The Rudd Government has made infrastructure, retirement incomes and clean energy the centre of the 2009-10 budget, but the promised assault on middle class welfare is a low key affair. While the Government has promised $1.5b in savings next year and much more over the following four years, the big gains come from superannuation changes, means-testing of the private health insurance rebate and tightening of the taxation and family tax benefit system.
Wayne Swan has produced a lower-than-feared deficit of $53.1 billion that is still nearly 5% of GDP, based on an economy that will bottom during the year and average -0.5% growth, and unemployment of 8.25%, but, optimistically, ride a global recovery back to higher growth in later years. The Government will become the highest spending in Australian history, taking expenditure to 28.6% of GDP on the back of a massive road and rail investment program, a multi-billion dollar clean coal and solar technology fund, more educational investment — all funded from the Government’s investment funds — and a substantial lift in the pension rate.
The impact of the global downturn on revenues has also significantly worsened, with the Government downgrading receipt forecasts by a total of $210 billion, matching the revenue boost delivered by the minerals boom in recent years. The write-down of revenue means the deficit for the current year has blown out from February’s estimate of $22 billion to more than $32 billion.
Wayne Swan’s mantra will be the one he repeated at his press conference this morning — “jobs, nation building and a path back to surplus”, with the Government stressing the employment impact of its “early and decisive stimulus”, a massive infrastructure program and detailed assurances of a return to surplus by 2015-16 on the back of higher-than-usual forecasts for levels of growth as the economy recovers from recession.
This is a Budget very much of a piece with the Government stimulus packages so far: heavy emphasis on infrastructure, more cash handouts via pension increases and the scheduled tax cuts, but this time coupled with a relatively mild attack on superannuation concessions, private health insurance and some fiddling — albeit highly remunerative fiddling — at the edges of family tax benefits and the tax system. It will deliver a substantial stimulus into the economy in 2009-10, but only make a start on the more longer-term challenge of paring expenditure back to sustainable levels.
Four questions:
1) Can some numerate person work out what the cost of someone earning $149,999 pa is if they can be bothered to earn one more dollar?
2) Why is income confused with wealth? There are a bunch of reasons why someone earning $150k pa is less wealthy than someone earning less including being paid in share options vs PAYE, divorce, family size etc. For example my ex wife who hasn’t worked in 17 years has a boat, a holiday house, a swimming pool and an unencumbered house (I have non of these, but I pay the tax).
3) Have Wayne and Kev also aligned their non age capped, non means tested pensions of way more than $100k pa to the rest of us? Kev (or Wayne) could retire tomorrow on this pension – no annual $25k caps, no waiting till they are 67 and no worries about running out of money.
4) Is anyone else getting worried about the divisive language. Apparently those earning more than average are NOT “working Australians” or “hard working” but they get undeserved “middle class welfare” and are the “super rich”….. hmmmmm
No and you know why? because its a stupid question.
49,998 anyone anyone?
Though some may have been hoping for some more structural changes to reign in on-going deficits it should be recalled that doing this during a recession is counter productive and likely to slow your recovery path.
By accident or by design the Government has done this right. Cuts that affect a larger part of the population and affect employment directly or indirectly should be directed to the time when world and national growth have reached a permanent recovery.
Thomas Paine
Not sure that an abusive answer contributes to the debate. Why is it a stupid question? If anyone has a chip on their shoulder, the tax differential between 150k and 49,998 is $48,250 (plus loss of all “middle class benefits”). What about this is not already contributing at a reasonable level?
Why is Wayne Swan Treasurer? Just listening to Lindsay Tanner on Lateline. For a start, he looks like he doesn’t sleep anymore – Wayne looked pretty well-rested. Lindsay sounds like he actually understands what he’s saying, Wayne sounds like he’s reading his lines. I’ve nothing particular against Wayne Swan, but he’s occupying an office that’s beyond him.
Is Lindsay Tanner doing all the work???