Traditionally a budget in an election year contains a host of sweeteners and giveaways, but this year the government simply didn’t have the money to soften up the business community.
Treasurer Wayne Swan is announcing a deficit of $18 billion and the much vaunted budget surplus won’t occur until 2015 when Swan is banking on a surplus of $800 million.
The cuts and revenue-raisers
In the meantime this election year budget is filled with incremental cuts and revenue raisers which Swan was quick to say were not “radical cuts to the bone” and instead “a sensible, calm and responsible approach that puts jobs first”.
The headline measures include:
- scrapping the Baby Bonus;
- reforming superannuation to raise $800 million; and
- increasing the Medicare Levy to fund a national disability insurance scheme.
Swan was at pains to emphasise that he could have cut harder but had held back.
“Just because the global economy took an axe to our budget, does not mean we should take an axe to our economy,” Swan said.
“Just as we shielded Australia from the worst during the global financial crisis, we will continue to follow the responsible middle course.”
Business in the firing line
There may be no radical cuts but Swan’s “responsible” budget contains little joy for business.
The overwhelming majority of the measures touted as part of the government’s plans to “support business to innovate” had already been announced, including the $500 million investment in Industry Innovation Precincts and the government’s $1 billion “Plan for Australian Jobs”.
Swan described these measures in his budget speech as “part of our plan to support and create jobs, building on our loss carry-back and instant asset write-off reforms for 3 million small businesses.”
But he failed to mention the loss carry-back scheme, announced in last year’s budget, is still to be legislated for.
Rather than offering support for business, under the measures announced in tonight’s budget, businesses will be targeted through:
- the provision of $67.9 million to the Tax Office to crack down on trust misuse; a $77.8 million boost to the ATO’s data matching;
- an increase in the 457 visa application fee to almost double;
- more upfront checks for start-ups registering Australian Business Numbers and an increased business name registration fee;
- the shutting down of “unfair business tax loopholes” by focusing on offshore marketing hubs and business restructures; and
- confirmation that self-education expenses will be capped at just $2000.
Small boosts for business
It is an election year after all so Swan has included a few measures for business to help the medicine go down:
- $29.4 million in assistance for small and medium businesses vying for government services and tenders;
- funding to standardise the business name registration process;
- $12.9 million to assist businesses in accessing the National Broadband Network; and
- protection of entitlements for contractors in the textile and clothing industry.
The business community may be relieved that Swan’s cuts and revenue raisers were not more savage.
But there’s not much in tonight’s budget for voters and businesses to look to come September.