I am very happy to rise to speak on this and explain why the budget this year is such a fair budget. I do not accept the premise that last year's budget was unfair. This is a very good budget for Australia. It is a very good budget for those who want to have a go. I think that that is to be applauded.
The Treasurer, the finance minister and all those who worked on this budget need to be congratulated. This budget is the next step in the coalition's responsible, long-term economic plan to build a strong, safe and prosperous future for all Australians. We all know there are economic challenges. China's economy has slowed, and the iron ore price has almost halved since the last budget, but it is important to stabilise the nation's finances and reduce debt.
This is key to building a stronger economy and a better future for all Australians. Our country has seen real progress. Our economic plan is working. Growth is up and jobs are up. Labor's projected debt and deficit have already been cut in half, and this year's budget delivers a credible path back to surplus. This government, the coalition government, remains committed to returning the budget to surplus as soon as possible, and this budget shows that our plan is working. The budget will deliver jobs, growth and opportunity in a way that is responsible, measured and fair.
We want to help Australians get ahead and we want to provide them with greater capacity to make their own decisions about their future. That is why this year's budget is good for families and good, especially, for small business. There is a jobs and small business package which I will talk about shortly. It includes a small-business tax cut, which will boost investment and create jobs. And the budget delivers a better childcare system that is simpler, more affordable, more flexible and more accessible. This will provide parents with greater choice when it comes to balancing work and family.
Addressing Labor's debt and deficit will make Australia stronger and allow the government to invest more in the services that Australians need. So we are taking the responsible decisions in the long-term interests of our country. There will always be economic challenges but our plan is realistic, achievable and capable of adapting to changing circumstances.
We should remind those who are listening to this, or reading it, that we inherited a deficit of $48 billion. The deficit for the budget year is now estimated to be $35 billion, and it is forecast to reduce each and every year to below $7 billion over the next four years. That means that, over four years, we will have reduced the $123 billion worth of deficits inherited from Labor by over $40 billion. And we have a credible path—with a credible plan—back to get us surplus.
Because of our efforts, the deficit reduces each and every year on average by around half a percentage point of GDP. This is despite a reduction of over $90 billion in tax receipts having been written off since we came into government. Iron ore prices have halved since the last budget, from US$90 a tonne to US$48 a tonne in this budget. This has contributed to the largest fall in the terms of trade in over 50 years.
As we have promised, the size of government will reduce over the next four years. As someone who passionately believes in a smaller government—it means greater power for individual families—I think that is a good thing. We have kept real payments growth in check at 1.5 per cent average over the five years to 2018-19. While Labor promised real spending growth of two per cent per annum they delivered a 3.6 per cent per annum increase. Gross debt in a decade will be more than $110 billion lower than we inherited from Labor, which was a forecast of $667 billion. Net debt is projected to peak at 18 per cent of GDP in 2016-17, before falling considerably to 7.1 per cent of GDP in 2025-26.
Our action on the budget has allowed us, each year, to lower taxes. In 2014, we removed the carbon and mining taxes, a key election promise. In 2015, we are reducing taxes for 96 per cent of all Australian businesses. I will repeat that: we are reducing taxes for 96 per cent of all Australian businesses. Taken together, all of our decisions since government have reduced the overall burden of tax by $5.4 billion.
This government's economic stewardship, under the leadership of Tony Abbott, has seen nearly a quarter of a million new jobs created since we came to office. In the lead-up to the budget, Labor was standing in the way of fixing the budget by blocking $30 billion in savings, including $5 billion of savings that they had promised. There is more to do—we know that—but we have made considerable progress and laid a strong foundation for the future.
I want to focus, with your permission, on small businesses. Like many on this side of the chamber, I come from a small business background. My parents were farmers, and I was a sole trader for a period of time. I was always quite frustrated when filling out the BAS forms that a small business has to fill out. It shows that on our side of politics we understand the stresses and tribulations that small businesses go through. They are often just mum-and-dad operations.
Small businesses form the engine room of our economy, and as the economy changes, the role of our small businesses will be even more important. With the economy in transition we are freeing up small businesses to create new jobs for Australians and for their children. That is why the $5.5 billion Growing Jobs and Small Business package will deliver a major incentive for businesses to invest, hire and grow. In addition, the package includes $375 million aimed particularly at improving opportunities for Australians to get a job and reach out to disengaged youth.
From 1 July 2015—a mere few weeks away—all small businesses, whether they are incorporated or not, will receive a tax cut. From 1 July 2015, the government will cut the company tax rate for incorporated businesses with annual turnovers of up to $2 million by 1½ percentage points to 28½ per cent.
From 1 July 2015 the government will also provide a five per cent tax discount to unincorporated businesses with an annual turnover of up to $2 million. It was great news for small businesses when, at 7:30 pm last night, the Treasurer said the words, 'Up until 30 June 2017 small businesses will also be able to immediately deduct every asset they acquire, which is valued up to $20,000, for tax purposes'. Currently the threshold sits at $1,000. This is fantastic news for businesses in terms of how they deal with their tax liabilities, but it is more fantastic for those small businesses that are going to purchase goods. So, there is going to be a little miniboom over the coming weeks and months up until, certainly, the end of this tax year as people take advantage of this fantastic deduction.
This budget will also help everyday Australians access new jobs, particularly young job seekers and the long-term unemployed. New measures will focus on making job seekers more employable, on reducing the costs of taking on new staff and on bringing job seekers and job providers together. These initiatives include a $1.2 billion national wage subsidy pool to target long-term unemployment. Employers will receive this subsidy from the time an employee starts in a job, when hiring and training costs are greatest, rather than waiting six months or more. This will ensure wage subsidies are more effective. This initiative also includes reforms to restart or to make it easier for small businesses to receive government support sooner when they employ older workers. A private sector work-for-the-dole program of $18 million over four years, for around 6,000 job seekers annually, to undertake valuable work experience is another program that was announced in the budget. This will allow, particularly, young job seekers the chance to develop practical skills, gain workplace experience and better connect with real jobs.
It is not just small businesses. There is a strong package on families. The $4.4 billion jobs for families package will deliver a childcare system that is simpler, more affordable, more flexible and more accessible. Our objective is to help parents who want to work and parents who want to work more. This package will provide parents with greater choice when it comes to balancing work and family. Families with incomes of between $65,000 and $170,000, who use child care from 2017, will be around $30 a week better off. Those on higher incomes will, on average, continue to receive the same level of support when faced with costs when wanting to return to the workforce. Having two parents in paid employment has become a necessity for most families because of the changes taking place in society and in the economy over many years. All mothers work hard, and many are also in paid employment.
This budget is not a budget that is unfair. This budget is a budget that is very fair for all Australians.