Costello Delivers Howard Government’s 12th Budget

May 08, 2007

The Treasurer, Peter Costello, has delivered the 12th Budget of the Howard Government.

The budget will take the government through to this year’s election.

Listen to Peter Costello Deliver the 2007-08 Budget:

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This is the text of the 2007-08 Federal Budget Speech, delivered to the House of Representatives, by the Treasurer, Peter Costello.

Mr Speaker, I move that the Bill now be read a second time.

INTRODUCTION

Australia is different to the way it was 10 years ago.

Our economy is about 1½ times larger than it was back in 1996.

We have another 2 million Australians who have found jobs since then. And average
wages have increased 20 per cent in real terms.

In the decade before 1996 inflation averaged 5 per cent a year. Since then inflation has
halved, averaging the low and stable rate of 2½ per cent a year.

Ten years ago the Australian Government owed a net debt of $96 billion. The
Government was paying an interest bill of $8.5 billion a year. Today we are debt free in
net terms. And our net interest payments are zero. This is saving taxpayers $8.5 billion
a year.

Back in 1996 the Budget was in deficit. We were living beyond our means. Today we
are living within our means. For the 10th time, I am outlining a Budget that will be in
surplus.

We have come a long way and made a lot of progress. This year’s Budget has been
framed to lock in that progress:- to keep people in jobs; to keep our living standards
up. We don’t want to lose all that we have achieved over the last 10 years. We want to
lock in the gains and move forward.

The next decade will bring challenges all of its own — the ageing of the population,
health care, aged care, the emergence of climate change, the instability of our region
and the global shocks which can threaten our economy.

If we lock in the achievements of the past this will help us with the challenges of the
future. We want to meet and deal with future challenges from a position of strength.

This is a Budget which will build our economic capacity and give us that strength.

Tonight I will explain how we will invest for the future.

I will outline steps which will grow our economy.

I will introduce measures to give a helping hand to those who are struggling.

I will detail proposals to improve and conserve our natural environment — our water
and our riverways.

And this Budget will fund the national security and defence preparedness we need to
protect our country.

Two years ago I announced the Government would establish a Future Fund to invest
now for liabilities that are falling due for payment in the years which lie ahead. The
Fund is established and is well on its way. It will help pay entitlements to our soldiers,
navy and air force personnel which must be honoured after they have retired and
finished their service to the nation. The Fund operates as an accumulation fund and
reinvests its earnings. It aims to meet its target by 2020.

If you rob capital or earnings from the Future Fund, taxpayers will have to make up
the difference. You are passing our bills, our obligations, from our generation to the
next. This will limit their future. We will strongly oppose any irresponsible attempt to
raid this national investment for cheap political advantage.

HIGHER EDUCATION ENDOWMENT FUND

We do not want to limit the future chances of young Australians, we want to build
them. So tonight I announce another investment in the future. For the first time ever,
the Australian Government will establish an endowment fund — the Higher
Education Endowment Fund (HEEF) — as a perpetual fund to generate earnings for
capital works and research facilities in our institutions of higher learning.

The initial investment of $5 billion out of this year’s Budget surplus will broadly
double all the existing financial investments and endowments currently held in the
total university sector.

The capital will not be spent. It will be invested. And, what is more, we will add
further capital from future Budget outcomes to this perpetual fund.

Individuals who wish to contribute to this visionary initiative will be able to make tax
deductible gifts to be managed along with the Government endowment. The
Endowment will be managed by the Guardians of the Future Fund.

The earnings generated by this investment will be dedicated to building first class
institutes of learning — first class by world standards — and put our Institutes of
Higher Learning on a secure footing for ever.

In addition to this, tonight I announce a plan to improve the education system so as to
help all young people achieve their full potential.

This $3.5 billion plan called Realising Our Potential has three components. At the school
level it means improving numeracy and literacy. At the training level it means better
vocational education and more apprenticeships. At the tertiary level it means better
universities which are more responsive to student needs.

IMPROVING SCHOOL OUTCOMES

Every parent is entitled to expect that their child will receive a high quality education
and develop the basic skills they need in later life. If children fall behind early they
find it very hard to catch up.

From 1 January next year we will help those children who do not achieve national
literacy and numeracy benchmarks in Years 3 and 5 and 7 by providing a voucher to
their parents for extra tuition outside of school. The voucher will be for $700. It can
only be used for tuition. It is designed to give those children who need it specialized,
personal, assistance.

