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What does the 2014 budget mean for you?

Tough but fair. Pain with a purpose. Shared burden.

This year’s budget has been a hard sell.

What you’ve been hearing for the last month is most likely: political spin, political spin, tax hikes, political spin, political spin, welfare cuts, political spin, political spin.

But all you really want to know is: what does this mean for me?

We cut through the pollie speak and give you no-nonsense, and a more personal look, at how the budget could affect students, workers and jobseekers alike. 

2014 budget changes for students

Meet Jill. She’s currently in year 9 at a state school. Ever since the budget was announced, her school’s been pretty worried.

Under the new budget, there are plans to dump the Gonski reforms in 2017-2018, which is when two thirds of funding was meant to be released.

Education peak bodies aren’t too happy about this and are particularly confused, considering the government is injecting $245m into reviving the national school chaplaincy program.

While Jill is too young to worry about these things at the moment; her parents are concerned over the budget’s proposed university reforms.

Why? Because if the legislation is passed, by the time Jill is ready for uni, it may cost her a whole lot more to get a degree.

The major game changer is the deregulation of uni fees. As of 1 January 2016, unis will have free reign and can charge whatever they want for courses.

Experts are saying this will most likely drive uni fees up, but the government says it’s too soon to speculate. Fees could go up, but they could also go down.

The thinking behind this move is to create a more competitive market and to boost the quality of Australia’s universities. So while Jill faces potentially pricier fees, she should be getting a more superior education in return.

A combination of budget proposals will also see Jill pay more of her uni fees.

The government is looking to lower funding to Commonwealth Supported Places by 20 per cent. This means that Jill will have to pay 61 per cent of the costs of her degree, not the previous 41 per cent.

Jill also faces higher HELP debt (previously known as HECS), and she’s going to have to pay her loan back sooner.

The budget is proposing changes to the indexing of HELP loans to an interest rate system, where Jill could potentially pay up to 6 per cent interest on her student loans, and she’ll have to start paying this back when her income hits $50,638 rather than the original threshold of $53,345.

In a bid to create greater access to unis, the budget is also forcing unis to redirect 20 per cent of revenue made from fees towards scholarships for disadvantaged students.

Jill’s from a lower socio-economic family, so if she keeps up her grades, she could be eligible for this. 

2014 budget changes for job-seekers

This is Brad and he’s been looking for a job.

Like many young people he’s been pretty unlucky in the job market, so to get him by he’s been receiving Newstart from Centrelink.

But this is about to change. The government’s lifting the age of eligibility for Newstart from 22 to 25, meaning if Brad is no longer eligible for Newstart. Instead his payments will be downgraded to Youth Allowance (which is $96 less per fortnight).

It’s ok though; Brad’s looking to take up an apprenticeship as a chippy.

Under the new budget proposal, Brad won’t be able to receive the $5,500 Tools For Your Trade payment though.

The government is looking to cut this initiative as of 1 July 2014, and replace it with the Trade Support Loans scheme instead.

Under the new scheme, Brad can borrow up to $20,000 to help cover everyday costs while he completes his apprenticeship.

To be eligible he needs to complete a trade that’s on the National Skills Needs List, and complete either a certificate III or certificate IV that will go towards his trade.

The loan will be subject to indexing, and of course, Brad will have to repay it once he finishes his apprenticeship and is earning an income of $53,345 or more.

There’s definitely a huge incentive for him to finish as well. With the budget outlining a 20 per cent discount off his loan – which is a saving of potentially $4k if Brad borrows the full amount.

Once he’s a fully-fledged chippy, Brad’s employment prospects look quite good with the government outlining $11.6 billion in funding for new infrastructure projects. 

2014 budget changes for parents

This is Janine. She’s a broadcast journalist currently working at the ABC. And she’s expecting!

As a mum-to-be on a salary of $80k (below the income threshold of $100k), Janine’s eligible for Abbott’s signature Paid Parental Leave scheme.

If it gets passed, the scheme will have most mums smiling and means Janine will be able to receive up to $50,000 for six months of maternity leave after her new bub arrives.

On the downside, Janine’s not sure how the cuts to public broadcasting are going to affect her job. The ABC director has warned staff of ‘uncertain times’ ahead, so Janine and her colleagues are definitely worried.

The ABC and SBS are set to lose one per cent of annual funding over the next four years (which roughly equates to $120 million).

So there is a chance Janine will be let go.

If this happens and Janine becomes unemployed, as an under 30 year old she might have to wait a maximum of six months till she can receive Newstart.
In a bid to encourage Australians to work rather than live off the dole, the budget includes some drastic changes to welfare payments.

Janine’s past employment will reduce her waiting period. However, after this term, Janine will only be able to receive Newstart for six months at a time. This six-month cycle of benefits and waiting periods will continue until Janine gets a job or turns 30. 

2014 budget changes for public servants

Meet George. He’s a high-earning public servant.

With an income well above $180k, George will have to pay the two per cent Debt Levy – which will come into effect next financial year and last three years.

While the tax irks George a fair bit, he’s more worried about his job right now.

The budget measures include approximately 16,500 cuts to public servant jobs, so George isn’t sleeping very well.

It won’t be all doom and gloom though. If George has to re-enter the job market, there’s a lot of incentives for businesses to hire him and other mature aged workers (50+).

Under the government’s new Restart program, employers will be paid up to $10k for hiring mature-aged workers. 

Without doubt, this year’s federal budget has been a highly divisive and hotly debated topic. While the opposition and uproar has been vocal, the budget has drawn some international support.

The head of the OECD, Angel Gurria, recently praised the government for its attempts to address the budget deficit, labelling the budget as a ‘sustainable, durable solution’ to stabilising government finances.

Remember though, the budget is subject to legislation being passed through parliament, and the Opposition has vowed to block these measures.

So we’ve all just got to wait and see what the pollies do now.

Got friends, family or co-workers who are just as confused as you were about the budget? Share this article with them. 

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