2008-09 Budget

On the 13th May 2008, Wayne Swan handed down Labor’s first Federal budget since Ralph Willis in 1995.  In the past we saw Robert Menzies’ push for the “forgotten people” followed by John Howard’s little Aussie “battler”. You may have been one of the “forgotten people” or a “battler”, but this year you were a winner if you are a “working family”. So called “working families” do not include the hard working families in the over $150,000 combined income bracket though. Perhaps what we need is a definition of what constitutes the “working family”?

The mildly better off working mother/family is left to ponder their ‘wealth’ and the sometimes meanness of the means testing. Yet again, singles and childless couples received little joy from the budget. However, it is our aged pensioners that have truly been left to eat crumbs after receiving almost no compassion in the budget announcement, notwithstanding the fact that they were the true “working families” of our time. 

For all the pre-budget hype over same-sex couple’s apparent push for equality, they are potentially worse off than they were. I believe the discrimination in question is more intimate rights such as medical rights and fertility, yet their push for equality has merely taken away their ability to qualify for higher payments as two single people. I am sure the same-sex community were hoping for equality on broader grounds than just this.

We are very pleased to hear of that a review of the taxation system is on the agenda, particularly some form of unification of State and Federal taxes. Wayne Swan was noted as saying “there has not been a comprehensive review of the Australian taxation system, including state taxes, for at least the last 50 years”. I think this bold statement may be a little insolent towards the good work of his predecessors in the last 50 years. I also question a “comprehensive review” that does not involve all taxes (GST has been excluded from the review). Despite that, the platform has been set for a review which can only be good? What we are really seeking is business tax reform that more fully incorporates reviewing compliance costs and streamlining administrative and interpretative processes. They have given themselves a tight timeframe, but we remain hopeful.

Wayne Swan has branded his debut budget as “inflation-fighting” which is arguable at best. To begin with, the budget shows the Government increasing spending. To impact inflation, the budget should reflect a decrease in net spending, not an increase. This budget will likely do very little to improve Australia’s notoriously bad rate of savings. It would be safe to assume that virtually all of the package will result in increased household spending which will only place pressure on an economy that is running hard against the constraints of capacity. Furthermore, the first home save accounts will probably place upward pressure on the house prices rather than improving affordability.

So, what do we think of the budget? If you’re in the middle class you’re probably still stinging. On the whole, the budget is largely uninteresting and lacking any zest. But then, you can’t please everyone.