Life in Tony Abbott’s Australia will have some changes in store for hard-working mums and dads. Depending on your income, this could be a good or a bad thing. We asked guest writer Nigel Bowen, to share an overview of what may be to come.
A change in government and the introduction of new policies always advantages some and disadvantages others. Overall, the election of the Coalition should result in many middle-aged family men and women having a bit extra cash in their pocket. Here’s a brief summary of how Tony Abbott’s major policies will impact your family’s budget.
Paid parental leave
Labor introduced paid – at the minimum wage – parental leave when it took power, but Tony Abbott surprised many by trumping his opponents with one of the most generous parental leave schemes in the world. The bad news is it’s not retrospective, but women planning on having another child after mid-2015 can look forward to receiving their full wage, including superannuation, for six months (as long as they earn $150,000 or less). It is estimated this will put over $5 billion a year into the hands of the nation’s new parents when the scheme commences.
The Coalition is getting rid of a number of taxes, which should reduce costs for businesses and hence consumers. However, the change that will have the biggest impact will be the removal the carbon tax, while keeping the compensation the previous government introduced to offset it. During the campaign Tony Abbott claimed scrapping the carbon tax “means every household will be $550 a year better off”.
Somewhat reluctantly, the Coalition signed up to Labor’s plans to invest heavily in the nation’s primary and secondary schools over the coming years. That influx of money may mean private schools have less need to raise their fees (and public ones to request ‘donations’), though there is no guarantee of that. What is certain is that the Schoolkids Bonus, which provided eligible families up to $410 a year for children in primary school and $820 for those in high school, will be scrapped.
The Coalition has postponed Labor’s plans to incrementally lift compulsory superannuation payments from 9.25 per cent to 12 per cent of salaries by 2020. The Coalition is also scrapping the low income superannuation contribution. As the name suggests, this won’t have any impact on those earning an average wage or better, but it will reduce future superannuation contributions for low-income earners by up to $775.50 a year.
The incoming Coalition government has seemingly tried to shield middle-income Australian families from as much economic pain as possible, meaning they could end up in a better financial position than was the case under Labor. Should the policy changes result in leftover money, it’s worth considering using it for savings as no government can guarantee you’ll never need a nest egg to fall back on.
Note: The views expressed in this article are those of the author and are not necessarily those of the Rabobank Group.