A high Australian dollar and slowing global economy has certainly impacted heavily on Labor's sixth budget, with the Government giving up any hope of a return to surplus in favour of funding the main Labor initiatives of the Gonski school reforms, the DisabilityCare program, the National Broadband Network (NBN), and the Nation Building Projects (Road and Rail).
Businesses eagerly awaited to see whether the Government was
able to come up with a visionary plan for the future to help the
economy grow and to turn around the declining revenue collections.
Other than the incidental stimulus from the above four initiatives
there was nothing major to kick business along. The crackdown on
perceived loopholes that are supposedly being exploited by
multinationals (such as the thin cap reform) will be a drag
on
business.
Many of the budget's major spending initiatives were announced in the lead up to the budget, such as:
- DisabilityCare $68 billion over 10 years
- School Education $26 billion over 10 years
The Government had also previously announced that these measures were to be largely funded through:
- An increase in Medicare levy of 0.5% of $3.3 billion a year
- Cancellation of the increase to Family Tax Benefit Part A - $1.8 billion over three years (originally was to increase by $300 for those with one child and $600 for those with more.)
- Deferred tax cuts for carbon price compensation $1.4 billion (Carbon tax was expected to bring in $2 billion in the first year, yet in the first six months it only brought in $126 million.)
Interestingly, new laws will be introduced to help Australian firms win more work by introducing a requirement for an Australian Industry Participation Plan for any project in Australia worth more than $500 million and a new anti-dumping commission.
It will be interesting to see how many of these budget announcements will see the light of day after the Federal election.
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Exective Summary - Moore Stephens Federal Budget 2013 Insights
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