care for people with dementia in their own home.
Medicare Safety Net and the PBS made more sustainable.

Since the last Budget, the Government has increased the maximum rate of Family Tax Benefit Part B, costing $2 billion over five years.
The level of income allowed before Family Tax Benefit Part A is withdrawn will be increased to $37,500 a year from 1 July 2006.
A bonus payment for carers will be paid in June 2005. $1,000 for recipients of Carer Payment and $600 for recipients of Carer Allowance.

$239 million over four years to further enhance the investigation and language skills of intelligence agency personnel.
$522 million over four years to improve protective security, including in missions overseas.
$580 million for additional quarantine screening.

$1 billion aid package to Indonesia to assist with tsunami reconstruction and development efforts.
$841 million over four years helping the Solomon Islands restore law, order and sound public finances.

2005-06 Budget At A Glance