It is fair to say that the headline from the Treasurer’s speech last night was the announcement of tax cuts to come into effect next year.
These “top-up” tax cuts take the current lowest tax bracket from 16 per cent, which applies to taxable income between $18,201 and $45,000, and reduces it to 15 per cent on 1 July 2026 and then from 1 July 2027, this tax rate will be further reduced to 14 per cent.
The tax cuts are estimated to save taxpayers as much as $268 in the first year, and another $268 in the second.
While small, they do attempt to help address bracket creep, which occurs when people are pushed into a higher tax bracket because their salary increases. This will be especially welcomed by the nearly 30 per cent of South Australians, compared with 25 per cent Australia-wide, who are in these lower tax brackets.
Further tax relief for brewers, distillers and wineries is also included in the budget.
Currently brewers and distillers get a full refund of any excise paid up to $350,000 each year. This will increase to $400,000.
The Government will also increase the Wine Equalisation Tax (WET) producer rebate from $350,000 to $400,000.
This is good news to the roughly 700 wineries in South Australia, the 80 breweries and the state’s rapidly growing distillery sector.
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South Australia will also be particularly helped by guaranteed funding for public schools.
Data from the Australian Curriculum, Assessment and Reporting Authority (Acara) shows that 98 per cent of public schools are underfunded, with South Australian public schools experiencing a shortfall of almost $340 million in 2024.
Thus, the deal for the Commonwealth to lift its contribution to 25 per cent of the Schooling Resource Standard (SRS) over the next decade will go a long way to closing this shortfall.
As was foreshadowed leading up to the budget, healthcare is a major focus of this government.
The increased spending on Medicare is expected to increase the number of GP practices fully bulk billing to around 185 across Adelaide, from the current level of 31 practices.
Additionally, there will be 50 new urgent care clinics across Australia. South Australia will get three: East Adelaide, Victor Harbor and Whyalla.
The government also announced significant changes in the Help to Buy housing programme.
The income cap for eligible singles has increased from $90,000 to $100,000 and for joint or single parent purchasers it has been raised from $120,000 to $160,000.
The property price cap has been raised as well to $900,000 for homes in Adelaide and $500,000 for homes in regional South Australia. These values now match median home prices in both areas.
But it remains to be seen how long that lasts.
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In a recent survey, CoreLogic reports that 67 per cent of real estate agents in South Australia expect housing prices to increase in 2025.
Indeed, since COVID, Adelaide has experienced the second highest increase in housing prices, at 75 per cent, and the highest in unit price increases, at 65 per cent. Regional SA prices have also outpaced the national average, increasing 73% since COVID.
To help alleviate supply constraints, the budget increased financial incentives for apprentices in the construction sector.
From 1 July 2025, eligible apprentices in housing construction occupations will receive up to $10,000 in financial incentives over the course of their apprenticeships.
Employers will also see some support with the Priority Hiring Incentive to be extended until the end of 2025. Under the programme, employers will be eligible for $5000 for every apprentice hired in priority occupation which includes many occupations relevant to housing construction.
Regional South Australia, which have seen nearly 70 regional bank closures since 2012, will benefit from a commitment from Australia’s four largest banks to a moratorium on branch closures for two and half years.
NAB, CBA, ANZ and Westpac have all agreed to forego any further regional branch closures before August 2027. The government estimates this will impact nearly 1800 regional and remote communities Australia-wide.
Other off-budget items that have a significant impact in South Australia include the forgiveness of HECS and HELP debt.
The government will cut student debts by 20 per cent with effect before the 1 June 2025 indexation.
This will help the roughly 11 per cent of South Australians who have HECS/HELP debt cutting approximately $5.2billion from what is owed. According to the government, the average savings nationally will be $5165 per person.
Finally, the state and federal governments have pledged $2.4 billion to help save South Australia’s Whyalla steelworks.
This includes $1.9 billion to invest in future works including a commitment to produce green steel through the government’s Iron Steel Fund. The steelworks employs 1100 workers and supports more than 2000 indirectly across South Australia.
Susan Stone is the Credit Union SA Chair of Economics at the University of South Australia.
