This is a big spending election Budget, with handouts to Labor voters paid for by smokers (a relief for drinkers this time around), miners and tax collected from a growing workforce and reduced unemployment.
The Federal Government spends or allocates to the States for spending, 1 in every 3 dollars spent in Australia, (almost equal to the entire GDP of Greece, which admittedly only has half our population). Almost half the expenditure and all the increase in total expenditure goes to health, social security and welfare. The main areas of reduced expenditure, education, housing and energy efficiency are areas that needed boosting rather than cuts.
Labor’s heartland will welcome the reduced income tax, the superannuation guarantee increase from 9% to 12% and easier tax returns (plus higher deductions) so much so that if the Liberals refuse to pass elements of the Budget because , for example, they don’t like the super profits tax on miners then Labor will easily win the election to be called shortly.
I believe Mr Abbott has made a serious mistake aligning himself with the miners. That’s a no win situation. Voters will want the handouts and won’t care about big mining companies paying for them. Politics at its cynical best.
Hidden in the Budget are some interesting nasties for small businesses. The government is going to spend a quite massive extra $420m targeting GST avoidance and the cash economy. If the FBI can catch a terrorist because he paid for his car with cash, the sky is the limit as to what can be achieved if serious resources are directed at the black economy.
Most individuals and most industry sectors gain a little from the budget. The government has cautiously increased spending as much as it dared without raising the ire of the RBA. They are pinning their hopes for revenue raising on miners and smokers. Once the election is announced we will see the hollow logs raided for more election promises.
Lucky we can still afford a glass of wine or 2 for another year.
