Monday, April 11, 2011
A $1 billion hit to personal income tax collections and a widening $4 billion gap in business tax takings are helping push this year’s budget deeper into the red by the week, intensifying the search for savings in the leadup to the May 10 budget.
Updated figures released yesterday by the Finance Minister Penny Wong and pointed to by Treasurer Wayne Swan on Twitter have government income down $4.5 billion on what was expected in the November review, and well down on the $3 billion deficiency reported in Finance figures a mere fortnight ago.
“Losing big slabs of revenue like this makes it even tougher to get back to surplus as planned, but we’re determined to make the difficult decisions to meet that commitment,” Mr Swan said yesterday.
Senator Wong said the budget would be “tough,” with “hard decisions”. The government would meet its commitments to the rural independents.
A new five-year agreement with the pathology industry will save more than $550 million over its life - $400 million in the budget projections period... The industry has agreed to keep annual growth in Medicare pathology payments to strict limits that average 5 per cent per year. Although no slower the previous rate of increase the government regards the deal as an improvement because without it the ageing of population and the growing level of chronic disease would have pushed spending higher.
Government sources say income tax collections are being pushed down by weaker than expected capital gains rather than income or employment. Corporate takings are down in part because the massive boom in mining investment is allowing companies to write off more spending against tax.
The government also faces extra spending of 5.6 billion on reconstruction and support after the Queensland floods and cyclone, only partly offset by the $1.8 billion flood levy.
Opposition leader Tony Abbott said Mr Swan was using this year’s hit to revenue as ‘‘an excuse’’ to cut spending next financial year.
“It impacts on the current financial year, it doesn’t impact on the next financial year,” he said in Manly at the end of his “Polly Pedal” endurance bicycle fund raiser. ‘‘This has been a wasteful government and it’s because it’s been such a wasteful, extravagant and incompetent government that they now have to inflict unnecessary pain on the Australian public.”
Published in today's SMH
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