Tue May 13, 2014
Australian Government Plans To Slash Budget, Raise Taxes
Originally published on Tue May 13, 2014 2:42 pm
Australia's conservative government says it wants to effect radical spending cuts and tax increases aimed at nearly halving the fiscal deficit by 2016.
In a speech to Parliament, Treasurer Joe Hockney said Tuesday that "the age of entitlement is over."
The plan for the fiscal year starting July 1 is to reduce Canberra's budget deficit to $27.8 billion. The cost for visits to the doctor under Australia's partially government-funded health system will be increased, as will fees for university students, while defense will get a bump in spending and small- to medium-size businesses will enjoy a tax cut.
More than 16,000 government workers are expected to lose their jobs, The Associated Press says.
The government also plans to spend just over $10 billion on infrastructure projects such as roads, railways and a new airport in Sydney.
The Sydney Morning Herald has a breakdown of the budget's winners and losers here.
Prime Minister Tony Abbott's center-right government was elected in September promising no new taxes. But, according to the AP, "critics say he is breaking that election pledge with a 2 percent levy to be paid for three years by Australians earning more than about $170,000 a year. The levy would raise about $3 billion."
"It's a budget that delivers short-term pain for all of us, including short-term pain for business, but there is significant long-term gain for Australia," Australian Chamber of Commerce and Industry Chief Executive Kate Carnell says.
"Promised tax cuts and big spending on infrastructure will benefit the top end of town, while smaller businesses receive rewards for hiring older workers.
"Companies will also receive financial assistance to access export markets, manufacturers moving into new growth industries will be eligible for grants, while the energy and resources sector will be encouraged to explore for new mineral deposits.
"'Rather than corporate welfare, the government's focus will be on strengthening the overall business environment, so that enterprise, large and small, can create more jobs in Australia,' Mr Hockey told parliament."
"The economic blueprint also includes plans for the possible sale of assets such as the Royal Australian Mint and aural aid-maker Australian hearing. ...
"They also announced plans to create an [$18.7 billion] medical research fund in a bid to help diversify its economy away from its reliance on mining.
"The government also fielded a proposal to raise Australia's retirement age to 70 by 2035, to combat the problems associated with an ageing population."
The AP notes: "The government will need the support of opposition and minor parties to get some of the more contentious measures through the Senate and might have to make compromises."