2012 Federal Budget Focus
The key focus for the Federal Government in the 2012-13 budget is to achieve a headline surplus.
Therefore rather than spending announcements in portfolio areas the major focus will be on growth forecasts and on savings whether achieved through spending cuts, removal of tax benefits or tax hikes including the raising of charges.
It is also likely there will be an increase in tax audit activity and recovery processes as this is proven measure governments can use to help bolster revenue.
It is worth highlighting that the need for Australia's austerity measures comes not only from undisciplined spending but from an underperforming economy failing to deliver the revenue required.
Treasurer Swan has announced revenue collections will be down by a further $5 billion in both 2012-13 and 2013-14 compared to the last forecasts in the mid-year budget update in November.
This takes the total write-down in tax collections since the 2008-09 Budget to almost $150 billion over five years.
This adds to the case to not only find substantial savings in order to achieve the surplus objective but also to stimulate the economy through assisting business.
Tonight CCIQ will be focusing on a number of areas:
- The budget should take cost pressure off doing business
- A surplus is achievable if the government only spends where spending is necessary. A surplus achieved by removing necessary support for the economy is a false saving
- The budget should announce a policy reversal on the carbon tax
- The budget should outline the wage trade off mechanism to fund the 2013 superannuation levy rise
- The budget should accelerate past investment in skills, education and retraining
- The budget should announce a framework for broader tax reform than the carrying back of small business losses.
A number of further questions need to be answered tonight:
- In forecasting a budget surplus will the savings measures adversely affect the mainstream economy and the level of aggregate demand?
- Are the GDP forecasts realistic in the light of significant fiscal contraction?
CCIQ will be releasing a budget review following today’s budget statement.