Budget Week!

[Meirionnydd]

Here in Australia every May the Government presents the budget for the fiscal year. It's all a pretty big deal here, so I thought I would post it here.

No frills, no thrills, no spills

Fiscal responsibility, an earlier than expected return to surplus and a narrow escape from recession are the central messages in Treasurer Wayne Swan's third budget.

With an election only months away, the budget features few big-ticket expenditure items. But it consolidates Labor's focus on health spending with a further $2.2b to add to the $5.3b pledged in recent weeks.

Mr Swan says the Government's stimulus package saved Australia from recession. He says the package helped Australia "far outperform" the rest of the developed world to register growth of 1.3 per cent.

He says the budget bottom line will return to surplus in three years - three years ahead of the schedule set out in the 2009 budget.

Mr Swan repeated the message that the budget underlines Labor's "strict fiscal strategy".

"Tonight we meet the highest standards of responsible economic management," he said.

"Together Australians have defied global economic gravity, not by accident but by choice."

But taxpayers appear to have been generally underwhelmed by a budget delivered against the backdrop of a series of setbacks for the Government, with polling showing a resurgence for the Coalition and a steep fall in the popularity of Prime Minister Kevin Rudd.

Most major business groups have reacted favourably, although the budget received a much better reception from the financial sector than the mining industry.

If there was a centrepiece to this budget it would be health spending, but medical groups say Indigenous and mental health were overlooked.

The government immediately began selling its budget as evidence that it is fiscally responsible, but the Opposition dismissed it as a 'house of cards' which relied too heavily on China's continued demand for resources.

The budget and reaction now appear to have set out the themes for this year's federal election, with the government claiming credit for Australia avoiding a recession, and the Opposition labelling it a debt and deficit regime.

Budget key points

• $2.2b for increased GP services, super clinic upgrades, more nurses and electronic health records
• $661m to boost skills training
• $652m for a Renewable Energy Future Fund
• Tax breaks on interest income up to $1,000
• Simplified tax returns
• $1b for Australian Rail Track Corporation and $71m for a Sydney transport hub
• $4.3b national security boost

Forecasts at a glance

• $40.8b deficit 2010-11, $13b deficit 2011-12, $1b surplus 2012-13, $5.4b surplus 2013-14
• Growth at 3.14pc for 2010-11, 4pc for 2011-12, 3pc for 2012-13, 3pc for 2013-14
• Unemployment at 5pc for 2010-11, 4.34pc for 2011-12, 5pc for 2012-13, 5pc for 2013-14
• Inflation at 2.5pc across the four years
• Net savings of $544m over four years
• Net debt to peak at 6.1pc of GDP and be paid off three years earlier than expected

http://www.abc.net.au/news/events/budget2010/

Of course, the Opposition gets a right of reply, which happened tonight.

Coalition to freeze public service jobs

Opposition Leader Tony Abbott says a Coalition government would freeze public service recruitment for two years and cut Commonwealth advertising to rein in spending.

Mr Abbott has outlined the savings measures in his first budget reply, which he delivered tonight in Federal Parliament.


He did not detail any new spending but foreshadowed further announcements from his treasury spokesman Joe Hockey next week.

Instead, Mr Abbott used his speech to ramp up his "war" on the proposed 40 per cent mining tax and also criticised Government health funding, its cigarette tax and "reckless spending".

He said the Coalition would also scrap more than $650 million in new spending to the Renewable Energy Future Fund and use the money to pay for its direct action measures.

The Opposition would also restructure the schools spending program, scrap the National Broadband Network and sell off Medibank Private.

"I have one message for Mr Rudd. It's one that he should be familiar with. This reckless spending must stop," he said.

"Of the three budgets delivered by the Rudd Government, this is the most political, the least believable and the most damaging to Australia's long-term future.

"What the Government has actually delivered, though, as opposed to talk about, is a $57 billion deficit in this year - the biggest ever."

Mr Abbott said the recruitment freeze would not result in redundancies but the 6,000 employees who retire or leave each year would not be replaced.

The freeze would result in savings of about $4 billion over four years.

The advertising cut and the $650 million for the renewable energy fund would be funnelled into the Coalition's climate change policy.

Full costings and details are yet to be released but Mr Abbott said they would be out nearer to the election.

Mr Abbott used a large portion of his speech to emphasise the Coalition's opposition to the Government's plans to impose a $9 billion a year tax on the resources industry.

He said a Coalition government would block it in Opposition and wind it back in government.

"It's hard to overstate the seriousness of this," he said.

"It's a triple whammy tax on the jobs of half a million mining and related workers, on the superannuation of millions of retirees with mining shares and on the cost of living to everyone who uses power."
He also criticised the Government's $7.3 billion health spend, saying it is more focused on looking good than doing good.

"The Coalition will spend more on health only where we're certain that extra spending will produce extra services," he said.

Mr Abbott is hoping his response to the Government's third budget will convince voters the Opposition is a credible alternative government.

Both sides of politics have been attacking each other's economic credentials in the wake of Tuesday's budget which predicts the bottom line will be back in the black three years early.
The Government says its budget is fiscally conservative but Mr Abbott has scoffed at the claim.

Laughable

Finance Minister Lindsay Tanner says Mr Abbott's speech was laughable.

"He cannot even properly cost the one or two glib one-liner savings proposals that he put in his speech," Mr Tanner said.

He says Mr Abbott has proven he cannot be trusted with the economy and that a Coalition government would compromise the rights of Australian workers.

"We are committed to protecting the rights of working people at work, and we are not interested in the kind of propositions that Tony Abbott wants to float because he wants to go back to what the Australian people rejected in 2007 and what we stood absolutely against."

CPSU national secretary Nadine Flood says the Opposition's public sector recruitment freeze does not make sense.

"We're disappointed to see Tony Abbott trotting out a line that frankly smacks of 20 years ago," she said.

"I mean, the world has changed. The community's expectations of government are increasing, our population's increasing, and an easy hit at public servants just doesn't make a great deal of sense and it's not what the community expects from government."

Greens Leader Bob Brown says he is alarmed by the Coalition's plan to freeze public service jobs.
"Voters of the ACT in particular, but my home state of Tasmania which has a very healthy public service, will be indeed looking carefully at that threat because it cuts across their future employment of their children," he said.

Senator Brown used his budget reply speech to promote his party's carbon tax policy.

He says the Greens are the only party with a serious strategy to tackle climate change.

"The Greens proposal would bring in some $10 billion a year from a pollution tax on the 1,000 biggest polluters in the country, $5 billion of that earmarked to help households facing climate change all across the country," he said.

Family First Senator Steve Fielding used his budget reply to criticise the Government's decision to cap its childcare rebate.

"Any parent who pays more than $57.70 in childcare fees per day, five days a week will be worse off under this budget announcement by the Rudd Government," he said.

"It's a kick in the guts to mums and dads who are already struggling to pay their childcare bills as it is."

http://www.abc.net.au/news/stories/2010/05/13/2898893.htm