Swan needs to save $10b to get budget in surplus
THE Treasurer, Wayne Swan, has put a number on the savings he will need to outline on May 8 to return the budget to surplus.
He said a collapse in projected budget revenue of $5 billion in 2012-13 and another $5 billion in 2013-14 would mean he would need to find an extra $10 billion over the next two years.
The Herald understands that only $2 billion of the $5 billion shortfall in 2012-13 is due to weaker than expected company tax collections.
Will do everything in his power "to protect low and middle-income earners" ... Treasurer Wayne Swan. Photo: Glenn Hunt
Another $1 billion is due to weak collections from superannuation funds in the wake of a downturn in the share market. A further $750 million is due to weaker than expected collections of customs and excise duties on alcohol, tobacco and fuel.
Mr Swan told Channel Ten's Meet the Press he would do everything in his power ''to protect low- and middle-income earners'', confirming that high earners on $300,000 or more would have their superannuation contributions taxed at 30 per cent rather than the present highly concessional 15 per cent.
''We have got to make sure superannuation concessions are distributed fairly around the system, and in a budget where we are looking for savings it's important to run your ruler over a whole range of tax expenditures to make sure that they are directed in the right areas,'' Mr Swan said.
The Treasurer will also tighten up further on so-called living-away-from-home allowances under which executives hired from overseas or interstate receive large tax-free sums to compensate them for ''living away from home''.
From July 1 they will have to prove they rent or own a second home to claim such an allowance and it will be limited to a period of one year. Fly-in, fly-out workers in the mining industry will be allowed to continue to claim the allowance.
Four leading public health bodies have written to the Prime Minister asking for a crackdown on alcohol tax concessions as a way of stemming the tide of alcohol-related deaths and injuries and saving $1.5 billion a year.
The Australian Medical Association, the Cancer Council, the McCusker Centre for Alcohol and Youth, and the Foundation for Alcohol Research & Education say taxing wine by volume at the rate applying to beer would save more than $1.5 billion and would stop the leakage of concessions to New Zealand wine makers now claiming them as part of the Closer Economic Relations agreement.
''We are aware that the government has previously declined to act in this area, arguing that it will not act in the middle of a wine glut and where there is an industry restructure under way,'' the letter says.
''However, research shows the current alcohol taxation arrangements actually contribute to the increased availability of very cheap wine and action is urgently required.''
The budget numbers will be boosted by a forecast of a return to economic growth of 3.25 per cent. The latest figures show growth languishing at 2.3 per cent.
Participants in Treasury's Business Liaison Program report ''strong demand'' in the resources sector, a ''challenging'' environment in retailing and ''difficult'' conditions in manufacturing, according to a Treasury document to be released this morning.
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