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Budget Paper 1
Budget Statement 1
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The priorities and measures in this Budget build on the priorities addressed in the
Government's first term in office. Important areas that the Government consistently
focused on in its first term included families, older Australians, employment, regional
Australia and small business.
At the last election, the Government set out a comprehensive programme of targeted
expenditures, plus a major reform of the Australian tax system, contained in A New Tax
System. In addition to meeting these commitments, the Budget introduces new measures
that aim to build on Australia's strengths and develop long-term economic prospects.
The Government's priorities for this Budget have been developed within a framework that
takes account of its broader economic and social objectives. In framing
the 1999-2000 Budget, the Government has given priority to:
The following provides more details on the Government's key expense and revenue priorities and measures for the current Budget.
Savings in this Budget are attributable mainly to reductions in resourcing for certain agencies and rationalisation of Commonwealth property.
The Government considers that reform of the tax system is essential in building an
economic infrastructure that will enable Australia to compete and prosper in a competitive
world economy.
A New Tax System will abolish the existing Wholesale Sales Tax and nine inefficient
and distorting State and Territory government taxes and replace them with a GST, which
will be locked in at a rate of 10 per cent. The Commonwealth will provide all of
the GST revenue to the States and Territories. Importantly, this will ensure a stable
revenue source for the States and Territories to provide essential community services such
as hospitals, schools and emergency services. Financial Assistance Grants to the States
and Territories will be abolished.
Implementation of A New Tax System will help ease the burden of raising a family
through personal income tax cuts totaling $13 billion a year from July 2000.
Family benefits will be substantially increased and simplified. This will benefit over
two million families at a cost of around $2½ billion a year. Additional
incentives to work and save will also be achieved by reducing family benefit withdrawal
rates and increasing the income thresholds for family payments.
Some of the revenue measures announced in A New Tax System have been revised to
improve their operation. The luxury car tax threshold on vehicles has been aligned with
the car depreciation limit for income tax purposes. The Reform of Tobacco Taxation
outlined in A New Tax System was scheduled to apply from July 1999. The new
arrangements will now apply from 1 November 1999 to give the tobacco
industry sufficient time to implement the required changes.
The Budget contains measures to implement A New Tax System and to enhance the tax
reform package for families.
At the 1999 Premiers' Conference, the States and Territories signed an Intergovernmental Agreement with the Commonwealth that will transform Commonwealth-State financial arrangements. Under the agreement, the States and Territories will benefit from tax reform by gaining a stable and robust source of revenue in the form of the GST and the capacity to remove a range of inefficient taxes. In the context of signing this agreement, the Commonwealth agreed to provide further assistance to the States and Territories during the transitional years of the reforms. This will ensure that the budgetary position of each State and Territory will be no worse off under the new arrangements.
The Government is providing a package of measures to promote corporate and individual
philanthropy. The measures include a capital gains tax (CGT) exemption for testamentary
gifts of property and for gifts accepted under the Cultural Gifts Programme. These changes
will apply from 1 July 1999.
To improve the overall operation and efficiency of the Superannuation Surcharge, the
advance instalment requirement has been removed. The removal of the advance instalment
will affect only the timing of the surcharge collections.
A healthy Australia is a high priority of this Government. Having already delivered
major funding increases to the States for public hospitals through the Australian Health
Care Agreements, this Budget focuses on improving health care for the elderly,
facilitating access to high quality health care in rural and regional areas and enhancing
Australia's health and medical research capacity.
The Government is committed to a balanced health system, and to strengthen both the public
and private sectors. In this regard the budget measure of Lifetime Health Cover will be an
important complement to the 30 per cent rebate on private health insurance
premiums that has been operating since 1 January 1999. Lifetime Health Cover
will be implemented from 1 July 1999. This system allows registered health funds
to offer lower lifetime rates of hospital cover. People taking out hospital cover
early in their lives will pay lower premiums than those taking it out later in life.
The new system has the potential to encourage an increase in health insurance membership
numbers together with an improvement in the membership profile. Importantly, Lifetime
Health Cover will not disadvantage existing fund members, maintains the principle of
community rating and will allow non-members to join during a 12 month grace period
without penalty. In addition, special provisions will protect people aged 65 or more
on 1 July 1999 by ensuring that they can take out hospital cover at any time
without penalty.
