Just days out from the release of his third Federal Budget, Treasurer Wayne Swan has promised the Government will resist the temptation to buy election votes and deliver a “no frills” budget with seemingly few new spending initiatives.
“It’s certainly going to be a no frills Budget. We’re not engaging in some Peter Costello-John Howard spend-a-thon in [an] election year. There’s simply no room for that. We are very serious about our strict Budget rules and imposing a 2% cap on spending,” Swan told the Nine Network yesterday.
Rather than introducing a raft of new measures, the Budget will turn Rudd Government policy announcements into formal programs.
These include the Government’s $15 billion health reform package that was approved last month by all the State Governments with the exception of Western Australia; the $5 billion increase to the tobacco excise; the move to increase the superannuation guarantee from 9% to 12%; and the decision to shelve the carbon pollution reduction scheme, with will save $2 billion.
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“I think the most important thing that people will see from this Budget is a long overdue funding of the health system which will deliver the quality of services that they need over a period of time. That is a very significant reform in the Budget,” Swan said.
Based on the Treasurer’s description of the budget, it looks like there will be slim pickings for businesses.
While another tranche of small personal income tax cuts will help small business operators, most industry groups are pinning their hopes on increased spending on training and education, more money for infrastructure and measures to help improve Australia’s competitiveness as a financial services hub.
Reports in the Australian Financial Review today suggest one area the Government will tackle is GST for exporters and foreign businesses, such that the GST rules for cross-border transactions are made easier.
Pre-Budget rumours also suggest a cut in the tax rate on bank deposits could be made to encourage saving, while simplified one-page tax returns for individuals and businesses appear to be still on the agenda, despite the fact the Government ignored this idea in its response to the Henry Review last week.
These rumours suggest that while businesses should not expect too many big-picture policy shifts in tomorrow’s Budget, it is crucial to keep watching for small changes that may have still have a big impact on their business.
Tomorrow SmartCompany editor James Thomson and reporter Patrick Stafford are jetting up to Canberra for the Federal Budget lock-up and will bring you all the news and analysis in a special bulletin on Tuesday evening. While Treasurer Wayne Swan has promised a “no frills” budget, entrepreneurs need to watch out for the smaller policy shifts that could have a big impact on their sector.