The federal government's long anticipated 2013 - 2014 budget was released last night. It was always going to see what the government did given:
- It is an election year and the Gillard Government is well behind in the polls
- Tax revenue and income to the government has fallen off a cliff with the slowing economic environment
I confess that although I am not particularly drawn to any political party, I have found the Gillard Government's fiscal policies to be frustrating and spineless. This is probably a function of the hung parliament they have had to negotiate but it was nonetheless very frustrating.
From my point of view this budget surprised me - it was pragmatic, invests in Australia's future and does not do the pork barrelling and vote grabbing that most election year budgets do. We are all going to be a little worse off but I do appreciate having a government that is willing to acknowledge that we are in a worse economic position now than we were a year ago and that does not spend just to grab votes.
So how will the 2013 - 2014 Australian Federal Budget affect you?
Like all things...it depends. There isn't really something for everyone in this budget. From an individual point of view there are not a great deal of positives and some negatives but it really has to do with how much you are already getting from the government (or not getting).
The benefits in the budget for individuals
- $14.3 billion in funding for the national disability insurance scheme
- If you have a disability this will definitely benefit you
- If you do not have a disability you may be disadvantaged through the increase in the medicare levy - see below
- Increased funding for public schools and education
- This will benefit the quality of educational institutions but there will be no hand outs to individuals like in the past
- I'm not against this at all - I think a good system is much better than giving people choice about where to spend their education dollars
- Note that this is for primary and secondary only...tertiary education did not get the same level of funding benefits
- Seniors funding
- $112.4m to help seniors who are downsizing their homes
The rest of the benefits do not really impact individuals at all - they are all about nation building. It is about infrastructure (roads, rail) and other measures that only a government can fund. If you're going to try and improve a country and an economy in the long run this is are the types of things that need to be funded.
Personally I got no real benefits from this budget but I'm just glad that we finally have a government that is thinking about the long term.
The downsides for individuals
- The baby bonus was abolished
- I always thought it was a mad scheme to pay people to have children
- The amount was always too small to encourage working people to leave the work force to increase the reproduction rate and it encouraged short term thinking when it came to family planning
- Although it will definitely hurt some new families - this is one I am glad to see go
- Offsetting this will be an increase to the Family Tax Benefits A of $2,000 for the birth or adoption of a first child and $1,000 for subsequent children
- An increase to the medicare levy
- This one is going to hurt me personally as the medicare levy increases from 1.5% to 2.0%
- This amount is going to fund the NDIS (mentioned above)
- Family tax benefits
- A reduction in the time allowed to claim family tax benefits and child care allowances will save the government money but if you are a family that is currently claiming this you will be disadvantaged
Most of the pain of the budget will actually be borne by companies (especially multi-nationals). Whilst this is undoubtedly not great for business, many of the changes will actually be affecting tax structuring. It always irks me that effective tax structuring and profit shifting between jurisdictions allows big companies to avoid tax so I'm not opposed to this.
Individuals will be feeling a bit of pain however in this environment it is not nearly as bad as it could be. In an election year it is interesting to see middle class welfare being cut.
Overall
Overall I think this budget is a slight negative for individuals but I can understand why the government is doing it. It is a sensible budget for tough times and one I certainly would not have expected in an election year. I can't imagine it will make the government more popular but it feels like they have done the right thing for the long term health of the country. What do you think? Are you going to be slugged hard by this budget and is it going to make you more or less likely to vote for the Gillard Government in the upcoming election?
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Although this may not specifically relate to the budget what are your thoughts on superannuation and the proposed raising of the contribution caps to $35,000 for those over 50 from 2015 financial year?
ReplyDeletePersonally I think this is great (I work with a financial services company) although too many Australians are disengaged with their super (a shame really)