What’s in the Federal Budget for older Australians? 💸🧐
After a nine year absence, a Labor Treasurer has once again delivered a Federal Budget, with Dr. Jim Chalmers producing in his first budget a document that reflects the times; one that is aiming to be, in his words, ‘solid, sensible and suited to the conditions’.
And the conditions are indeed muddied by a multitude of uncertainties, from the impact of the ongoing conflict in Ukraine on global energy prices to domestic considerations, with inflation (as measured by the Consumer Price Index) not forecast to fall back within the Reserve Bank of Australia’s target range of 2% to 3% per annum until 2024-25.
The Treasurer laid the ground for deeper cuts in the future but provided no additional cost of living support for struggling households other than existing policies offering cheaper childcare and medicines that won’t begin until next year. Amidst these tensions the Treasurer has shaped a budget with an emphasis on fiscal restraint, while still delivering on key commitments taken to the federal election.
The following are the key announcements contained within the Budget papers that affect older Australians including retirees.
Tax credits for those still working
Alongside pension payments increasing, age and service pensioners who look to get back into the workforce will receive a one-off $4,000 credit, allowing older Australians to work and keep more of their money. The temporary income bank credit will increase the amount pensioners can earn this financial year from $7,800 to $11,800 before their pension is reduced.
Patient savings on medicine costs
The promise of cheaper medicines was one of the major cost-of-living measures touted by Labor before the budget. The government will spend $787.1m over four years and $233.4m each year after that to reduce the amount customers pay towards the cost of medicines on the Pharmaceutical Benefits Scheme. Labor has introduced legislation to parliament to slash the maximum general co-payment for medicines on the PBS from $42.50 to $30. This means the federal government will increase the amount it spends on subsidising about 17 million scripts filled by about 3 million people a year. The government will also fund a range of other mental health, primary care services and hospital upgrades, including in regional Australia, and fund some new treatments on the Medicare Benefits Schedule, including nuclear medicine imaging treatments for cancer patients. The government will also provide $47.7m over four years to reinstate Medicare funding for bulk-billed telehealth psychiatry in telehealth eligible areas across regional and rural Australia, contributing a 50 per cent loading for consultations.
Lift to the Commonwealth Seniors Health Card income threshold
Lift to the Commonwealth Seniors Health Card income threshold
The income threshold for the Commonwealth Seniors Health Card will be increased from $61,284 to $90,000 for singles and from $98,054 to $144,000 (combined) for couples. The budget also freezes social security deeming rates at their current levels for a further two years until 30 June 2024. Where returns generated from investments held exceed these deeming rates, this measure will assist older Australians who rely on income from deemed financial investments, as well as the pension, to deal with the rising cost of living.
Greater quality of aged care
Labor’s aged care reforms will cost $2.5bn over the next four years. Most of the funding will go towards paying staff. From 1 July 2023, under the package aged care facilities will be required to have a registered, qualified nurse on site 24 hours a day, 7 days a week. This will see average care minutes increase to 215 per resident per day from 1 October 2024. The government will also spend $540.3m responding to the final report of the Royal Commission into Aged Care Quality and Safety. This includes $68.5m to strengthen governance and to support the implementation of aged care reforms in regional areas.
The budget contains two key measures to incentivise pensioners to downsize their housing. The first extends the assets test exemption from 12 months to 24 months for income support recipients, following the sale of their principal dwelling. This will double the time pensioners have to use the sale proceeds to acquire a new principal dwelling, without these funds being counted towards the assets test. The second measure changes the income test, so that it will only apply the lower deeming rate (currently 0.25%) to principal dwelling proceeds when calculating deemed income for 24 months after the sale.
Extending eligibility to Downsizer superannuation contributions to Over 55s
As part of a series of measures to tackle housing accessibility, the government has announced the extension of the downsizer superannuation contribution to those between the age of 55 and 59. This measure, first introduced in the 2017 budget, was previously restricted to those aged 60 and older. More people will be able to make downsizer contributions to their superannuation, with the minimum eligibility age reduced from 60 to 55 years of age. The downsizer contribution allows people to make a one-off post-tax contribution to their superannuation of up to $300,000 per person from the proceeds of selling their home. This measure provides greater flexibility to contribute to superannuation and aims to encourage older Australians to downsize sooner to a home that better suits their needs. The government will also spend $73.2m over four years, and $400,000 each year after that, to support pensioners to downsize by extending the assets test exemption for the proceeds of selling their homes. This measure will reduce the financial impact on pensioners looking to downsize their homes in an effort to minimise the burden on older Australians and free up housing stock for younger families. A further $61.9m over two years will fund one off credits worth $4000 to age and veteran pensioners. This will increase the amount pensioners can earn, without having their payments cut, from $7,800 to $11,800, so those who want to work more hours can do so.
Deeming rate freeze
The government has detailed it will freeze social security deeming rates at their current levels for a further two years until 30 June 2024. This freeze is targeted at supporting older Australians who rely on income from deemed financial investments, as well as the pension, to deal with the rising cost of living.
Some internet users
About 1.5 million Australian homes and businesses have been promised better access to improved Wi-Fi. The budget includes a $2.4bn equity investment to the company which runs the National Broadband Network. The government is promising to expand the NBN’s full-fibre access, with a focus on the outer suburbs and in regional areas. The government has also provided $757.7m over five years to improve mobile and broadband connectivity and resilience in rural and regional Australia. Another $4.7m over 3 years will support the delivery of free broadband for up to 30,000 unconnected families with school aged students during the 2023 calendar year.
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