Budget 2013

image_galleryEvery year I get people ask me for the details of the budget because I’m keen on watching that sort of thing.  I get it’s not everyone’s favourite thing, so here are some highlights.

Taken from the ABC website:

Winners

  • $3.3 billion for DisabilityCare Australia in 2014-15 funded by half a percentage point increase to the Medicare levy. Total investment in scheme $19.3 billion over seven years ($14.3 billion in new money)
  • $113 billion in defence funding over the forward estimates, up $10 billion from last year’s budget. Includes $3 billion over nine years to obtain 12 EA-18G Growler electronic attack aircraft
  • New spending of $3 billion over the forward estimates as part of a $24 billion infrastructure package. Includes $3 billion for the Melbourne Metro rail project and $1.8 billion for the WestConnex motorway in Sydney. $400 million will be allocated to Sydney’s F3-M2 link and a further $715 million to Brisbane’s Cross River Rail project
  • $9.8 billion in school funding reforms outlined in the Gonski review, over six years from 2014-15
  • $300 million on childcare reforms, including establishing a fund to help long daycare providers acquire a highly qualified workforce
  • $300 million to support jobseekers, including allowing Newstart recipients to earn more from paid work – up to $100 a fortnight from the current $62 a fortnight, and indexed from July 2015
  • $2.2 billion to be invested in the Medicare benefits schedule across five years, with a further $2.2 billion over four years towards the private health insurance rebate
  • $226 million on cancer care, including $92.2 million over the forward estimates towards breast cancer screening and pap smears and $18.5 million towards prostate cancer screening
  • A trial of $112.4 million towards assisting senior Australians to downsize to a more suitable home without affecting their pension, and $9.9 million to extend the Broadband for Seniors initiative
  • $100 million on natural disaster mitigation to reduce insurance premiums
  • Almost $100 million for a new farm household allowance to support farmers in hardship
  • $64 million on a national anti-gang taskforce comprising 70 members of the AFP and state police
  • $42 million for Antarctic climate change research

Losers

  • Massive revenue write-downs – $170 billion over the last five years. A deficit of $19.4 billion in this current financial year, followed by a $18 billion deficit in 2013-14 and a $10.9 billion deficit in 2014-15 before a projected return to surplus by 2015-16.
  • Significant reduction in tax receipts of $60 billion over the forward estimates, attributed to challenging global conditions and the high Australian dollar
  • Minerals resources rent tax estimate down from an original forecast of $13.4 billion to $3.3 billion over the forward estimates
  • Baby bonus to be abolished from March 1, 2014 and replaced by an increase to Family Tax Benefit Part A – $2,000 for the first child and $1,000 for subsequent children
  • FTB-A eligibility rules to be tightened, meaning 28,000 families who would have received the baby bonus will be excluded under the new arrangements
  • An additional increase to FTB-A, due in 2015 and worth $2.5 billion over the forward estimates (between $300 and $600 a year for families) has been dumped
  • FTB-A eligibility changed for children aged 16 years and over – it will only be paid until the end of the calendar year in which a child completes school, effective from January 1, 2014
  • Medicare safety net threshold increased from $1221.90 to $2,000 from January 1, 2015, saving the Government $105.6 million over the forward estimates
  • $2.8 billion in tax cuts associated with the carbon trading scheme and due in 2015-16 have been deferred. They would have increased the tax-free threshold from $18,200 to $19,400. People earning up to $80,000 a year would have saved nearly $1.60 a week
  • The tax cuts associated with the carbon trading scheme will be deferred until the estimated carbon price reaches $25.40 a tonne – the current projection has dropped to $12.10.
  • The research and development tax incentive will only apply to companies with an annual aggregate turnover of less than $20 billion, saving the Government $1.1 billion over the forward estimates
  • $500 million over three years cut from the Carbon Capture and Storage Flagships program
  • $370 million of funding for the Australian Renewable Energy Agency moved to beyond the forward estimates
  • $270 million cut from a program designed to support coal mining jobs
  • $2.3 billion in cuts to higher education funding. The 10 per cent discount on paying university fees upfront will be abolished, student start-up scholarships will be converted to loans, and there will be a lower limit on tax deductibility of self-education courses, saving the Government $500 million
  • Deductions for work-related education expenses capped at $2,000 from July 1, 2014, saving $514.3 million over the forward estimates.
  • As in last year’s budget, the foreign aid increase has been postponed for another year, saving the Government $3 billion over the forward estimates. $375 million of current foreign aid investment will go towards asylum seekers in Australia, a figure which will be capped
  • Tax crackdown on big business – including tightening the rules to prevent profit shifting – saving the Government $4.2 billion over the forward estimates
  • $900 million in revenue over the forward estimates from changes to superannuation tax arrangements, including taxing earnings of more than $100,000 on superannuation pensions and annuities at 15 per cent instead of them being tax free
  • $665 million cut from the teachers bonus over the forward estimates
  • $580 million in cuts to the public service over the forward estimates
  • $100 million in cuts to solar funding
  • The average cost of a basic packet of cigarettes will increase by 7 cents in the first half of 2014.

HERE is an interactive feature to see how the budget will affect you.

And if you want a quick, general video summary, here is a 3 minute one from the government:

 

And HERE is a less biased 90 second summary.

 

Here are some of my thoughts:

Mostly, everyone only cares about the budget as it affects them.  This is understandable enough, but sometimes we need to think about the greater good.  I’m happy to pay my 90c a day to help fund the NDIS.  It doesn’t bother me.  I’m also happy that the baby bonus has been cut.  In our economic climate, it’s a luxury we can’t afford.  I realise that it’s very helpful for some, but it’s not necessary for everyone who gets it (people on $150,000 a year don’t need it), and sadly the people who need it most are the least likely to spend it wisely.  Yes, that a generalisation, and of course it’s not true of everyone, but the stats support that.

According to our national statistics we have never had it better.  Yes, some people are obviously doing it tough, I don’t doubt that, but in terms of our general prosperity, Australians are doing better than they have ever done before.  This whole ‘rising cost of living pressure’ is simply untrue.  It is felt, but it is not our reality.  Our wages are rising faster than our cost of living.  As a society we are doing well.  Once again, obviously there are people doing it tough and there are areas where we ought to be doing much better in our social economic policy, but general speaking we are rather well off.  If people are struggling financially, it’s not always the fault of the government (although sometimes it definitely is).

We could be saving an awful lot of money by processing asylum seekers onshore.  We could be saving more money by closing tax loopholes for big business.  We could save lots of money by not letting people purposefully lose money on real estate and write it off on tax.  There are endless ways to save money and divert funds to those who need it most.  Of course there is always room for improvement, but let us remember how lucky we are.

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