This Budget provides funding of $228 million over four years for an Enhanced
Primary Care Package, targeted to older Australians and those with chronic conditions. The
package is designed to better coordinate health services, including by providing
incentives for GPs to participate in better coordinated care and by providing a single
point of contact for home and community care services (Carelink), and to improve people's
self-reliance and capacity to manage their own conditions. Separately, $82 million
over four years has been provided to expand the provision of respite care for carers of
people with dementia and other cognitive and behavioural problems. The Government will
provide additional funding of $210 million over the next four years for hearing
rehabilitation services, including the provision of hearing aids for eligible persons. The
funding will enable a further 67,000, mainly older, Australians to be assisted each year.
A component of this funding will be directed towards the ongoing delivery of high quality
hearing services to children and others with special needs.
Aboriginal and Torres Strait Islander primary health care funding is to be significantly
increased. The Army/ATSIC Community Assistance Programme which provides environmental and
health infrastructure to indigenous communities will also be extended.
Health and medical research plays a vital role in improving the well being of all
Australians. Consequently, the Government will invest $614 million over the next six
years into health and medical research funded through the National Health and Medical
Research Council. This will more than double the Council's existing research funding level
by 2005 and will consolidate Australia's position in the top 10 OECD countries
in terms of health and medical research investment. In addition, funding of
$20 million over the next two years will support the development of enhanced
facilities for Australia's leading health and medical research institutes.
The Government is pursuing a wide range of labour market reforms to achieve sustained
reductions in the level of unemployment. As part of this, the scope of activities that
satisfy the mutual obligations of unemployment beneficiary recipients will be increased
and mutual obligation will be extended to those aged between 25 and 34 years who
have been in receipt of unemployment payments for 12 months or more. Work for the
Dole will also be broadened to include this group and Year 12 school-leavers in
receipt of unemployment payments for more than three months, with a doubling of Work
for the Dole places from 25,000 in 1998-99 to 50,000 by 2000-01. To combat the severe
employment problems faced by Aboriginal and Torres Strait Islander people, the Government
will also double the funding for indigenous employment initiatives through the
introduction of the Indigenous Employment Policy, including the Indigenous Employment
Programme.
Employers in rural and regional areas will be provided with an additional incentive
payment of $1000 to progress New Apprentices to higher skill levels in trades and
occupations experiencing skill shortages.
The Government has already implemented its election commitment for additional funding of
$553 million over five years for Catholic systemic schools. This decision
followed an independent assessment of the needs of this system conducted by the
Non-Government Schools Funding Review Committee. A new allocative mechanism for
distributing general recurrent funding to non-government schools will be implemented for
the 2001-04 school quadrennium. The new model will be based on a measure of the
socioeconomic status of the community that a school serves and will provide a fairer and
more transparent model for allocating funding. Under this model, funding to the
non-government school sector will increase by around $561 million over the 2001-04
school quadrennium.
High quality education improves employment opportunities. This Budget increases school
funding and provides a range of initiatives that will benefit Australian school students.
Ensuring that every Australian school child is able to read and write is a key Government
priority. This Budget builds on previous initiatives by allocating $131 million over
four years for literacy and numeracy programmes in schools. Funding is also being
provided for studying Asian languages and a quality teacher programme that will focus on
professional development in literacy, numeracy, mathematics, science, information
technology and vocational education.
The Government has allocated additional funding of $195 million over
four years to upgrade the National Highway System and roads of national importance.
Increased funding is also being provided for bridge upgrades to facilitate the
introduction of increased mass limits for heavy vehicles. These programmes will enhance
the efficiency of our road transport system, with consequential national and regional
economic benefits. The Black Spot Programme is being extended for a further two years
in order to make our roads safer and reduce the social and economic costs of road
accidents.
Biotechnology will have a major impact on many commercial activities and has the potential
to improve the lives of Australians through new medical treatments, safer and more
nutritious food, reductions in the use of chemicals and more sustainable land use
practices. Initiatives in this Budget will assist the biotechnology industry to maximise
its contribution to the Australian economy through ensuring a consistent regulatory
system, improving the management of intellectual property in biotechnology and developing
measures to enhance access to genetic and biological resources.
To help ensure that Australia maintains its strength in scientific and industrial research
and innovation the Government will maintain higher baseline funding for the CSIRO.
Research infrastructure funding for universities will be increased and new science
lectureships will be established. This complements the Strategic Partnerships-Industry
Research and Training programme for which additional funding has previously been
announced.
