MYEFO: Federal deficit improves by $5.8b; $2.1b to be saved through higher education changes
Updated
This year's federal deficit has improved by $5.8 billion compared to forecasts in the May budget, but it is still going to hit more than $23 billion.
Key points:
- Wage growth downgraded across next four years, but deficits lowered every year until 2020/21
- Higher education reforms tweaked to cap funding for student places, compromise on income threshold for paying off loans
- New migrants will now have to wait three years to access welfare payments
Treasurer Scott Morrison and Finance Minister Mathias Cormann have released the Mid-Year Economic and Fiscal Outlook (MYEFO) in Canberra, showing wage growth has been downgraded across the next four years, along with downgrades in growth of the nation's GDP.
But the Federal Government has said it will deliver lower deficits this year, and every year through to the end of the 2020/21 financial year — the first year a surplus is forecast.
The doomed higher education reforms have been tweaked, including revising up the income threshold for student loans from $42,000 to $45,000 — $10,000 less than the current threshold of $55,000.
$2.1 billion in savings in the higher education sector have been confirmed through freezing the Commonwealth Grants Scheme to universities and a cap on funding for student places.
That could force universities to put a limit on the number of places they offer prospective students.
A lifetime limit on student loans will also be imposed. The maximum will be about $104,000 for most students and $150,000 for medical, dentistry and veterinary courses.
The original higher education savings, outlined in the May budget and blocked in the Senate, aimed to cut $2.7 billion.
Mr Morrison said the education savings would not be reliant on legislation passing the Parliament.
"The predominant measure in there, which is the freeze, is a non-legislative measure. That's the overwhelming proportion of the savings," he said.
The revised threshold for paying back student loans and lifetime limit on student loans will both require support in the Senate.
The Federal Government will aim to cut $1.2 billion from the social services portfolio by extending the waiting period for new migrants accessing welfare payments from two years to three years.
That covers family tax, paid parental leave and carers' allowance.
There is also a big crackdown on family daycare integrity, aimed at saving around $1 billion over the next four years, after a number of rorts in the sector.
The Commonwealth is having to spend $11.6 million to cover the costs of the multiple High Court challenges on citizenship this financial year.
Topics: government-and-politics, political-parties, budget, business-economics-and-finance, economic-trends, globalisation---economy, scott-morrison, parliament, federal-parliament, australia
First posted
