Budget 2014

|announcements news

In its first budget since coming to power, the Abbott Government has made a number of announcements which are likely to impact on the working lives of Australians.  Whilst none of these bring any great surprise, the announcement with perhaps the most immediate impact on employers is in relation to the legislated increases in superannuation.

Freeze on super increases

As the government’s  original proposed freeze on superannuation increases is being held up in the Senate, the government has sought to provide more certainty to employers by announcing that the legislated increase in super from 1 July 2014 will go ahead, as will the eventual increase in the super rate to 12%.  However, the timeframe for doing so will be extended.

This means that from 1 July 2014, employer compulsory superannuation contributions will increase to 9.5% but will remain there until 1 July 2018 when it will rise by 0.5% each year until it reaches 12% in 2022/23.  These changes are set out below:

Date Superannuation rate
1 July 2014 9.5%
1 July 2018 10%
1 July 2019 10.5%
1 July 2020 11%
1 July 2021 11.5%
1 July 2022 12%

Other budget outcomes

Other measures to be increased which impact on employment issues are:

  • Retirement age – following on from the previous government’s increase in the retirement age to 67 from 1 July 2013, the government will further raise the retirement age to 70 from 1 July 2035;
  • Temporary Budget Repair Levy – there will be a 2% levy imposed on those who earn above $180,000.  The levy will remain for a period of 3 years;
  • Work for the Dole – the government is intending to reintroduce a Work for the Dole scheme for those in receipt of unemployment benefits;
  • Employer Wage Subsidy – this is payable to employers of those who, after 6 months of participating in the Work for the Dole scheme, have been unable to find work.  The wage subsidy may be available for up to 6 months;
  • Restart – this is an incentive to be paid to employers who employ workers who are aged 50 or over.  The subsidy of up to $10,000 (payable for the employment of older employees on a full time basis) is payable on a six monthly basis over a 24 month period;
  • Paid Parental Leave – the new scheme provides for payment to new mothers at their full pay for a total of 26 weeks.  This will apply to those earning up to $100,000 per annum including superannuation.  Payments are capped at a total of $50,000.  The scheme is to be paid for by imposing a levy on large companies;
  • Reduction in public service sector – the government will reduce the number of jobs in the Australian Public Service by 16,500 over the next 4 years.

In addition, there were announcements which may have an indirect impact on employment related issues.  For example, the Infrastructure Growth Package is being touted as a mechanism for stimulating the construction industry, with the presumed flow on effect for jobs in that industry.  Similarly, the government has confirmed its commitment to reducing the company tax rate by 1.5% from 1 July 2015.  Again, it is possible that this may allow some businesses to employ more staff.