- Baby bonus scrapped from 2014
- Winners and losers
- Full budget 2013 coverage
- Federal budget at a glance
- Treasurer Wayne Swan's budget speech
Middle income families, parents to be, and smokers will lose out in Wayne Swan's sixth budget designed to repair the debt-ridden bottom line and convince voters of Labor’s economic management credentials.
Declaring the budget to be about ''consistency'', the Treasurer has eschewed the traditional pre-election spendathon, opting to challenge the opposition to ''choose between making motherhood statements about ending the age of entitlement, or putting their words into action'' by backing savings initiatives.
Swan defends 'tough budget'
Treasurer Wayne Swan joins the Fairfax Canberra team to discuss the budget, criticism from business groups and the failure to return to surplusPT6M27S http://www.canberratimes.com.au/action/externalEmbeddedPlayer?id=d-2jle7 620 349 May 15, 2013
Faced with an expected $60 billion shortfall in revenue over four years to 2015/16, the budget confirms billions in new spending on popular disability insurance and education reforms and sets out $24 billion in infrastructure projects – although not all of that represents new spending.
But it carries the political risk that its tiny projected surplus in year three will not be believed by voters, and that its savings will be seen as harsh on business and on middle-income households.
Families in the middle income bracket stand to lose some family entitlements as well as promised carbon tax compensation, while incurring new costs for higher education when scholarship grants are converted to loans.
Treasurer Wayne Swan poses for the media with the 2013 budget at Parliament House. Photo: Andrew Meares
Smokers too are to be slugged by higher costs per packet when the federal excise and customs duty is pegged to average weekly ordinary time earnings rather than inflation.
Some older Australians will benefit from the rapid fiscal consolidation via a new trial program to encourage them to bank the proceeds of downsizing to smaller homes without affecting their aged pension availability.
Outlining a plan to deliver a tiny surplus of less than $1 billion in the third year of the budget cycle, after a larger than expected deficit nearing $20 billion for 2012/13, the Treasurer has revealed the $5000 baby bonus will be scrapped from March 1, 2014, to be replaced by a lower $2000 supplement payable only to recipients of Family Tax Benefit (A).
The Family Tax Benefit upper income cut-offs – which have been traditionally indexed to take account of inflation – have also been frozen until July 1, 2017, meaning fewer families will remain eligible as their incomes grow.
The two measures will save $2.3 billion over four years as part of a claimed aggregate saving total over five years of $43 billion.
VIDEO: Federal Budget 2013
In a surprise to markets and economic commentators, even after being softened up with pre-budget warnings of a current $17 billion revenue write-down, Mr Swan has revealed a fiscal shortfall for 2012/13 of $19.4 billion in place of what was forecast to be a budget surplus of $1.1 billion.
Business, which has made no secret of its antipathy for Labor in recent months, stands to pay more under a suite of changes headlined ''protecting the corporate tax base''.
These include tightening the rules on profit shifting, where multinational companies load up their local arms with debt while shifting profits offshore, usually to low tax jurisdictions. Other changes include removal of immediate deductibility for expenditure on exploration. The measures will secure nearly $4.2 billion for the budget over four years.
Delivering what might well be his last budget, Mr Swan said next year's balance sheet would show a similar deficit of $18 billion, shrinking to $11 billion in 2014/15, and tipping into the black by just $0.8 billion in 2015/16.
The wafer thin surplus is as much a political gesture for Mr Swan, who has been on the back foot since abandoning his iron-clad commitment to a surplus come-what-may in 2012/13, just before Christmas.
''Because of our deep commitment to jobs and growth, we have taken the responsible course to delay the return to surplus, and due to a savage hit to tax receipts, there will be a deficit of $18 billion in 2013/14,'' he told Parliament.
''To those who would take us down the European road of savage austerity, I say the social destruction that comes from cutting too much, too hard, too fast, is not the Australian way. Instead we’re making targeted, sustainable savings of $43 billion over the forward estimates.''
The budget forecasts slower economic growth of 2.75 per cent in 2013/14 before recovering to 3 per cent trend growth thereafter.