If we want to improve literacy and numeracy we also need to recognise and reward
those teachers and those schools that do well in teaching our children.

In 2008 there will be a bonus up to $50,000 available to schools that make significant
improvements in the literacy and numeracy standards in their schools. This will
reward school excellence.

The Government will also provide $102 million from 2008 to establish Summer Schools
for teachers to undertake professional development for teaching in the areas of
Literacy and Numeracy, Australian History, Maths, Science and English. Teachers who
attend these summer schools in their own time, will receive a $5,000 bonus from the
Australian Government on completing the course.

The Government will also provide additional funding of $77 million from 2008 to get
more practical experience for those training to be teachers. We will pay Institutions to
provide a minimum 120 days experience in schools for trainee teachers who are doing
three and four-year degrees.

VOCATIONAL EDUCATION AND TRAINING

The Australian Government is a strong supporter of vocational education and training
(VET). The recent Skills for the Future package committed $837 million in new funding
to support skills training in the sector. We need more tradesmen and women. We need
to get more young people into apprenticeships.

That is why we will introduce a new tax exempt payment of $1,000 to first and second
year apprentices in skill-shortage trades to top up their wages. It will be for those
under 30 years of age. It will give them better wages while they are training. First and
second year apprentices in skill-shortage trades, regardless of age, will also be entitled
to a voucher of $500 which they can use to help offset course fees for their training.
This will encourage more people to take up apprenticeships at a cost of $549 million
over four years.

An additional $84 million over five years will be provided to establish three new
Australian Technical Colleges in the Brisbane, Sydney and Perth areas; to add to the 25
being established around Australia.

HIGHER EDUCATION

The Budget also includes an additional $768 million over four years to increase the
capacity of universities to respond more flexibly to student demand:- allowing them to
enrol more students in courses that students want to study and simplifying
Commonwealth funding arrangements.

We will also provide an additional 3,500 Commonwealth Learning Scholarships for
university study over four years.

These measures for primary education, for apprentices and for higher education will
boost the skills of our workforce and expand Australia’s productive capacity. More
than ever Australia needs to be smarter and more productive to keep ahead of the
pack.

INCOME TAX CUTS

Mr Speaker, if we want our economy to grow we must ensure there are strong
incentives for people to join the workforce and reward them for better skills and better
effort.

We commenced cutting personal income tax in 2000.

We have cut taxes in the last four Budgets.

Tonight I announce income tax cuts for the fifth year in a row. These tax cuts will take
effect in two stages: from 1 July 2007 and 1 July 2008.

From 1 July this year, the 30 per cent tax rate will only apply to income over $30,000:-
up from the current threshold of $25,000.

The low income tax offset will also rise from $600 to $750 and will begin to phase-out
from $30,000. This means that low income earners eligible for the offset will not pay
tax until their annual income exceeds $11,000.

For a person on average wages the tax cut I announce tonight will be around $16 a
week. For those below it can be more, for example, at $30,000 the tax cut will be $21 a
week.

These tax changes provide further incentives for those outside the workforce to enter it
and for those in part-time work to take additional hours.

Taxpayers earning $30,000 paid $6,222 in income tax in 1999. From 1 July 2007 they
will only pay $2,850 — a reduction of around 54 per cent.

From 1 July next year, we will increase the 40 per cent threshold from $75,000 to
$80,000 and the 45 per cent threshold from $150,000 to $180,000.

These income tax changes will ensure that more than 80 per cent of taxpayers face a
top marginal tax rate of 30 per cent or less across the forward estimates period. They
mean the top tax rate only applies to around 2 per cent of taxpayers. Back in 1996 the
top marginal rate — which was higher than it is today — applied from $50,000. If that
threshold had been indexed it would have stood below $68,000 on 1 July next year. In
fact it will be $180,000.

Senior Australians who are eligible for the senior Australians tax offset will now pay
no tax on their annual income up to $25,867 for singles and up to $43,360 for couples.
Our tax system exists to fund the decent services in health, education, aged care, and
other services that Australians legitimately expect and are entitled to receive. If after
we provide for those services, invest for the future, and balance our Budget, we can
reduce the tax burden, we should do so.

Tonight I am also announcing a programme to dramatically simplify income tax
returns for the next financial year commencing on 1 July 2007.

