“c04AggregateDemandPoliciesAndDomesticEconomicStability_PrintPDF” — 2022/6/7 — 8:31 — page 326 — #40
TABLE 4.6 Three stages in cutting personal income tax rates passed by the parliament, after modifications to stage 2 in 2020 Stage 1: Covering 2018–19, 2019–20
Taxable income $0–$18 200
Tax rate
19% for amounts over $18 200
$18 201– $45 000
19% for amounts over $18 200
$18 201– $45 000
19% for amounts over $18 200
$37 001– $90 000
$3572 + 32.5% for amounts over $37 000
$45 001– $120 000
$5092 + 32.5% for amounts over $45 000
$45 001– $200 000
$5092 + 30% for amounts over $45 000
$90 001– $180 000
$20 797 + 37% for amounts over $90 000
$120 001– $180 000
$29 467 + 37% for amounts over $120 000
$180 001 and over
$54 097 + 45% for amounts over $180 000
$180 001 and over
$51 666 + 45% for amounts over $180 000
Note: Key tax changes at each stage are shown in bold.
$200 001 and over
$51 592 + 45% for amounts over $200 000
G
Source: Source: Australian Taxation Office, ‘Individual income tax rates’.
Nil
FS
$18 201– $37 000
Nil
O
Tax rate
Nil
Taxable income $0–$18 200
PR O
Tax rate
Stage 3: Covering 2024–25 onwards
E
Taxable income $0–$18 200
Stage 2: Covering 2020–21 and 2023–24
PA
Recent increased government investment spending on building national infrastructure
U
N
CO RR EC
TE
D
Each of the 2019–20, 2020–21 and 2021–22 budgets announced huge increases in government capital spending to help improve and build national infrastructure projects. As an aggregate demand budgetary policy initiative, increasing government investment spending (G2 ) helps to strengthen AD, and cause more orders and falling levels of unsold stocks of goods. Firms should then be encouraged to lift production, boosting economic growth and the employment of resources, helping to create more job opportunities and lowering unemployment, especially in the long-term. • The 2019–20 budget committed an additional $25 billion to the rolling Ten-Year Infrastructure Plan or pipeline, taking the total government spend to $100 billion. This included an extra $3 billion for the Urban Congestion Fund to help cut urban travel times and to provide for improved parking at railway stations, $2 billion for the Geelong-Melbourne fast train project to halve the journey and $100 million for regional airports. • The 2020–21 budget promised a rise of $14 billion for building national infrastructure, over and above that previously committed to the rolling 10-year plan, thereby bringing the total to $110 billion. The current flow of projects include the Melbourne to Brisbane Inland Rail, the $5 billion Western Sydney International Airport and the $10 billion Bruce Highway Upgrade (Qld). These projects represent a rise in G2 spending to support AD, and help create an extra 40 000 jobs around Australia. There is an additional $3 billion for accelerating the start of shovel ready, small-scale projects creating a further 10 000 jobs. • The 2021–22 budget added an extra $15.2 billion to funds available for the rolling Ten-Year Infrastructure Plan, restoring the total to $110 billion. This hopes to create up to 30 000 new jobs. For example, in Victoria, $2 billion is set aside for the Melbourne Intermodal Terminal, and the Pakenham and Monash Road Upgrades. In NSW, there is $2 billion for the Great Western Highway. In addition, there is also $3.5 billion for the National Water Grid Fund to build water infrastructure and dams designed to help prepare for future droughts and grow export capacity. Figure 4.15 shows some of the Australian government’s major projects already under way in Victoria and new commitments in 2021–22. 326
Key Concepts VCE Economics 2 Units 3 & 4 Eleventh Edition
