Budget thoughts
Key Points
The 50% reduction in the minimum drawdown for super pensions will be extended to 2022/23.
This year’s Low and Middle Income Tax Offset will increase by $420.
Age pensioners and other social security recipients, Commonwealth Seniors Health Card and Pensioner Concession Card Holders will receive a $250 payment in April 2022.
The fuel excise will drop by 22.1 cents a litre for 6 months.
The pre-election budget is typically a cash splash to encourage voters to maintain or turn support to the incumbent Government.
Tuesday’s budget was no exception – but how do you splash cash when you’re billions of debt already?
Primarily by using even more debt and only introducing one off or short-lived measures. The $250 one off payment to pensioners and benefit claimants combined with a higher than expected tax rebate for middle income earners does very little to address the problems that face an economy.
It’s a bribe, a little tap in the back pocket to remind you to vote Liberal in a few weeks time.
When inflation is soaring, you don’t get this under control by printing more money. It’s like putting petrol onto a fire. It will lead to interest rates rising sooner than those of us with mortgages would hope.
I’d expect many of us to get refunds from our tax returns later in the year. Don’t let this fall into cash – mentally allocate it now to your goals via investments or super. It’s the only way you’ll protect it from inflation in the long run.
The cut in fuel duty is only for 6 months (until the other side of the election – funny that.) There were no steps again to address the cause of our dependence on petrol such as the incentives in many progressive nations to reduce the cost of electric vehicles.
On the plus side for those of you in retirement, the reduction in the minimum withdrawal from your pension pots has been extended for another year. I’d like this rule to be abolished completely – but that won’t happen as no government wants you sitting on large untapped pots of tax-free assets.
So all in all, a very lightweight budget potentially saving some bigger punches to be promised in election campaigning.
If you have any questions on the above or how it affects you, just let me know