Australian Federal Budget 2017 – Key Themes

The Commonwealth has sought to shore up its revenue base by increasing the Medicare Levy, introducing a new levy on the aggregate liabilities of the major banks while firms that employ foreign skilled labour will also have to pay a levy for the visas issued while large multinational corporations will be faced with a tightening of Multinational Anti-Avoidance Law, sometime know as a "Google Tax". Spending focus is on small business tax relief, infrastructure investment and securing health and education programmes.


Some key savings are the Higher Education Reform of $3.8bn over four years involving a 2.5% efficiency dividend on universities and higher student contributions, the removal of family tax benefits indexation for two years saving $2.0bn over the next four years, and cheaper medicine prices under the Pharmaceutical Benefits Scheme which save $1.3bn over four years.

Revenue raising measures

Additional funding of the Australia Tax Office to raise an additional $1bn from the "cash economy". The tightening of Multinational Anti-Avoidance Law to raise $4bn and a 6bps levy on banks for liabilities above $100bn is set to raise $6.2bn. With a new skilled visa programme to replace 457 Visas, firms that use the new visas will contribute to the new Skilling Australians Fund worth $1.5b over four years for State and Territory government training programmes. Medicare levy to be raised by 0.5ppt in two years' time.

Skilled migration and training programme

The 457 Visa to be replaced by a new skilled visa programme – firms that use the new temporary visas will face a levy of $1,200 for turnover of less than $10mn or $1,800 per worker a year if over $10mn, and one-off permanent skilled visa levy of $3,000 or $5,000. This will contribute to the new Skilling Australians Fund worth $1.5bn over four years for State and Territory government training programmes supporting apprenticeships and traineeships for in demand occupations.

Tax cuts

$20k instant write off for small businesses (turnover less than $10m) extended to June 2018. As previously announced, businesses with a turnover of up to $50mn will see their tax rate fall to 27.5% from 28.5% for the 2016–17 income year.


An $8.4bn via equity investment into the Melbourne-Brisbane inland rail link via the Australian Rail Track Corporation. A second Sydney airport at Badgerys Creek, $5.3bn over 10 years. $844m to upgrade Bruce Highway in Qld. $1bn for Victorian projects including $500m regional rail fund, $30mn for Tullamarine link business case. $1.6bn for infrastructure in WA of which $1.2bn is for the METRONET project. A $472mn Regional Growth Fund for regional infrastructure projects. $600mn for the National Rail Program.


Medicare rebate to be lifted via the reintroduction of indexation for certain items plus the new amended listings under the Pharmaceutical Benefits Scheme adds $2.2bn to spending over four years. Medicare levy to be raised by 0.5ppt in 2019/20 to ensure the funding of the Commonwealth's contribution to the NDIS. $1.4bn over four years for medical research and $115mn for mental health. A focus on generic pharmaceuticals for taxpayer-subsidised medicines to save $1.3bn over four years.


Extra $1.8b over four years for schools with the reintroduction of Gonski-style needs-based funding formula. HECS debt threshold lowered to $42k while university students face 7.5% tuition hike with universities hit with 2.5%, or $2.9bn, efficiency dividend.


First home buyers' can salary sacrifice into their superannuation over and above the compulsory superannuation contribution for a home deposit. Contributions will be limited to $30k per person in total and $15k per year. $1bn National Housing Infrastructure Facility to be established, based on a UK model, to assist development. Increase capital gains discount by 60% for investments in affordable housing. The release of Commonwealth land for development. $375mn for a permanent extension of homelessness funding to the States. A "Ghost Tax" of at least $5,000 on future foreign investors who fail to either occupy or lease their property for at least six months each year. Introduction of regulation to prevent developers from selling more than 50% of new developments to foreign investors.


Introduction of a demerit point system with payments deducted if job interviews skipped. Drug-testing trial will have 5000 welfare recipients put on voucher system if they test positive. An additional $375mn to extend homelessness service funding to the states.


Commonwealth in talks to buy back shares of Snowy Hydro from Victorian and NSW governments on the expectation those funds will be recycled into new infrastructure investments. $90mn to secure access to Australian gas for domestic use and $37mn for new energy infrastructure and gas pipeline in South Australia.


Gambling ads banned during live sports broadcasts before 8.30pm, and for five minutes before and after start of play. $130 million annual licence fee for broadcasters to be scrapped in favour of a $40mn spectrum fee. Repealing the 75% reach and cross-media ownership restriction laws.


Downsizers over the age of 65 can make non-concessional contributions of up to $300k into their superannuation fund from the proceeds of the sale of their principal home.


Australian Federal Police get $321mn to recruit anti-terrorism/trafficking specialists, $350mn for mental health services for veterans.

Written by Westpac Economics

Past performance is not a reliable indicator of future performance. The forecasts given above are predictive in character. Whilst every effort has been taken to ensure that the assumptions on which the forecasts are based are reasonable, the forecasts may be affected by incorrect assumptions or by known or unknown risks and uncertainties. The results ultimately achieved may differ substantially from these forecasts.

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Budget 2017 – Overall budget impact

Budget 2017 – Commercial Business impact

Budget 2017 – Small Business impact

Budget 2017 – Rural impact

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