The Federal Budget was announced last week and has, once again, divided the opinions of Australian consumers.
The use of data to benefit consumers seemed high on the Treasurer’s agenda, with a number of well-received initiatives to support control and privacy. But his measures to boost consumers’ personal finances were labelled modest and unfair by many.
Here we take a closer look at reasons to both love and loathe #Budget2018.
Why we love #Budget2018
One of the widest spread perks of Budget 2018 is an initiative to help electricity consumers shop around and get the best possible deal available when purchasing power. Twenty eight million dollars were set aside to collect further energy data, and make it easily accessible to consumer groups. Energy affordability continues to be a major issue for consumers, with household bills often double that of recent years. Similarly, business owners often struggle to balance high expenses, including energy, with incoming revenue. So, this is a move that will likely be welcomed by many.
Another example of data being used to benefit the consumer is a $20 million initiative that will give consumers the right to use their own corporate-held data to help them find a better bank, product, or service provider. Both this initiative and the energy affordability initiative were designed with the purpose of provoking industry competition and potentially driving a positive and long-term impact on price points. Wholesale electricity prices have fallen recently and this added sense of rivalry may give providers the kick they need to pass those price cuts on to consumers.
Aside from data, consumers’ personal finances were also given a boost with widespread tax relief and a set of reforms to financially support older citizens. These include opportunities for additional superannuation contributions for those aged between 65 and 74, an extension of the Pension Loans Scheme, and a $1.6 billion initiative to provide home aged care. With an ageing Australian population, this is certainly something to applaud.
Why we loathe #Budget2018
On the surface, tax relief is cause for celebration among consumers. But on closer inspection, the approach taken here appeared somewhat tokenistic and unfairly distributed to some – channeling billions of dollars to Australia’s highest earners and offering just ‘scraps’ to those most in need.
Research by thinktank, The Australia Institute, revealed that the top 10% of earners¬ will get 40% of the value of the tax reforms, and the bottom 30% of earners just 7% of the value. The reforms weren’t overly generous to those on a middle bracket income either – the average Australian household will save just $10 per week under the new scheme.
Another negative from the Budget was the Treasurer’s lack of effort to enhance consumer choice and affordability in other industries, besides electricity. Australia’s public health insurance market, for example, is notoriously ‘translucent’ and increasingly unaffordable, as premiums continue to rise above CPI. This was an area that disappointed many and sparked a fair degree of criticism in the media.
Unfortunately, however, the reality is that with scarce resources there will always be groups that benefit more than others.
# # #
Katrina Haskew is Managing Director of Leading Advice
DISCLOSURE: Katrina Haskew & KGH Financial Pty Ltd trading as Leading Advice ABN: 52 146 015 885 is a Corporate Authorised representative of Millennium3 Financial Services Pty Ltd ABN: 61 094 529 987 Australian Financial Services Licensee No. 244252. | 7/50 Borthwick Ave Murarrie QLD 4172 This information (including taxation) is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice and consider a Product Disclosure Statement. The views expressed in this publication are solely those of the author; they are not reflective or indicative of Millenium3 Financial Service’s position, and are not attributed to Millenium3. They cannot be reproduced in any form without the express written consent of the author.