The promised boost to Family Tax Benefit payments will now be scrapped due to the budget’s deteriorating position, the government confirmed this morning.
The confirmation comes alongside rumours the budget shortfall will swell to $80 billion over the next four years, alongside reports business concessions will be targeted for savings.
Finance Minister Penny Wong told Sky News this morning the government won’t be in a “position to proceed” with an increase for the Family Tax Benefit program. That pledge was due to begin on July 1.
The increase was accounted for in the 2011-12 budget, with Labor putting aside $1.8 billion over four years in order to increase Family Tax Benefit Part A. The increase was aligned with extra money from the mining boom.
“Because we’re seeing a combination of circumstances, a very high dollar and the prices of the things we sell to the rest of the world coming off, that that’s obviously having an impact on company profits, which is having an impact on government revenues,” Wong told Sky News.
“That will have an impact across the budget period and what I can confirm is that the impact in the current financial year, between last year’s budget and this year’s budget looks to be in the order of $17 billion.
The extra benefit would have provided an increase of $300 per year for families with one child and $600 per year for families with two or more children.
Wong also declined to comment on speculation the budget shortfall will increase to $80 billion over the next four years, instead referring to the decision to cut the FTB payments as a “difficult but responsible” choice.
“(It’s) obviously a decision we would have preferred not to have made, but a decision that is driven by the need to act responsibly in the face of falling revenue,” she said.
Wong also said no person would lose any money from the change, as the benefits weren’t set to begin until July 1.
The confirmation comes alongside a multitude of budget speculation. The latest reports from The Australian Financial Review suggest the budget shortfall will be as much as $80 billion over the next four years.
The speculation also indicates business tax concessions will be targeted, much to the ire of representative and lobby groups.