Taxpayers will be able to go online to access an income tax return prepared by the
Commissioner of Taxation, including income from salary and wages, interest,
dividends, information on private health insurance, and any benefits paid from the
Government, including the family tax benefit.

If the taxpayer is satisfied with this pre-prepared statement, they will be able to click
online and file their return without any further action. If there is additional
information to provide, this can be added to the pre-prepared return.

This will be available for the 9 million taxpayers who currently lodge their tax return
electronically, either directly or through a tax agent. There are 10 million taxpayers in
Australia.

IMPROVING CHILD CARE ARRANGEMENTS

Part of helping families to balance work and parenthood is to assist with child care.
Government assistance for child care in 2007-08 will be $3 billion, nearly three times
the level in 1996-97.

From 1 July 2007, the rates of Child Care Benefit will increase by 10 per cent, on top of
indexation. This will increase the maximum rate of Child Care Benefit from $2.96 to
$3.37 per hour, meaning that a family on maximum rate assistance with one child in
Long Day Care for 40 hours per week will be eligible for $134.80 per week. This change
will provide $728 million in extra assistance to more than 700,000 families.

The Government will also reimburse 30 per cent of the remaining out-of-pocket
expenses after the payment of the Benefit. From 1 July 2007, families will receive the
30 per cent Child Care Tax Rebate as a direct payment shortly after the financial year
in which they incur out-of-pocket child care costs. Families who incur out-of-pocket
child care costs in both 2005-06 and 2006-07 will receive two rebates in 2007-08 — one
through the tax system under existing arrangements, and the other as a direct
payment. The maximum payment will be $4,096 per child in respect of 2005-06 and
$4,211 per child for 2006-07.

This reform will help mothers who want to take part in the paid workforce to do so.

BOOSTING INVESTMENT IN LAND TRANSPORT INFRASTRUCTURE

Mr Speaker, a high quality transport network underpins our nation’s productivity,
economic growth and prosperity.

The Government has a strategic plan to develop this network called AusLink.

We have invested $15.8 billion in road and rail projects like the Pacific Highway, the
Deer Park Bypass, and the Caboolture Motorway.

Tonight I am announcing that the Government will boost its investment in road and
rail infrastructure with the second AusLink plan and total funding of $22.3 billion over
five years from 2009-10.

The National Network of road and rail is critical to our economy and provides the link
between Australia’s major population and economic centres. It is the link for our
exports to the world.

AusLink 2 will help reduce accidents on Australian roads. The Black Spot Programme
will increase to $60 million per annum over the five years from 2009-10. The Roads to
Recovery Programme constructs and maintains local roads and will be funded with
$1.8 billion. The Strategic Regional Programme supports the growth of regional
industry and will be allocated $300 million.

In order to bring forward construction of some of these strategic regional roads I am
announcing tonight an additional $250 million of supplementary funding to be paid to
local councils before June 30.

SUPPORTING RETIREMENT SAVINGS

Mr Speaker, encouraging people to save for retirement is critical to meet the challenges
posed by the ageing of the population.

In last year’s Budget I announced the most comprehensive reform of Australia’s
superannuation system ever. Taxes on benefits paid from a taxed fund to those over 60
will be abolished from 1 July 2007 — no tax on pensions, no tax on lump sums.

Another superannuation incentive for people on low to middle incomes is the
co-contribution scheme where the Government matches $1.50 for each $1.00 a person
contributes from their own money to superannuation. In order to reward this saving
further, the Government will pay an additional one-off to double the co-contribution in
respect of the 2005-06 year.

This means an eligible person who contributed $1,000 will receive a co-contribution of
$3,000 from the Government for that year.

This will boost the superannuation savings of low and middle income earners by
$1.1 billion.

REWARDING OLDER AUSTRALIANS

Mr Speaker, since this Budget will boost the take home pay of those in the workforce,
we also want to assist older Australians of retirement age.

This year the Government will provide a one-off seniors bonus payment of $500 to all
individuals of Age or Service Pension age eligible for either the Utilities Allowance or
the Seniors Concession Allowance as at 8 May 2007. This payment will also be made to
all recipients of Mature Age Allowance, Widows Allowance and Partner Allowance as
at 8 May 2007.

