Highlights of Wayne Swan’s Budget 2012-13
- $1.5 billion surplus for 2012-13, growing to $7.5 billion in 2015-16.
- Budget deficit for the year ending June 2012 blows out to $44.4 billion.
- Government has found $33.6 billion in savings, offset by $5 billion in new spending.
- "Benefits of the Boom": new payments for families to offset cost of living pressures.
- National Disability Insurance Scheme begins.
- Commitment to aged care reforms.
- Mining boom means economy will keep growing, despite spending cuts and carbon tax.
The Economy in 2013
- Unemployment remains low: forecast to peak at 5.5 per cent.
- GDP at 3.25 per cent next year, 3 per cent in 2014.
- Inflation moderate: 3.25 per cent next year, 2.5 per cent 2014-15.
- Mining boom continues apace: $450 billion in the pipeline. "Patch-work economy is multi-faceted": not all non-mining sectors are struggling, spill-overs from mining in-direct as well as direct.
- Australia is the envy of the rich world: Australian GDP growing robustly while Europe, Japan and the US face a lost decade.
"Why returning the budget to surplus is appropriate"
- The stimulus worked: the "timely, targeted and temporary" stimulus during the GFC supported economic growth and averted a deep recession.
- Even so, the government "charted a clear path to return the budget to surplus" when growth returned to trend.
- Growth is not "around trend", so a roughly balanced-budget is appropriate.
- Surplus will provide confidence, not just to consumers, but to financial markets.
- Australia retains AAA credit rating, bind rates very low.
- Net debt will peak at less than 10 per cent of GDP, one-tenth of many OECD partners.
How Swan got back to surplus
- $33.6 billion in savings, a part of over $100 billion in savings identified in the four budgets since 2008-09.
- Government spending is only 23.5 per cent of GDP, a level not seen since 1993.
- Some "smoke and mirrors": spending moved forward to 2011-12.
- Tax receipts gradually returning to pre-GFC levels, but still lower than expected.
What are the spending cuts?
Big-ticket spending cuts include:
- Cuts to overseas aid: $2.9 billion in savings over four years by deferring its aid target of reaching 0.5 per cent of Gross National Income by a year. Includes a $212.5 million cut to AusAID. Government points out aid budget will still double between 2007-08 and 2014-15.
- Defence cuts: $5.45 billion over the forward estimates. 1000 civilian staff to be cut, purchase of 12 F-35 Joint Strike Fighters to be delayed, purchase of self-propelled howitzers cancelled, retirement of the C130H Hercules brought forward.
- Single parents: Parenting Payment will cease once a child turns eight for single parents, or six for partnered parents. Saves $685 million over four years.
New revenue measures, including cancelled tax cuts
- Company tax cut from 30 per cent to 29 per cent abandoned. Saves $4.75 billion over the forward estimates.
- Crackdown on GST under-reporting: saves $986.2 million over the forward estimate.
- The 2010-11 income tax "simplification" measures abandoned, including the so-called "standard deduction" for ordinary taxpayers. Saves $2.094 billion over the forward estimates.
- Superannuation tax breaks tightened, including deferring the 2010 budget measure that gave a superannuation concession to workers with super balances under $500,000. They no longer get a special tax break on their super top-ups. Saves $1.46 billion over the forward estimates.
- Tax break for super contributions for very high earners (over $300,000) tightened: saves $946 million over the forward estimates.
- 50 per cent tax discount for interest income abandoned. Saves $923.5 million over the forward estimates.
- Tax breaks for Green Buildings killed off: saves $405 million over the forward estimates.
- Personal income tax cut for mature age workers cancelled: saves $255 million over the forward estimates.
- Limit eligibility for Family Tax Benefit A to children turning 18. Saves $360.9 million over four years.
- Raise HECS rate for maths and science university students. Saves $314.9 million over four years.
- Increase in the Road User Charge. Brings in $698 million over four years.
- Fringe Benefits Tax tweaks for second home allowance. Saves $1 billion over the forward estimates.
- Decrease in duty-free exemptions: saves $600 million over the forward estimate.
New spending announcements
"Benefits of the Boom"
- $2.1 billion over five years for a new "school kids bonus": $410 and $820 for each primary and secondary student. Not means-tested: "all eligible families will receive the full rate of payment."
- Benefits of the Boom: new income support payment for those on most benefits like Newstart, Youth Allowance and Parenting Payment. $210 per year extra for eligible singles and $175 for each member of an eligible couple. Costs $1.1 billion over four years.
- $1.8 billion over four years to increase the payment rate of Family Tax Benefit A. Those on full rate with one child will get $300 extra a year, those on base rate $100.
National Disability Insurance Scheme
- $1 billion over four years for the first stage of the National Disability Insurance Scheme.
Health and dental care:
- $345.9 million over three years to alleviate pressure on public dental waiting lists, and $158.6 million over four years to increase the capacity of the dental workforce (but offset by $290 million in savings from re-allocating existing dental funding).
- $475.0 million over six years for the delivery of 76 projects through the Health and Hospitals Fund (HHF) 2011 Regional Priority Round.
- $233.7 million over three years to implement the National e-Health Program.
Aged care
- Aged care announcements ("Living Longer, Living Better"): $1.2 billion over five years from 2012-13 (including $471.7 million in 2016-17) to address workforce pressures in aged care.
- $660.3 million over five years from 2012-13 in residential care.
- $955.4 million over five years to assist older Australians in need of care to stay at home.
- $80.2 million over five years from 2012-13 for better health links to aged care providers.
- $256.4 million over five years from 2012-13 for aged care reform priorities such as the My Aged Care website and the Aged Care Quality Agency.
- $192 million over five years from 2012-13 for skills development in aged care workforce.
- But there will be aged-care savings to offset this funding including $561 million over five years owing to means-testing.
Afghanistan
- $1.3 billion in new spending for next year’s operations, including $374.9 million over four years for a Force Transition Team to redeploy from Uruzgan to Kabul.
- $286 million over two years for civilian and police aid in Afghanistan
Remote jobs and the Northern Territory
- Remote jobs investment: $393 million in new spending for Remote Jobs and Communities Program, $137.5 million for a Community Development Fund.
- Northern Territory spending: $141.6 million over four years ($326.3 million over 10 years) for the Alice Springs Transformation Plan, $239.6 million over four years for better policing and justice in the NT, $254.4 million over four years NT health and allied health.
G20
- $326.9 million over four years to host the G20 in 2014.
Arts, culture and media
- $95 million in extra money for SBS. The extra funding "will allow the SBS to maintain the quality and delivery of existing services and upgrade distribution and storage technology". Also $63 million for a free-to-Air Indigenous television service.
- $12.8 million for new Wolverine movie
- $39.3 million for national cultural museums
- National Cultural Policy: no funding