Brendan Rynne, Chief Economist
The Budget housing affordability moves are fairly modest and unlikely to have a major impact. The measures aimed at boosting supply by encouraging the development of new dwellings and better use of existing stock might help the overheated Sydney and Melbourne markets a little.
The First Home Super Saver Scheme will also help new buyers to compete against investors, but overall the Budget is just a first step. More policy initiatives will be needed to tackle this complex problem, with greater co-ordination between all tiers of government and the private sector.
The Underlying Cash Balance (UCB) presented in the Budget is slightly worse, by $1.8bn in aggregate for 2016-18, than was forecast in the government’s last MYEFO statement. But from 2018/19 the UCB is forecast to improve dramatically, with a surplus of $7.4bn by 2020/21.
I consider this forecast path to budget repair to be at the optimistic end of the spectrum of possible outcomes. The underlying economic forecasts contained in the budget do not indicate boom times ahead, and there is current excess capacity within the Australian economy which will take some time to be taken up.
Health, aged care and welfare
Liz Forsyth, National Sector Leader, Health Ageing and Human Services
The government has clearly set out its position with regard to Medicare and the Pharmaceutical Benefits Scheme by establishing the Medicare Guarantee Fund and restoring MBS indexation over time. Although the staging of the increase will not satisfy all stakeholders, it is a clear means of neutralising the perception that Medicare is under threat.
Underpinning the health budget was the government’s establishment of new “health compacts” with five key stakeholders which outline shared principles relating to transparency in decision-making, accountability for reforms and stability and certainty in regard to government investment. These compacts set the foundation for long-term engagement and cooperation with stakeholders – including the AMA and the Pharmacy Guild – to increase the pace of reform across Australia’s health system.
The Aged Care sector continues to be impacted by reform and market pressures. It is vital that appropriate governance, including quality controls, and funding support the needs of older Australians. Unfortunately there was no significant investment in this year’s Budget to support the Aged Care sector.
While there are a range of savings measures in the welfare budget and an attempt at payment simplification, it is unfortunate the government has not taken the opportunity to commence a necessary and more fundamental reform of welfare payment arrangements. It is recognised, however, that the new National Housing and Homelessness agreement and the full future funding of the NDIS provide welcome certainty to those Australians requiring support.
Prof. Stephen Parker AO, National Education Sector Leader
Politically, I believe it is likely the Senate will agree to the Budget measures, after some arm-wrestling. The groundwork has probably already been done, the flashpoints of the 2014 proposals have been removed, and the feeling that “it could have been worse” will make the proposals more palatable.
From the point of view of fairness, Australian students are already amongst the highest proportionate contributors to their degree costs in the OECD, possibly sixth highest. However on average they will still only pay 46 percent by 2021, compared with 42 percent at present, and it is hard to argue with precision for any specific split between the public good and private gain components of a degree.
From an equity point of view, increased tuition fees mean longer repayment periods, but there is little evidence that this yet deters students from aspiring to university.
It is true that graduate unemployment is currently above the long-term trend, and the lifetime earnings premium on a degree has probably come down, but it is still a good investment for those inclined to a profession rather than a trade.
A “HECS debt” seems still to be good debt for the graduate and good debt for the country.
Badgerys Creek airport
David Pring, Managing Partner, Greater Western Sydney
The Budget go-ahead for the Badgerys Creek airport is excellent news. This substantial investment is a vote of confidence in Western Sydney and its population – which in years to come will become as large as Melbourne is now.
To make it a success will require further infrastructure spend. This provides a real opportunity for NSW to get its train transport right and consideration must be given to fast train links with Parramatta, CBD and Sydney airport.
This is a once in a lifetime opportunity to create a hub of high-end knowledge jobs in Western Sydney. From logistics perspective, it will create a new business precinct around the airport. There is an opportunity to create an aerotropolis of associated businesses needed by the airport and to create links with science and technology park.
This project will means jobs for Western Sydney in the construction phase for the next decade. It will cause increase in asset values in Western Sydney which can assist existing landholders and existing businesses.