I also announce tonight, for the fourth consecutive year, that recipients of the Carer
Payment will receive a bonus of $1,000 and recipients of the Carer Allowance a bonus
of $600 for each eligible person in their care. These are people who look after others
with a disability and help those unable to fully care for themselves. They deserve this
support.

Both the seniors and the carers bonuses will be paid by 30 June 2007. These payments
will be tax-free and not treated as income when calculating social security payments.
These measures will cost $1.7 billion in 2006-07.

These bonuses show we can extend the benefits of a strong economy to those outside
the workforce. It recognises the contribution older Australians have made to building
our economy. It lends a helping hand to our carers.

The Government will also increase the Special Rate and Intermediate Rate Veteran
disability pensions by $50 and $25 per fortnight respectively, with effect from
July 2007.

ACCESSIBLE AND AFFORDABLE HEALTH CARE

Mr Speaker, the Government is committed to ensuring Australia’s health care system
remains accessible and sustainable into the future.

In 2007-08 the Government will spend $51.8 billion on health and aged care, up from
$20 billion in 1996-97.

Our medical scientists have made Australia a world leader in health and medical
research. Building on previous Budget investment in this area, tonight I announce the
Government will provide $486 million in grants this year to construct further
world-class health and medical research facilities. Our scientists are among the best in
the world. We want to support their work to unlock treatments to deal with
debilitating and degenerative diseases.

And the Budget funds new pharmaceuticals to deal with conditions like diabetes that
affect so many Australians. By keeping our PBS competitive we can give access to new
treatments.

Being overweight or obese is a major risk factor for chronic diseases including
diabetes, heart disease and stroke. This Budget provides an additional $150 million
over four years for a package of measures to improve nutrition and encourage physical
activity, including structured physical activity for children after school. This will
encourage them to adopt healthier lifestyles.

Mr Speaker, while primary responsibility for dental care lies with State and Territory
governments, the Australian Government has responsibility for funding dental
training and funding general health services through Medicare.

This Budget provides funding of $65 million over four years to establish a new
regional dental school, with 60 additional dentistry places in regional centres. The
Government will also provide $12.5 million over four years to create more
opportunities for city dental students to undertake dental training in regional settings.

And tonight I am announcing additional Medicare funding of $378 million over four
years for patients whose dental health is impacting on a chronic medical condition.

A Medicare benefit up to $2,125 per year will be available for their dental treatment in
the private sector as referred by a doctor.

MEETING THE CHALLENGE OF CLIMATE CHANGE

Mr Speaker, one of the great challenges we have is to maintain the beautiful, diverse
and precious natural environment we have in Australia.

Our responsibility is to manage the environment for future generations. One of the
serious long term threats is global warming.

Since 1996, the Government has invested $2 billion to develop practical responses to
counter and reduce climate change.

The Government’s $500 million Low Emissions Technology Demonstration Fund is
already driving the development of solar and clean coal technologies that are vital in
this regard.

We want to encourage homeowners to install solar panels across Australia. The current
rebates will be doubled so that households will receive up to $8,000 for installing an
average system, which costs around $14,000, a rebate of over 50 per cent. Grants of up
to $12,000 will be available for solar panels in schools and community buildings.
Forests play a key role in reducing greenhouse gases. Tonight I announce that the costs
of establishing qualifying carbon sink forests will be tax deductible with immediate
deductibility for five years commencing 1 July 2007 and concessional depreciation
arrangements after that.

This Budget provides $197 million over five years for the Global Initiative on Forests
and Climate. This initiative will assist developing countries to manage and maintain —
rather than slash and burn — their precious tropical forests.

And this will be complemented by the establishment of partnerships with developing
countries to support water management, energy efficiency and alternative energy
initiatives.

A new Australian Centre for Climate Change Adaptation will be established. The
CSIRO will be allocated $103 million for Climate Change and Energy Research. All this
work will help Australia respond to the great challenge of global warming.

A NATIONAL PLAN FOR WATER SECURITY

Mr Speaker, water is one of Australia’s most precious resources.

The Government’s $10 billion National Plan for Water Security is intended to place
rural water use on a sustainable footing over the next decade. This plan includes
$5.9 billion to increase the efficiency of water use in irrigation and $3.1 billion to
address over-allocation of water.

Tonight I announce funding of $201 million over six years to support the installation of
water tanks and other water saving devices by schools and community organisations.
We must capture as much of this precious resource as possible and use it carefully and
wisely.

