Family payments frozen until 2021
UNIVERSITY funding will be frozen at 2017 levels from next year as the federal government continues its push to bring the budget back to surplus.
The funding freeze to the Commonwealth Grant Scheme funding for universities will be implemented from January 1, 2018.
"Australia has some of the world's leading higher education institutions but the cost and quality of the system must be sustainable for future generations," Finance Minister Mathias Cormann said.
The Minister said higher education funding would remain at a record high of at least $17 billion annually.
And, after the freeze, direct funding to universities for teaching, learning and research would grow by 8 per cent in 2020.
He said taxpayer-backed student loans would also increase if universities maintained their current enrolment patterns.
Under the higher education reforms, students will also be required to repay HELP loans when they begin earning $45,000.
The freeze would mean the government would save $544 million less than over the forward estimates than it would have gained for budget repair under the university funding cuts proposed in the May budget.
Minister Cormann said $37 billion in savings measures had been passed since the May budget.
Reductions in spending were primarily responsible for the 9.3 per cent improvement in the budget bottom line, he said.
Families will be hit by other savings measures intended to bring the budget back into the black.
A freeze already on family payments will be extended until June 30, 2021.
That's expected to net savings of $184 million over four years.
The government will also gain $1 billion over four years from a crackdown on dodgy daycare providers attempting to gain more payments by rorting the system.
It will also save $1.2 billion by extending the waiting period for migrants to receive welfare to three years.
Meanwhile, Treasurer Morrison said the economy was in strong shape heading into the new year.
"Our growth story remains a compelling one, with the trajectory still upward," he told reporters in Canberra today.
Economic growth was forecast to improve to from 2 to 3 per cent in 2018-19 with the drag from the downturn in the mining and investment boom having "almost now washed out of the system", he said.
The freeze is expected to provide enough savings to offset $2.5 billion in cuts to universities which the government was unable to get through the senate earlier this year.
Treasurer Scott Morrison announced Australia's federal budget was still on track to return to surplus by 2020-21 in his midyear budget update today.
The forecast surplus will be about $3 billion higher than initially forecast in May but remains narrow at $10.2 billion.
Deloitte Access Economics' Chris Richardson said the budget update was "undeniably happy news for Australians".
He told Sky News universities would not be impacted too significantly by the funding freeze. "Two billion dollars is obviously a lot of money but you're talking about higher education, which is a really big bucket," Mr Richardson said.
"And compared to earlier efforts by governments to wind back higher education, this is probably not that big."
The forecast deficit by 2020-21 has shrunk to $23 billion, down from $29 billion expected in May.
Global economic growth - and particularly strong growth in China - has had a positive impact on the Australian economic outlook, documents outlining the Mid Year Economic and Financial Outlook show. Global growth is expected to jump 3.5 per cent next year and 3.75 per cent in 2019.
Wage growth is expected to be lower than forecast in May, which will mean $8 billion less than expected from individuals taxes over four years.
Despite this, the news for job seekers in the budget update was good.
An extra 380,000 jobs were created over the year and the unemployment rate fell to 5.4 per cent, the lowest rate in four years.
But companies are expected to pay more tax, netting the government $7.4 billion more than expected in revenue.
Australia's major banks will start paying the new bank tax from next year, with the first payments coming in from March.
The government is also expecting the budget bottom line to benefit from lower than expected spending on student, disability and aged care payments.
Fewer people than expected signed up for the disability and student payments, saving the government $1.5 billion and $1.2 billion respectively, while the number of Australians seeking the aged care pension has also grown slower than forecast, saving $755 million over four years.