How the Abbott Government’s 2014 Budget will affect the employment landscape.

Last night the Abbott Government delivered its first Budget. It is a tough Budget that many political commentators are describing as unfair on certain parts of the community, while at the same time being ultimately necessary to rein in deficit spending and protect the Australian economy in the long-term.

The Budget will have major implications for employers and employees, especially those in the public service.

Some of the major employment issues arising from the Budget include:

  • A “budget repair levy” of 2% will be imposed for the next three years on individuals earning $180,000 per annum or more.
  • The superannuation guarantee rate will increase to 9.5% on 1 July 2014 but will then remain there until 30 June 2018. 
  • The Fair Entitlements Guarantee, which covers unpaid employee entitlements where an employer is insolvent or bankrupt, will be reduced. Employees will now only be entitled to claim up to 16 weeks’ redundancy pay under the Guarantee, as opposed to the current maximum of four weeks for each full year of service. Indexing of the maximum weekly wage payable under the guarantee will also be frozen, with the maximum weekly wage remaining at $2,451 until 30 June 2018.
  • A payment of up to $10,000 will be available to employers who hire a job seeker aged 50 years or more, including a job seeker on the disability support pension. The payments will begin after the worker has been employed for at least six months and will be paid in instalments.
  • 2,000 further jobs will be cut from the Australian Public Service. This is in addition to the 14,500 positions already being cut as a result of the Labor Government’s 2012-2013 Budget.
  • Salaries for members of parliament, senators and senior public servants will be frozen for the next 12 months.

The Budget does not reveal any new details about the Government’s paid parental leave scheme. However, the Government has recently indicated changes to the proposed scheme. The scheme is now expected to give eligible parents of children born or adopted on or after 1 July 2015 access to 26 weeks’ parental leave pay, up to a capped amount of $50,000. It is also expected that superannuation contributions will also be provided, and that the scheme will be funded by a levy against Australia’s largest companies.

The Government has not adopted in its Budget a number of recommendations made by the Commission of Audit, including that the Fair Work Ombudsman be merged with the Commonwealth Ombudsman. It remains to be seen whether these measures will be adopted at a later date.