Federal Budget 2021-22: What’s in it for older Australians?

josh frydenberg and scott morrison federal budget 2021-22

It was a hot chocolate budget, said ABC political editor Andrew Probyn.

It was the budget we had to have, said Deloitte economist Chris Richardson.

This wasn’t a budget. It was just a series of Shakespearian sonnets delivered in a Gregorian chant, tweeted one federal budget viewer.

Whichever side of the fence you sit, one would be hard pressed to disagree with any of these responses to Josh Frydenberg’s third Federal Budget and second pandemic budget.

There were no clear winners, but everyone got a little taste.

After setting a low bar comparing Australia’s relatively strong economy against countries such as Italy, the UK and Japan – all ravaged by COVID-19 – the Treasurer launched into patriotic jingoism, dramatic face-pulling and theatrical hand waving before settling in to delivering a budget aimed at “securing Australia’s recovery”.

And how is this to be done?
Spend, spend, and spend some more.

It may indeed have been the budget we had to have.

It is certainly the budget the Coalition had to have.

It was a budget that aligned policy with savvy economics and politicking.

An electioneering budget – the right budget for the times, as economist Chris Richardson suggested, with “big applause at all the announcements, but paying for it has been kicked down the track.”

Read more: Four key Budget measures for retirees

The Morrison government again took credit for the work of the states and the Australian people.” On the health front, the catastrophic loss of life seen elsewhere was averted,” the Treasurer said. “Early and decisive actions saved lives and livelihoods,” he added before spruiking federal funding of the COVID vaccine rollout almost like there was an alternative.

“Mr Speaker, our first priority is to keep Australians safe from COVID,” said the Treasurer.

“In this Budget, a further $1.9 billion is allocated for the rollout of vaccines.

“Australians have already received over 2.5 million doses.

“This Budget provides another $1.5 billion for COVID-related health services, including for testing and tracing, respiratory clinics and Telehealth.

“In total, the Morrison government has committed $20 billion to the vaccine rollout and to strengthen our health system in response to COVID.”

Read more: Federal Budget hits and misses

The government also plans on having all Australians vaccinated by the end of the year.

As at March 2021, 6 million Australians were eligible for the vaccine. According to the www.health.gov.au, 2.7 million have received a dose.

The Treasurer announced tens of billions of dollars in spending in a bid to secure our pandemic recovery, again, based on the assumption that there will be no more outbreaks, that everyone will be vaccinated by year’s end and international borders will reopen sometime in 2022.

“We are better placed than nearly any other country in the world to meet the economic challenges that lie ahead,” said Mr Frydenberg.

“We have a plan to secure Australia’s economic recovery and build Australia’s future.”

To do this, the government will:

  • reduce Australia’s unemployment rate forecast to drop to 4.5 per cent in 2023-24 and 2024-25
  • keep international borders shut until mid-2022
  • set aside $2.3 billion for mental health and suicide prevention
  • add $1.9 billion towards strengthening our national security, law enforcement and intelligence agencies
  • put in $1.7 billion extra for childcare sector jobs over the next three years
  • JobTrainer will receive an extra $500 million
  • spend $7.2 billion on the low- and middle-income tax offset – worth up to $1080 for singles earning under $126,000 and $2160 for couples on low and middle incomes
  • contribute $680 million to domestic violence programs
  • spend $9 billion over four years to increase JobSeeker by $50 a fortnight, $15 billion on infrastructure projects and $13.2 billion over four years for the NDIS.

And as for older Australians …
… there will be no changes to the Age Pension.

But they will be the beneficiaries of the removal of the $450 per month minimum income threshold for the superannuation guarantee, meaning those on low incomes who haven’t had a lifetime of compulsory 9 per cent super contributions can still build up a retirement nest egg.

Read more: Aged care overhaul

Currently, Aussies over 67 must work at least 40 hours over a 30-day period per financial year to make voluntary, non-concessional and salary-sacrificed superannuation contributions of up to $25,000 a year. This includes those receiving contributions from their spouse.

Those aged between 67 and 74 will be eligible for the new change from 1 July.

“The government will amend the work test rules to allow retirees who have not had the benefits of compulsory superannuation throughout their working lives to get more out of the superannuation system,” the budget papers said.

“This change also recognises that many retirees have accumulated savings outside of superannuation.”

The work test will still apply to those wanting to access concessional personal deductible contributions. The $1.6 million cap on lifetime superannuation contributions will increase to $1.7 million from 1 July.

It should also be easier for Australians to prepare for retirement and to be more secure in retirement, says Mr Frydenberg.

Read more: Social media reaction

“We will improve flexibility by no longer requiring older Australians to meet a work test before they can make voluntary contributions to superannuation,” he said.

“We will allow those aged over 60 to contribute up to $300,000 into their superannuation if they downsize their home, freeing up more housing stock for younger families.”

Put simply, those eligible can sell their home and put up to $300,000 earned from the sale towards their super. For example, someone selling their home for $800,000 can buy a $500,000 unit, putting the rest directly into their super account. Previously, only people aged over 65 were eligible for the scheme.

