The 2014 Budget was released last night, and the resounding opinion on it is not exactly positive. Treasurer Joe Hockey declared that “the age of entitlement is over”, as he announced the harshest budget in over a decade.
The budget hurts families, the sick, the wealthy and the young unemployed. Mr Hockey is doing this by: slashing welfare, introducing a temporary debt ‘tax’, raising the petrol tax, raising the pension eligibility age, and gutting the schools and hospitals by taking away over $80 billion of funding over the next 10 years.
The Abbott Government said the drastic budget would cut the nation’s net debt from a forecasted peak of $264 billion in 2017-18 to around $1-$2 billion within the next decade.
This budget was not exactly a winning budget for many people, as it clamped down on the majority of the population.
The real winners are the motorists and businesses.
The motorists were big winners with over $50 billion in funding for infrastructure, which is to be known as the “Our Growth Package”. Victorians will be able to experience this win through the $3billion for the East West Link; $263.4 million for Western Highway Ballarat to Stawell duplication.
Business can probably be seen as the biggest winner of the budget, with a number of key wins.
Starting with small businesses, which a Small Business Ombudsman is going to be created to help small businesses find out about government programs. The other key advantage for small businesses is that protection from unfair contracts will be extended to small business to help create a level playing field with bug business.
The minor winners are the individuals in the regional/rural areas of Australia with $100 million allotted to communication and $100 million to agriculture.
$100 million has been allotted to fix mobile phone black spots in rural and regional areas. This may mean that the tower works, but if your provider will actually take advantage of the increased network area is another question.
Also another $100 million to assist in research into the agriculture industry to improve the efficiency and effectiveness of all aspects associated with the industry.
The budget is full of big losers, ranging from low income earners to the young unemployed.
Starting off with the health industry, a $7 charge will be introduced to visit the GP, have a blood test or an X-ray. The increase is meant to be funding the new $20 billion Medical Research Future Fund, which is a positive but the effect of the $7 charge mixed with the effects on low income earners, will ultimately lead to increase hardship for the low income earners of Australia. Another lose in the health industry is the $2 billion cut from public hospitals, mixed with a $390 million cut to public dental. If this wasn’t already a big lose, a $5 charge for prescriptions (specific drugs which have not be named yet) and an extra 80 cents for pensioners surely take it over the line.
The education sector is the next biggest loser with a shredder taken to the budgets and affordability of education. Universities can set their own tuition fees from 2016, and students will have to pay back HELP debt sooner with the income threshold dropped to $50,368. With universities charging whatever they see fit for a degree, we could be seeing the cost of a degree rising to $200,000 in 2016.
The low income earners are probably the hardest hit in the budget, with both Part A and B of the Family Tax benefit being lessened. Part B will stop when a child turns six and the threshold being lessened to $100,000. Part A will see payments drop when income reaches $94,316 a year. This could end up losing low income earners over $4000 a year, this mixed with the rising costs in education, fuel and medical help will hurt every low income earner.
Businesses will also get $10,000 payment for employing employees over the age of 50. However, from September 2017 the age of the pension is expected to rise to 70 and pensions will be indexed to CPI not wages. In other words, pension raises will only compensate for inflation and won’t keep inflation; obviously, the ten thousand dollar grant is meant to assist the over 50s to get jobs and stay within the work force so they can combat the loss.
The petrol tax will increase by one cent a litre; however the proceeds are tied to road-building. You may never see the direct benefit of the increase but someone out there in Australia will be driving on your contribution of one cent a litre to their roads.
Overall, the budget seems to complete its objective of lowering the nation’s tax debt; but at what cost?
What are your thoughts on the 2014 budget?