PROTECTING OUR NATURAL RESOURCES

The Government is further extending the Natural Heritage Trust until June 2013, with
an injection of $2 billion to support activities that improve water quality and reduce
land degradation at the local, regional and national level. The Natural Heritage Trust is
protecting wetlands, controlling salinity in the River Murray and dealing with nutrient
run-off into the Great Barrier Reef.

Farmers and other private land holders are frontline environmental managers for
around 77 per cent of Australia’s land mass. Many of our rare and significant plants
and animals are located on privately managed land.

Tonight I announce a new Environmental Stewardship Programme, an innovative long
term initiative which will engage the Australian Government in partnerships with
landowners to protect and improve environmental assets on private land.

The first of our natural assets to be targeted are the Box Gum Woodland areas that
span inland from Queensland to Victoria. There is less than 5 per cent of this
significant nationally endangered ecosystem left and much of it needs urgent work.

RURAL AND REGIONAL AUSTRALIA

Mr Speaker, large parts of our country are suffering badly from a once in a century
drought which continues on with devastating effect to farmers and rural communities.

Australians believe we should give a helping hand to those who are struggling.

Combining last year and this year around $1.2 billion will be paid in exceptional
circumstances drought assistance. Funding of $688 million in assistance is expected to
be provided in 2007-08.

Our assistance to drought affected farmers includes income support and loan
assistance, counselling and support services.

Tonight I announce an additional $205 million over four years to fund professional
advice for farmers in severe difficulty, to subsidise management training and
education and to provide re-establishment grants to assist those who wish to exit the
industry.

DEFENCE AND NATIONAL SECURITY

Mr Speaker, the Government has no higher responsibility than the defence of Australia
and its interests.

At present, members of the Australian Defence Force (ADF) are serving their country
with distinction in difficult and dangerous theatres.

The Government recognises that improved recruitment and retention is necessary in
order to ensure that we maintain the current high standards of our defence force and
enable the ADF to grow to its intended strength of 57,000.

Tonight I announce additional funding of $2.1 billion over ten years for a range of
initiatives to further improve recruitment and retention, including an enhanced
Defence home ownership assistance scheme, incentives for young Australians to take
up a Defence apprenticeship in a technical trade, and an expanded cadet programme
for young people.

The Government is committed to ensuring our defence force is fully equipped to meet
new and existing challenges. This Budget provides funding of $6.6 billion over
13 years to acquire 24 F/A-18F Super Hornets to ensure Australia maintains air
superiority in our region. The purchase will ensure a smooth transition to the
F-35 Joint Strike Fighter and allow for the orderly retirement of the existing F-111 fleet.

And our Government is committed to addressing emerging threats to national
security.

This Budget provides a further $702 million over four years for national security
initiatives to further safeguard against terrorism, including high-priority intelligence
needs, an integrated e-security national agenda, and further strengthening of aviation
security.

This brings to $10.4 billion the additional funding the Government has committed to
national security over the ten years to 2010-11.

ECONOMIC OUTLOOK

Australia has now recorded the longest economic expansion in its history.

Unemployment is at a 30 year low.

I pay tribute to the enterprise of Australia’s small business people and the hard work
of employees who can share credit for this standout performance.

The orderly adjustment to the current strength in the terms of trade demonstrates the
flexibility we have now built in the Australian economy.

As a result, inflation is forecast to be 2½ per cent in 2007-08.

Overall, GDP growth is forecast to be 3¾ per cent in 2007-08, reflecting an assumed
return to average seasonal conditions in the farm sector and a partial recovery from the
drought.

Business investment has grown strongly in recent years, and is now at its highest level
as a share of GDP in 32 years. This will boost capacity in the years ahead.

This Budget — with its investment in education, skills, in road and rail, and sharper
work incentives will add to that capacity. This investment will drive further economic
growth.

We must now lock in the progress of the last decade if we want to keep our living
standards high. From this position we can step out to meet the challenges of the future
with purpose and confidence.

I commend the Bill to the House.

Filed Under: 2007 Federal Election, Audio, Budget, Economy, Howard Government Tagged With: , , ,

Costello Budget Gives Tax Cuts; Targets Education, Childcare, Aged, Environment

May 08, 2007

The Federal Government has brought down the Budget that will take it to this year’s election.

