It’s that time of the year again, and the full federal budget is now out and about for all of us Australians to take a gander at. My previous blog post about the speculation seems to have hit on some of the right points, namely the increase in the pension and hit to superannuation contributions but it seems the higher taxes for the rich have fallen by the wayside (although they might be on the table in the future) along with the increased defence spending. Here’s some of the major initiatives that the government has intended to include in the current budget:
- $3.4 billion for roads
- $4.6 billion for metro rail
- $389 million for ports and freight infrastructure
- $4.5 billion for the Clean Energy Initiative, which includes $1.0 billion of existing funding
- $2.6 billion in projects focused on universities and research from the Education Investment Fund
- $3.2 billion in projects focused on hospitals and health infrastructure from the Health and Hospitals Fund
- Partnering with the private sector to build the $43 billion National Broadband Network
- A pension increase of $32.49 per week for singles and $10.14 per week combined for couples on the full rate
- A crucial boost of $2.7 billion in funding for tertiary education, research and innovation
- $1.5 billion for the Jobs and Training Compact, providing education and services to support young people, retrenched workers and local communities
- A 50 per cent Small Business Tax Break for eligible assets
- Extending the First Home Owners Boost for an extra 6 months
- Honouring our promise of tax cuts
What I’m impressed with are the initiatives dedicated to infrastructure spending. This is something that will not only benefit Australia at large but will also build a solid foundation of sustainable jobs which will grow when the economy recovers. This also lends itself well to the boost provided to tertiary education as these people are going to want somewhere to work once they’ve graduated. The extension to the first home owner’s grant was a small surprise and it will help to keep the housing market afloat until the end of the year. Phasing it out instead of dropping it will make sure the market doesn’t suffer too much when the bonus finally comes to an end, as any more shocks to the market aren’t going to help our current situation.
Straight after the budget the criticisms started to flow thick and fast. ABC’s 7:30 Report last night had interviews with both Wayne Swan and Joe Hockey, although Hockey’s criticisms of the budget feel a little….weak:
KERRY O’BRIEN: Have we seen a global crisis like this?
JOE HOCKEY: Well, can I tell you, the RBA, the Reserve Bank said last week it will not be as deep as 1990. They said that last week. And yet this Government has spent more money than any government in modern Australian history – 29 per cent of GDP. It is the biggest spending government in modern history, the biggest debt in modern history. One million people unemployed. Nothing to show for all the money they’ve spent.
KERRY O’BRIEN: So what would you be doing? What should’ve happened in this Budget to reduce debt?
JOE HOCKEY: Well the starting point is don’t deliver the cash splashes.
KERRY O’BRIEN: No, that’s gone.
JOE HOCKEY: Well, no, no, no.
KERRY O’BRIEN: What would you be doing in this Budget now, what should’ve happened in this Budget now to reduce debt?
JOE HOCKEY: Well, grow the pie. You’ve got to grow the pie.
KERRY O’BRIEN: How?
JOE HOCKEY: Well, the first thing is you’ve got to focus on small business. That’s what we’ve always talked about. Malcolm Turnbull has already laid out a number of detailed policies to try and get small business to grow.
JOE HOCKEY: Well, let’s go back to the assumptions, right, that you’ve put into that question. The fact of the matter is that the Reserve Bank and the IMF say it’s going to be a slow recovery. But the RBA, the Reserve Bank said it’s not going to be as deep and severe as 1990. The starting point for the Rudd Government was they inherited a Budget surplus, they inherited four per cent unemployment, which is now going to eight per cent. They inherited zero Government debt, in fact there was money put in the bank. They’ve spent all the proceeds of the mineral boom and they’re now mortgaging the next boom.
KERRY O’BRIEN: OK, but very briefly, you’re happy to quote the Reserve Bank when it suits you, but …
JOE HOCKEY: Well, no, the Reserve Bank was right.
KERRY O’BRIEN: Well then do you also accept that the Reserve Bank governor is right when he says that the debt levels are modest?
JOE HOCKEY: Well, I don’t know if he’s seen these Budget numbers. But I tell you what, I wouldn’t consider them modest when it’s $9,000 for every man, every woman and every child in Australia, with an annual interest bill of $500 for every person. I don’t consider that modest.
I’m going to have to agree with my father (whom I was watching the report with last night) and say that Joe Hockey is just a trouble maker. He’s lashing out at the budget in order to try and score some easy political points. Additionally he ridicules the government for selectively quoting the RBA when it suits them and then proceeds to do the same thing. Whilst I know this budget isn’t perfect it’s a great start to keep this nation afloat whilst creating a sound basis for our economy to boom again when the time is right. The middle section I quoted shows that Hockey has little to no idea on how to approach this situation and had he been in charge of the budget I’m sure we’d be closer to the budget I predicted last week; something lacking direction and lining the coffers of the loudest lobbyists.
Swan didn’t get off easy either. Kerry did point out that some of his initiatives, namely the raising of the pension age and large deficit, were created without a lot of knowledge of the situation we’re in. Whilst the predictions made are probably the best that can be done with the information that we have it does seem a bit reckless to start basing policy on them. Many of their policies have times that are set a bit far off in the future which is a deliberate political ploy in order to make sure they get elected back into office. This will be the budget that will stick in people’s minds come the next election, and I’m sure the Rudd government knows that.
Overall I’m pleased with the budget. The money is getting spent in the right places and whilst we might be running a deficit, we’re still in a good position to weather this recession and come out ready for the good times ahead.
I’m just going to have to tune out Hockey and the other detractors for a couple weeks. 🙂