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Budget Update hits childcare, health and welfare

The government will claw back billions by clamping down on some welfare payments and cutting healthcare rebates.

The Federal government is banking on saving billions of dollars through a combination of cutbacks that will impact some welfare recipients and certain healthcare rebates.

In announcing a further blowout in the budget deficit on Tuesday to a whopping $37.4 billion, and pointing to further fiscal pain ahead, Federal Treasurer Scott Morrison outlined a series of spending cuts that will recoup more than $2 billion over the next three to four years.

So what do the latest cutbacks, and the broader economic outlook, mean for your hip pocket?


Healthcare costs are set to rise for those needing blood tests or other diagnostic services, including x-rays and MRIs. The government aims to remove bulk billing for pathology services, and also reduce bulk billing for diagnostic imaging services.

This will cut spending in these areas by $197 million in 2016-17, and by $639 million over the four years to 2018-19. Concession card holders and children under the age of 16 will be exempted from the changes.


If you receive Centrelink payments and also work, the Government has its eyes on you.

It will be seeking to recover money from more workers whenever discrepancies are identified between their employment income declared to Centrelink and the Pay As You Go information provided by their employers to the Australian Tax Office.

Likewise, the government will have its microscope on those receiving welfare and not declaring PAYG income to the ATO.


If you receive childcare payments assistance, there will be a series of changes. Those families who earn more than $250,000 per year will have their payments assistance reduced.

The government will also cap the number of places in the Interim Home Based Carer Subsidy program after receiving less interest than anticipated. The program currently subsidises the cost of childcare for over 10,000 children delivered in the family home by approximately 4000 nannies.

The government will remove the ‘access to affordability support’ element provided under the Community Childcare Fund. This will cut spending by $15 million in 2015-16, and $441 million over the next four years.

Beyond the spending cuts actually announced however, the bigger picture outlook on the state of the Australian economy means most of us should expect some tougher times ahead.

With the budget set to remain in deficit until at least 2020-21, largely thanks to falling commodity prices, it’s very likely more spending cuts are on the horizon.

The mid-year economic and fiscal outlook (MYEFO) has forecast a sharp fall in dwelling investment growth over the next year, from 8.5 per cent down to 2 per cent. At the sametime, business investment is tipped to fall by 4 per cent, reflecting heavy cutbacks in mining investment. Non-mining investment isinvestment is forecast to rise by 4.5 per cent.

Don’t expect buoyant economic conditions by any stretch. The economic growth rate has been cut by 0.25 of a percentage point to 2.5 per cent in 2015-16, and by 0.5 of a percentage point to 2.75 per cent in 2016-17.

And while the unemployment rate has been forecast to fall to 6 per cent this financial year, the government expects it to rise again in immediate future.

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