The Treasurer, Peter Costello, delivering his 12th Budget, announced:

  • A surplus of $10.6 billion.
  • Tax cuts: 30% threshold rises on July 1 from an income of $25,000 to $30,000; from 2008, the 40% threshold increases to $80,000 and the 45% threshold increases to $180,000.
  • Simplified Income Tax Returns.
  • University funding increased by $5 billion for capital works; additional income support for tertiary students.
  • $700 tutorial vouchers for parents with children not meeting literacy and numeracy benchmarks.
  • $5000 bonuses for teachers completing professional development courses; extra money to ensure trainee teachers have 100 days teaching practice in schools.
  • 10% increase in Child Care Benefit from July 1; Tax rebate to be made available sooner.
  • Additional money from 2009 for road and rail infrastructure.
  • One-off doubling of superannuation co-contribution.
  • $500 one-off bonus payment for older Australians; $600 and $1000 Carer Payment bonuses.
  • $8000 rebates for solar panel installations.
  • Additional drought and Exceptional Circumstances funding.
  • $6.1 billion over 10 years to assist Defence recruitment.
  • $772 million for improved detection and treatment of chronic and complex conditions.

Full Budget Details

Listen to Peter Costello Deliver the 2007-08 Budget:

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Filed Under: 2007 Federal Election, Audio, Budget, Economy, Howard Government, Liberal Party Tagged With: , , ,

Costello Is Frittering Away The Future Say Greens

May 08, 2007

The Australian Greens say the Budget “is more about greed than green”.

According to Greens leader, Senator Bob Brown, “there is no recognition in this budget that the economy is a wholly owned subsidiary of the environment”.

This is the text of a media release from the Australian Greens.

“This budget is more about greed than green. The Treasurer has announced more than $30 billion dollars worth of tax cuts. Those earning over $150,000 per year to receive nearly $3,000 per year. Once again the big end of town does best and the pensioners get barely anything,” Greens Leader Bob Brown said tonight.

“The Treasurer begins his speech by saying that ‘Australia is different to the way it was 10 years ago’. Sadly he is right. Australia is now hotter, drier and with a lot more greenhouse gas emissions. We have more expensive houses and more household debt. Some things have of course stayed the same. Indigenous Australians still die 17 years earlier than the broader community, the poor struggle to get dental care, 1.2 million pensioners get a measly one-off $500.”

Senator Brown said the Greens’ budget leak on the environment was spot on.

“There is no recognition in this budget that the economy is a wholly owned subsidiary of the environment. Overall the increase in funding for the environment this year is only $281 million.”

“Since coming to power the Howard Government has spent more than $2 trillion dollars of taxpayers’ money and tonight the Treasurer is crowing that more than $2 billion of that has been spent on climate change, but to what end? The Murray Darling system has collapsed. Two billion dollars is less than 0.1% of his total spending and around 1 per cent of what he has spent on defence.”

“The Treasurer has had time to commission two reports into the costs of ageing but he still has no idea what the costs of climate change will be. This year we have seen the devastating impact of drought on the Australian agriculture industry, but the budget papers assume that next year everything will be fine.”

“For the last 11 years there has been no mention of climate change in the budget, this year the budget papers refer to the ‘inevitable impact of past and future emissions on our climate’. While there is no mention of strategies to address climate change, we are now funding CSIRO to start planning where the cyclone and bushfire bunkers should be built.

“The reinstatement of the $8000 grant for solar roofs has only been allocated $30 million per year. At that rate it would take some 2000 years to convert all of Australia’s roofs into solar power stations.”

“But instead of announcing a plan for restructuring Australia’s economy, the Treasurer has announced $50 million for fridge magnets on how to reduce energy use and the development of a ‘free website’.

“The Greens support the extension of the Just Transition fund to assist farmers to adapt to a drying climate (and the lift in the threshold before GST applies to small businesses) but there is no plan to assist the loggers and coal miners prepare for new jobs in new industries.

“The Treasurer has announced an additional $35 million per year to encourage children to eat less junk food but continues to refuse to stop the junk food companies spending ten times as much persuading children to do the exact opposite,” Senator Brown said.

Filed Under: Budget, Climate Change, Economy, Greens, Howard Government Tagged With: , , ,

Kevin Foley Delivers 2006 South Australian Budget

Sep 21, 2006

The South Australian Labor Treasurer, Kevin Foley, has delivered the 2006 Budget.

