2011-12 $44.4 billion deficit
Projected surpluses 2012-13 2013-14 2014-15 2015-16
$1.5 billion $2.0b billion $5.3 billion $7.5billion
Extra saving over four years: $33.6 billion
Extra spending over four years: $22.4 billion
THE BIG SAVES
Over the four years to 2015-16
Defence $5.5 billion
Withdrawing proposed company tax cut $4.8 billion
Foreign aid $2.9 billion
Tighter superannuation concessions $2.4 billion
Withdrawing proposed standard tax deduction $2.1 billion
Living away from home allowances $1 billion
Withdrawing proposed savings tax break $0.9 billion
Tightening GST compliance $0.9 billion
Heavy vehicle road user charging $0.7 billion
Higher airport passenger charges $0.6 billion
Tighter duty free allowances $0.6 billion
THE BIG SPENDS
Schoolkids bonus $2.1 billion
Boosting family tax benefits $1.8 billion
Income supplement for beneficiaries $1.1
National Disability Insurance Scheme $1 billion
Business loss carry-back $0.7 billion
Dental health $0.3 billion
Six months ago in the mid-year budget review Wayne Swan was told to expect a paper-thin surplus in 2012-13 of just $1.5 billion. After shuffling tens of billions out of the pockets of the defence department, corporations liable for tax and the recipients of Australia’s foreign aid and funnelling much of it into payments for families, that’s where the Treasurer has ended up – with a projected surplus of $1.5 billion.
Between then and now the government’s finances have worsened somewhat, but not by as much as the Treasurer had led us to believe. The weaker than expected economy means non-GST revenue will be $4.5 billion lower than had been forecast, but it has also cut projected spending. Low inflation means the government will spend $2 billion less than it had been planning to, mainly because it won’t need to lift indexed payments as fast.
But rather than take the short cut of finding the $2.5 billion needed to restore the surplus Wayne Swan has gone the long way around, slashing billions from defence, axing business tax cuts about which he says business was unenthusiastic about, and postponing a planned increase in foreign aid.
Those measures alone save $13.2 billion over four years. Cutting back on superannuation tax breaks and living away from home allowances enjoyed by for high income earners save a further $3.4 billion. Withdrawing reforms to personal income tax recommended by the Henry review that haven’t yet started save another $3 billion.
Higher fuel excise for heavy vehicles makes $698 million, lifting the departure tax for Australians travelling overseas from $47 to $55 makes $610 million and cutting the duty free allowance for travellers bringing tobacco into the country from 250 to 50 cigarettes makes an estimated $600 million.
Some of the measures are guesses... Giving the Tax Office an extra $195 million to encourage businesses to hand over goods and services tax is expected to make $880 million, $554 million of which will be handed to the states as GST revenue, with the rest collected by the Commonwealth as extra tax.
All up the budget measures will raise an extra $33.6 billion over four years, $22.4 of which Mr Swan will spend, with ordinary Australians, “battlers” as he calls them, getting the lion’s share.
Family Tax Benefit A, already due to be augmented in coming weeks by upfront carbon tax compensation and then by ongoing compensation from June 2013 will from mid 2013 also be boosted by $300 per annum for families with one child and $600 for families with two or more children. Although not explicitly described as a carbon tax compensation measure the budget documents suggest this, saying it will ease cost of living pressures.
Unemployed Australians on Newstart have not been left behind as welfare organisations feared. From March 2013 they will get an extra $210 per year ($175 for each member of an eligible couple). It’s along way short of the $50 per week the Australian Council of Social Service wanted; it amounts to just $4 per week, but it is important as an acknowledgment that at $35 per day Newstart is too low.
The $4 per week increase will also be extended to other benefits including sickness allowance, youth allowance, Austudy, Abstudy and parenting payments.
Combined these two measures alone will cost $3.9 billion. The previously announced rebadging of the education tax refund as the schoolkids bonus will cost $2.1 billion.
The first stages of the National Disability Insurance scheme, supported by both sides of politics will cost another $1 billion, and much more per year when it becomes fully operational.
The changed budget outlook doesn’t much expect the buildup in government debt. It is still expected to peak this financial year, slowly receding until it vanishes in 2020-21. It will climb to $143 billion in 2012-13, $10.1 billion higher than forecast in the mid year budget review.
In today's Canberra Times, Sydney Morning Herald and Age