The sale of the second tranche of Telstra will provide a social bonus to enhance national
communications infrastructure. Telecommunication infrastructure in remote Australia will
be upgraded to give access to untimed local calls and to replace the pastoral call rate
with a fairer system at a cost of up to $150 million over three years. The
Networking the Nation regional telecommunications programme will provide enhanced rural
internet access, continuous mobile phone coverage on major national highways and an
expansion of the Regional Telecommunications Infrastructure Fund. The Television Fund
initiative will provide $120 million over five years to eliminate
between 200 and 250 television blackspots and expand the transmission of
SBS television.
To enhance Australia's capacity to participate fully in the strong global growth in the
financial services industry, the Government has allocated $3.5 million in each
of 1999-2000 and 2000-01 for initiatives to promote Australia as a centre for global
financial services.
The Government is committed to working with Australia's primary industries to secure
their profitability, sustainability and competitiveness. Funding is being committed to
support the Supermarket to Asia Strategy and to implement the Food and Fibre Supply Chain
Programme. Resources are being provided for the Northern Australian Quarantine Strategy,
for regional flood mitigation programmes, to deter illegal fishing in Australia's
subantarctic waters, and to support the sustainability of the Great Artesian Basin.
An additional 30 Regional Health Service Centres will be established over the next
four years. This measure will extend to more areas an approach that draws together
health, aged care and other community services to a central location; providing a mix of
services to best meet local priorities. Further, in recognition of the key role of general
practitioners, the Government will spend $43 million over four years on
retention payments for long serving GPs working in rural and remote areas.
To ensure that Tasmania is not disadvantaged from high transport charges, an expanded
freight equalisation scheme costing more than $20 million per year will be
implemented from 1999-2000.
Two new Centrelink call centres will be established in Maryborough and Port Augusta.
The new call centres will tailor services to customers in regional and rural Australia.
As part of the social bonus to be funded from the sale of the second tranche of Telstra,
the Government will fund the establishment of up to 500 rural transactions centres.
The programme will help small rural communities to establish centres that provide access
to basic transaction services, such as banking, post, phone, fax and Medicare Easyclaim.
To enhance the access that students from rural and regional areas have to education, this
Budget provides a number of initiatives including increasing boarding allowance under the
Assistance for Isolated Children Scheme and extending eligibility for the student
financial loan supplement.
The Budget contains measures to strengthen family relationships, reduce crime and
improve accessibility to justice.
Initiatives against crime include Crimtrac and the National Crime Prevention Programme.
Crimtrac will provide access to the most up to date and efficient technology to store and
retrieve information to help police solve crimes. At the other end of the spectrum, the
National Crime Prevention Programme is aimed at finding and promoting ways of preventing
crime and violence in the community. To enhance an equitable and accessible system of
federal law and justice, additional counselling and mediation dispute resolution services
will be provided and access to justice for disadvantaged people in rural and regional
areas will be extended. Funding will be provided to establish the Federal Magistrates
Service and to construct a Commonwealth Law Courts building in Adelaide.
This Budget provides a range of specific initiatives to support families through providing
increased relationship support services, assistance to resolve family disputes, developing
approaches to reduce domestic violence, expansion of children's contact services, a new
suicide prevention strategy and support for carers of young people with disabilities. The
Government will implement a new youth homelessness early intervention programme and
provide increased funding for the Supported Accommodation Assistance Programme which
provides transitional support and accommodation to help homeless people and those at risk
from domestic violence.
To date the Government has committed over $295 million to the National Illicit Drug
Strategy for a range of initiatives in the fight against drugs. This includes over
$80 million in this Budget to fulfill election promises. The Budget provides an
additional $221 million over four years for early intervention and
diversion of illicit drug users to counselling and treatment, and for education and
prevention activities including supply control.
Funding of $250 million has been allocated to the Natural Heritage Trust as part
of the social bonus from selling the second tranche of Telstra. This will maintain support
for the full range of Natural Heritage Trust programmes such as Bushcare, Rivercare,
Landcare and Coastcare; Murray-Darling 2001; and support for endangered species,
wetlands and World Heritage places. The Budget also contains increased funding for the
Living Cities programme, oceans policy, the Bureau of Meteorology and for a range of
environment protection measures.
Consistent with the Government's election commitment, a further $148 million is to be
made available to the Australian Sports Commission over the period 1999-2000
to 2002-03. This funding will maintain support for national sports infrastructure and
the development of elite athletes, including the extension of the Olympic Athlete
Programme.