13 May 2015
The West Australian
Joe Hockey has turned to Australia’s two million small businesses to reinvigorate the nation’s economy and restore the Abbott Government’s political fortunes.
In his second Budget as Treasurer, Mr Hockey has unveiled a centrepiece $5.5 billion package designed to transform every small business into a mini- generator of economic stimulus.
Small businesses with annual turnovers of less than $2 million a year will have their tax rates cut to 28.5 per cent, down 1.5 points.
And in a welcome surprise for the sector, the Treasurer announced an immediate tax write-off for each and every small-business purchase of up to $20,000.
“We want people to go out and have a go,” Mr Hockey said last night.
“Small business is going to be the engine room of innovation, the engine room of new jobs.”
Treasury is forecasting a $35.1 billion deficit for 2015-16, double what was predicted last year, and a $25.8 billion deficit the year after.
The tumbling iron ore price, now forecast to average $US53 a tonne in 2015-16, ripped more than $1 billion from tax revenues this year.
Treasury predicts unemployment will peak at 6.5 per cent in the months ahead and economic growth will be 2.75 per cent in 2015-16.
Net debt will peak at 18 per cent of GDP in 2016-17, with gross debt projected to reach $573 billion by 2025-26.
The coalition claimed there was a “debt and deficit emergency” when net debt reached 13 per cent of GDP under Labor two years ago.
As expected, the Budget increased childcare funding by $3.5 billion, with a single benefit to replace a range of subsidies from July 2017.
The Government’s $4.4 billion families package also extends universal access to preschool for four-year-olds by two years, at a cost of $843 million.
In recognition of the deep unpopularity of some measures in last year’s Budget, the Government formally dumped the plan for a $7 GP co-payment, costing $3 billion, as well as proposed indexation of the pension by CPI.
Instead, retirees will face a new assets test, cutting the pension for 235,000 people and 91,000 others will lose their part- pension, starting from January 1, 2017.
Another 170,000 pensioners with moderate assets will get a full or increased pension.
At $2.44 billion, the pension changes are the biggest new saving.
A crackdown on welfare cheats came in second at $1.5 billion.
Removal of so-called “double-dipping” of paid parental leave for public servants will reap just short of $1 billion and stopping childcare subsidies and an end of year supplement to parents who refuse to immunise their children will reap more than $500 million.
The Budget revealed WA’s expected share of the GST, which will fall to below 30Â¢ in the dollar in 2015-16, will only improve slightly to 32Â¢ the year after, before rising to 38.3Â¢ in 2017-18.
This means that WA, which received a $499 million one-off to cover its GST shortfall, is practically guaranteed another one-off payment next year.
Total Commonwealth payments to WA will fall 8.4 per cent in 2015-16, or 2.4 per cent if you include this year’s one-off payment.
WA, Queensland and the Northern Territory will be able to get concessional loans through a new $5 billion Northern Australia fund for new ports, pipelines, electricity and water infrastructure.
To accommodate a $1 billion cut to foreign aid, Australia’s payments to Indonesia will be slashed 40 per cent.
Australian aid to Africa has been cut 70 per cent.
National security will get $1.2 billion extra, paying for an expansion of Australia’s military operations in Afghanistan, Iraq and the Middle East, as well as a redoubled effort to counter home-grown extremism.
Labor labelled the Budget a short-sighted attempt to save Tony Abbott’s job, with more tax, a doubling of the deficit and higher unemployment.
“The fundamental unfairness of last year’s Budget disaster remains tonight – all but two measures from last year’s Budget remain in this Budget,” shadow treasurer Chris Bowen said.
“At the core of this Budget are the same cuts the public rejected last time: $80 billion cut from hospitals and schools, $100,000 university degrees, cuts to family payments.”
Greens leader Richard Di Natale said the Budget lacked vision, taking more money from the pockets of nurses and charity workers than the miners or big banks.
Courtesy of the West Australian