A tax, a
levy and Joe Hockey walk into a bar… it sounds like the beginning of a really
bad joke, but the reality facing many Australians is there will be tough times
ahead. Joe Hockey’s first budget was a real doozy! Not only are the days of
entitlements coming to an end, if you are feeling poorly, a student, a young
person or thinking about receiving the old age pension, times are a changing.
Oh, and if you earn over $180,000 don’t think you are left out, you get to be
part of the special group of people who will pay a Temporary Budget Repair
Levy, which is NOT A TAX but a levy. Levy not a tax.
Do you know
when politician are getting serious? When three word slogans are replaced with
four word slogans, “pain with a purpose” and “building a better Australia” were
phrases uttered early on by the Treasurer, while he went on to proclaim this is
a “contribute and build budget” and that “prosperity is not a gift, it needs to
be earned”. Under the recent years of
Labor, we have seen the Global Financial Crisis transform an economy which was
in surplus and moving along, to what the Coalition has labelled a disastrous mess
and now it is time for Abbott and his team to fix it with range of regimes that
look to reign is spending.
The
highlights include:
o
Fuel
indexation increasing twice a year, with the money raised linked through
legislation, to co-funding road building projects in New South Wales, Victoria
and South Australia.
o
$80
billion in Commonwealth funding will be taken from schools and hospitals over
the next decade.
o
$7
medical co-payment to see a doctor and an increase of $5 on medication is
expected to save upwards of $5billion in the forward estimates.
o
Deregulation of the University
sector, with unis setting own fees from 2016 and HECS to be paid back when
graduates earn $50,000. Hockey specifically said that "Through
these once-in-a-generation reforms, the government will help build a sector
that is more diverse, more innovative and more responsive to student needs"
in his speech.
o
The
pension age raised to 67 in 2023, and increasing to 70 by the year 2035.
o
The
creation of a $20 Billion Medical Endowment Fund which will fund medical
research into curing cancer, finding cures to diseases and paving the way for
Australia to be contenders in world research.
o
Changes to youth benefits. People
under 30 need to be unemployed for 6months before getting Newstart, and even
then will need to be participants in Work for the Dole to be eligible for
income help.
o
People under the age of 25 will be
eligible for Youth Allowance not Newstart.
o
Abolishing
$845million in Industry Assistance.
o
Cutting
company tax by 1.5%.
o
Family
Tax Benefit B eligibility will be lowered to $100,000.
o
#itsnotataxitsalevy
Temporary Budget Repair Levy for people earning over $180,000 per year for
three years.
o
$535 million in cuts
to Indigenous funding.
o
The
Coalition has also saved $2.5 billion by stopping the boats.
o
Annual
Seniors Supplement will be abolished on July 1 of this year.
o
Abolishment
of the Carbon Tax and MRRT.
Many of these measures are not at all surprising and while
the Government is playing hardball, it seems that some people will be taking a
bigger hit than others. The good news, for those who are obsessive over
deficit/surpluses however, is the budget deficit will $29.8 billion in the 2014-15
papers to be reduced further in the 2017-18 budget to $2.8 billion. “The time
to contribute is now” and no one is exempt, including politicians and senior
public servants, who will incur a salary freeze for one year, and ongoing
reductions to former and current MP’s entitlements starting this year.
While many economists have praised Hockey’s budget as a step
in the right direction towards fixing the structural deficit enshrined in the
economy, important minor parties have spoken out in concern. Palmer United’s
Clive Palmer, who will hold considerable power in the Senate come July 1, has labelled
this budget a “nightmare” and the Greens have many issues with the majority of
proposed savings. Interestingly, though The Greens do support the fuel
indexation tax, which will have a direct impact on fuel prices when it becomes operational.
This division within minor parties will prove fascinating as the Medicare co-payments
and fuel indexation legislation will need to be passed separately to the appropriation
bills (budget papers) and therefore can be blocked in the Senate. Also curious
were the areas not brought up in the budget speech tonight, including any
mention of the environment, funding the Paid Parental Leave scheme, any
possible changes to the GST and the National Broadband Network.
Many Coalition MP’s in the weeks ahead, will be trying to
convince the electorate that this budget is not only necessary but vital to the
prosperity and building of our nation and that the promises kept far outweigh
those that were broken. What they don’t say,
is this is only the start, the political love child of John Howard and Bronywyn
Bishop has at least 2 more budgets before the electorate can think about
replacing him, and as Hockey said, there might tax breaks in the pipeline but
when will they come about, only time will tell.
