Ah budget time, it’s always an interesting time of year as you get to see what the government has planned for the coming year and the rhetoric spin machines go into overdrive as both sides of parliament start duking it out over every talking point they can find. For me it usually entails a couple hours of good analysis of the changes so I can see if there’s any new measures that I’m able to exploit or if my particular industry might see some changes to encourage or discourage growth. Still it’s no secret that the whole thing is a rather dry affair (I skipped out on a friend’s invitation to have budget drinks at a local pub, even alcohol can’t make the delivery interesting) and I’ll forgive you if you tune out now, but if you read on I promise to make it worth your while 🙂
Rather than link you to a veritable tsunami of articles that analyze the various ins and outs of the budget I’ll just give you a link directly to a quick overview to the whole thing direct from the horse’s mouth. On the surface there’s really nothing amazing about it, no crazy reforms or highly controversial schemes that haven’t already been duked out in front of the public over the past few weeks. Most criticisms I’ve heard of the budget thus far focus on the government’s ability to follow through on the plans, citing past broken promises (ignoring the fact that it wasn’t Labor which caused them to fall through) and making accusations that it all hinges on things that haven’t yet passed parliament. Most of these accusations can be traced right back to Liberal party rhetoric and frankly, whilst they may have raised a couple points that need discussion, I’m starting to get tired of all their talk (more on that later).
One of the biggest things to come out of this budget is the so called Resource Super Profits Tax. In essence it’s the Australian governments attempt to get a bigger slice of the current resource boom that Australia is experience on the back of the heavy demand stemming mostly from China. Initially I was appalled at the idea as it felt a lot like a grab at a profitable industry just to boost the coffers to put the budget back in surplus sooner (which honestly doesn’t matter as much as the Liberals will have you believe). I mean what would happen if we had an IT boom in Australia? Would we then be subject to a super profit tax because we suddenly became desirable for hosting services (which is quite possible if the NBN goes ahead)? Diving deeper however it appears that this idea actually came direct from the mining giants themselves, hoping to seek a simpler system rather than the complicated arrangement they currently have. My sentiments echo that of Martin’s post I just linked; the belly aching we’re seeing from mining companies lobbyists is a disagreement over price more than it is them actually being hurt by this new tax.
An interesting development is the government’s idea of implementing a pre-fill or standard deduction option to the current tax return system. Basically this allows about 25% of all Australians to be able to claim a standard flat fee from the government (to the tune of $500, increasing to $1000 in 2013) without having to go through the hassle of filling out a full tax return. It’s a good idea, one of the few that the government is implementing from the Henry Review, and is very similar to many systems that are implemented in other countries. The main saving comes from the estimated 8.5 hours that every tax paying Australian spends doing their taxes every year, totalling a whopping 100 million hours spent collectively (not including the back end processing that the ATO has to do as well). For someone like me who has a rather complicated tax arrangement it’s really of no benefit but for those 6 million+ Australians it will help I’m really glad to see a measure like this go through, although I’m sure accountants Australia wide are none too happy with it.
Two major areas of funding are infrastructure and renewable energy. Whilst the infrastructure spending is mostly just a continuation of the spending that has been going on for a couple years the resources allocated to renewable energy and a skilled workforce are welcome changes. For renewables (full disclosure: my dad is the teacher of renewable energy at the Belconnen TAFE and I share his passion for it) there’s really nothing to lose in researching such technology. Whilst most are still in their infancy we’re on the cusp of having some real significant breakthroughs and Australia is well positioned to take advantage of them. Really with our vast amounts of unarable land and swaths of coastline we’re an idea place for wind and solar (both photovoltaic and thermal) and with such strong opposition to other clean forms of energy (read:nuclear, despite us having about 40% of the world’s uranium in our soil) renewables are the way to go, and I’m going to keenly watch all developments in this space.
There are some benefits that also speak to me personally, like the reduction in company tax rate and instant asset write off for small businesses. As someone who’s just about to lash out into the cruel world of being a technology start up any benefit I can get my hands on will be gladly taken and made use of. All the bits of technology I require to get my projects underway neatly fit under that $5000 limit for instant deduction, hopefully softening the blow somewhat to my own personal finances whilst I attempt to get my business off the ground. Whilst these changes are the ones that hinge on the super tax going through I’d still bet on it being passed, albeit in a different form to what it is now.
Now that I’ve gotten that all out of the way I’d like to take some time to launch a load flame laden bloggery right at the Liberal party. For the past 5 months the Labor government has been under constant attack from the Liberal party who have been taking every shot they possibly can whilst failing to deliver anything substantial of their own. To be honest I had expected as much as after the leadership spill saw Howard’s attack dog Tony Abbott take the opposition leader’s crown. Whilst I can appreciate that criticism of any policy is required to make sure it is robust I’ve heard little to no arguments that can be rightly substantiated with hard facts. That usually wouldn’t be a problem but it seems that the constant barrage of vitriol from the Liberal party is starting to have a dramatic effect on the Labor government’s approval rating with the populace at large, and that’s worrying for a couple reasons.
It’s no secret that I’m liberal (little l there folks) with a slight bent for libertarian went it suits me, so you should probably take this all with a little bit of conservative salt. The current rhetoric from the Liberal party is hinging on old ideals that Labor can’t be trusted with money (they always spend it~¹) and that the Liberals are the best to handle the economy (they always run a surplus and interest rates are always lower~). However if you do even a small amount of research you’ll see that traditionally the Labor government has been in power when the world economy at large is suffering. Keynesian economics advocates government deficit spending in time of a recession and it has been proven time and time again that this either softens the blow or stop a recession from happening entirely. Liberal rhetoric would have you believe that if the government did nothing we would’ve been fine regardless which shows a reckless disregard for the facts and decades of research into the matter. The interest rate line is dragged out time and time again, but isn’t it strange that the last year has seen interest rates lower than that of the previous governments entire time in office? That would be the line I’d tow if I wasn’t so blind to the fact that interest rates are subject to external pressures that are not under any Australian government’s control. The sooner this myth and the fear that comes with it dies the better.
Then there’s the idea that the Liberal government would do better than Labor at the helm of this country. Right now nothing could be further from the truth as whilst the party has managed to stabilize itself for the past 5 months it has spent most of that time being cynical whilst doing little other work. You’ve got an ultra-conservative at the helm, one climate change denier (he is a NOT SKEPTIC) in the front bench (with one recently leaving) and none that seem to harbor any respect for fact and rational thought, although I fully admit this could be far more due to party politics and such issues being dealt with behind closed doors. Currently it seems that the public perception is that they’re not sure about the Rudd government but they have yet to seriously consider the alternative: an Abbott government. Pressing a few not-so-politically inclined friends on the matter shows that they’d rather not have the latter, but hadn’t considered opposing Rudd meant getting Abbott as PM.
The budgets are always a big talking point for both parties and even more so in an election year. The Rudd government has delivered a sensible budget that aims to continue the economic growth that it managed to sustain throughout a global recession and keep Australia being the economic power that it has become. The rhetoric from the Liberal government should be analyzed and then discarded for the rubbish that it is and hopefully the Australian public sees that the current government is doing the right thing by us all and the alternative is a much darker Australia for us all.
¹FYI a tilde at the end of a sentence on the Internet typically indicates a sarcastic, flirty or playful remark.