The Government has stated this Budget is necessary to protect future living standards and prepare Australia for an ageing population. This budget is set to reduce deficit from $49.9b this financial year to $29.8b next financial year and to $2.8b in 2017-18.

Key points from the budget:

• 2 per cent Deficit Tax will apply to individuals in the top marginal tax rate with annual incomes of $180,000 or more, to raise $3.1 billion over three years
• Increase to the Superannuation Guarantee (SG) beyond 9.5% has been delayed until 2018
• Pension age will increase  to 70 by 2035
• $11.6b to be spent on road, rail and port infrastructure
• $7 co-payment to visit a General Practitioner or out-of-hospital pathology and diagnostic imaging services from 1 July 2015, with $5 directed to a new Medical Research Future Fund
• Fuel excise to be indexed from August 2014 to raise $2.2 billion over four years

Of particular note to the superannuation industry is the abolition of the excess contributions tax. From 1 July 2013 if a superannuation member exceeds their non-concessional contribution limit they will have the option to withdraw the excess amount, plus earnings, without incurring penalty tax. We view this as a step in the right direction as the penalty was quite harsh.

While there is no doubt this budget is tough, it goes a long way to getting the economy back to surplus over the coming years.