The superannuation rate will still increase to 12 per cent as legislated.

Another $21.2 million will be provided over four years from 2021-22 to “improve the uptake” of the Pension Loans Scheme.

This means those who have owned their home for at least 10 years will have immediate access to lump sums of around $12,000 for singles, and $18,000 for couples.

Older Australians on low and middle incomes will get tax relief worth up to $10.50 a week, delivered via an increase to the Low and Middle Income Tax Offset (LMITO) which will more than double to $1000.

The voluntary scheme is basically a reverse-mortgage type loan helping older homeowners unlock equity in their houses and boost retirement income.

The apprenticeship program has been very successful, says Mr Frydenberg, but what about getting older workers back to work?

Well, to combat age discrimination in the workforce, employers will receive a $10,000 wage subsidy after hiring senior Australians.

Perhaps the centrepiece of this Budget
… is the additional $17.7 billion for the aged care sector and funding for new home care packages.

The number of home care places will increase by 80,000 over four years at a cost of $1.6 billion.

These 80,000 home care places will be available to a waiting list of what is currently around 105,000.

“We will increase the time nurses and carers are required to spend with residents,” the Treasurer said.

“We will make an additional payment of $10 per resident per day to enhance the viability and sustainability of the residential aged care sector.”

Funding will also go towards retention bonuses to keep more nurses in aged care, increased access for respite services for carers and strengthening the regulations to monitor and enforce standards of care.

“We are committed to restoring trust in the system and allowing Australians to age with dignity and respect,” said the Treasurer.

Not enough, but it’s a start – and the government has pledged to do more over time.

Still, director of Aged Care Matters, Dr Sarah Russell, says the funding falls well short of what is needed to ensure appropriate care for vulnerable older Australians.

“The highest level of home care help for older Australians is $52,000,” she wrote for Michael West Media.

“And how much actual support does that $1000 a week offer? On average, just eight hours and 45 minutes a week, according to the aged care royal commission final report.”

Importantly, one of the recommendations made by the royal commissioners was that any additional spending needed to be targeted and regulated.

“… before the government hands out any more home care packages, mechanisms must be put in place to stop the ability to rort the system,” said the final report.

“More money alone will not transform the aged care sector,” said Monash University’s head of the health law and ageing research unit.

“The underlying issues require massive systemic changes in legislation, regulation, enforcement of standards, workforce recruitment and training, better models of care, and integration of healthcare into aged care.”

Now for the losers
The first is clean energy.

Big money and tax incentives have been assured for big pharma and biotech, with the government pledging to “consult” on clean energy innovation.

It has also promised to get Australia to net zero emissions by 2050 – which is great if we make it that far.

The tourism industry was also a big loser, with the Federal Budget papers revealing Australia’s international borders will remain closed until mid-2022.

“Inbound and outbound international travel is expected to remain low through to mid-2022, after which gradual recovery in international tourism is assumed to occur,” the budget papers read.

Some say Mr Morrison is keeping the international borders shut in a bid to win votes.

Others, such as The Age economics correspondent Shane Wright, say it’s being done to keep the pressure off the botched vaccine rollout.

Mr Frydenberg barely touched on the size of the deficit, noting the battle to protect Australia from the impact of the pandemic had left an “unavoidable cost”.

“We’re in the middle of a pandemic and making assumptions in normal times is difficult and making them now even more so, so we’re making assumptions based on the best available information we have,” he told 7.30‘s Leigh Sales.

While we await the Opposition’s budget response later this week

… shadow treasurer Jim Chalmers had some words to say about the Budget.

“Their hearts are not in it – and there’s barely a relationship between what they announce and what they actually spend,” he told 7.30.

“Absent from the Budget was any plan for getting the Budget back under control.

“The government won’t tell us how that will happen until after the election.

“I think the government has a plan to cut the Budget, but that won’t happen until after the election.”

Overall, the Budget was a big cash splash, based on optimistic assumptions with no clear path to economic recovery or budget repair.

And yet there are few people who were left out.

Most Australians should benefit in some way, directly or indirectly.

Politically, the Coalition spent in areas of Labor strength, shoring up shortfalls in voting weak points and removing any leverage the party might have come election time.

Yes, it “looks and smells like a pre-election budget”, said Andrew Probyn.

At this point many of you may be happy the Emgality migraine drug was put on the PBS.

I think I feel a migraine coming on …

What do you think of this Budget? Did the government nail what needed to be done to secure Australia’s future? Where do you think more money could be spent? Which proposals to you agree with? Why not share your opinions in the comments section below?

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Written by Leon Della Bosca

Publisher of YourLifeChoices – Australia's most-trusted and longest-running retirement website. A trusted voice on Australia's retirement landscape, including retirement income and planning, government entitlements, lifestyle and news and information relevant to Australians over 50. Leon has worked in publishing for more than 25 years and is also a travel writer and editor, graphic designer and photographer.

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