No wallets spared in hunt for savings

It’s hard to find a hip pocket spared by the Abbott government’s first budget.

Every motorist will pay more at the petrol bowser. More than two million families will be affected by a major overhaul of the family tax benefits system. High income earners will pay more tax. New charges will apply to GP visits and the purchase of medicines.

The government will raise an extra $2.2 billion over four years by re-introducing the biannual indexation of fuel excise. That will push up bowser prices by about 1 cent a litre next financial year, adding about $16 to the average annual fuel bill. If inflation rises in line with the official target for the next five years, motoring groups estimate that fuel excise will rise from its current rate of 38.143 cents a litre to 43.684 cents a litre, increasing the average annual fuel bill by about $81.

Expenditure surveys show filling up the car with fuel is the single biggest weekly purchase made by Australian households. Residents of outer suburbs will be hit harder than most because they tend to use much more. Then Prime Minister John Howard dumped fuel excise indexation in a bid to revive his political fortunes prior to the 2001 election.

Tighter eligibility requirements for the $19 billion a year family tax benefits system will hit millions of household budgets and exclude many upper-middle income families from the system altogether.

“Families who can support themselves will receive less assistance from the government,” the budget papers say.

The rates for family support payments will be unchanged until mid-2016 and the thresholds that determine the level of Family Tax Benefit Part A will be frozen until mid-2017. That means many families will receive lower payments as their incomes rise. Families with a single earner with an income over $100,000 will no longer be eligible for Family Tax Benefit Part B and it will no longer apply when the family’s youngest child turns six.

The effect on families from these changes depends on a household’s income and number of children but a Deloitte Access Economics budget specialist, Chris Richardson, said the reforms target middle Australia.

“Most of the heavy lifting is in the middle income range – that is families on about $100,000 to $150,000 a year,” he said.

“They have tried to protect the bottom end.”

The government has made a point of targeting high income earners with a “Temporary Budget Repair Levy”. That will lift the top marginal tax rate by 2 percentage points for the next three financial years. Those with annual earnings of $190,000 will pay an extra $200 a year, those on $250,000 will pay an extra $1400 and those earning $500,000 a year will pay an extra $6400.

Families will also have to find more money to fund their own health care. A new $7 co-payment for GP visits from July next year will cost a typical family of four $140 a year if each member visits the doctor five times.

Patients will also pay an extra $5 towards the cost of each prescription under the Pharmaceuticals Benefits Scheme from January 1 (or 80 cents if they are on a concession card).

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