Filed Under: Budget, S.A. Tagged With:

Treasurer Peter Costello Delivers 2006 Federal Budget

May 09, 2006

The Federal Treasurer, Peter Costello, has introduced the 2006-07 Budget to the House of Representatives.

  • Click the PLAY button to listen to Costello’s budget speech:

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This is the official text of the Budget Speech delivered by the Federal Treasurer, Peter Costello.

Mr Speaker I move that the Bill now be read a second time.

Introduction

Australia has weathered some economic storms over the last decade — storms every bit as deadly as the cyclones that lashed the north of our continent in the early part of this year. We have weathered the Asian financial crisis, a global downturn, a one in a hundred year drought. We have had threats to our international tourism from new diseases such as SARS. We have had terrorist attacks and the security response has brought huge additional costs and challenges. Our military forces are in theatres of war.

With disciplined and prudent management our economy has come through these storms intact — in fact growing, in fact growing in the longest continuous stretch our nation has ever experienced.

There were moments where we were vulnerable. But through these storms we never lost sight of our goals — to get Australians jobs, to keep inflation low, to keep home loan interest rates affordable, to balance our Budget, and to repay Labor’s debt.

We have now eliminated the $96 billion of net debt that Labor left the Australian Government when it left office. Our Budget is in surplus for the 9th time in 10 years:- in 2006-07 a forecast surplus of $10.8 billion. We have established a Future Fund which has begun to save for the future. With these savings the next generation will be able to meet the challenges of their time.

Now the Australian Government is debt free in net terms. We do not have to collect taxes to pay the Government’s interest bill. We are saving over $8 billion per annum in interest payments.

Tonight I will announce how we can use those savings:-

  • for a new programme of investment;
  • for a new comprehensive tax plan;
  • to help Australian families;
  • to assist older Australians; and
  • to secure and defend our country.

A New Programme of Investment

Tonight I am announcing new investment in physical infrastructure and research infrastructure that will carry Australia into the next decade.

Our AusLink Programme is a coordinated plan to build Australia’s key highway and rail network. In the five year period from 2004-05 we have allocated $12.7 billion to this programme.

Tonight I am announcing an additional $2.3 billion — an increase of nearly 20 per cent — in that programme. The largest allocation will be $800 million this year to accelerate duplication of Australia’s busiest interstate road freight route — the Hume Highway. Apart from three by-passes, this money will complete the dual carriageway from Sydney to Melbourne and pull it forward from 2012 to 2009.

We will provide $220 million to accelerate works to improve the safety of the Bruce Highway between Townsville and Cairns, and an extra $48 million to the Tully flood works project. This is in recognition of the key freight link that the Bruce Highway provides to far north Queensland. It will also support the region’s recovery from the devastating impact of Cyclone Larry.

In addition to these works this Budget will allocate new money of:-

  • $323 million for the Great Northern, Great Eastern and Eyre Highways in Western Australia;
  • $160 million for the Pacific Highway in New South Wales;
  • $100 million for the Sturt Highway in South Australia;
  • $60 million for the East Tamar Highway in Tasmania; and
  • $30 million for the Victoria Highway in the Northern Territory.

Earlier this year I announced additional funding for the Western, the Calder and the Goulburn Valley Highways in Victoria.

All these projects are AusLink national network roads.

At the local level the Australian Government has its Roads to Recovery programme funding Local Councils to upgrade local roads in local towns and neighbourhoods. The programme over 5 years averages around $300 million per year. The Australian Government will pay an additional $307.5 million to Local Councils this year — before 30 June — so Councils can double next year’s level of construction.

Over the last three years the Australian Government has allocated $550 million to the Australian Rail Track Corporation to upgrade the Interstate Network between Perth and the Queensland border. An additional $270 million will be allocated in this Budget in 2005-06 to improve track quality and rail speed on the North‑South rail corridor between Melbourne and Brisbane.

The Road User Charge for heavy vehicles currently stands at 19.6 cents per litre. The Government will not proceed with an anticipated increase in this charge which was to have come into effect on 1 July 2006. This is a saving to the road industry of $1.2 billion over the forward estimates.

Water Infrastructure

The Government is committed to restoring the health of the Murray River system. A healthy, working river system will benefit the environment. It will benefit irrigators, industries and towns in the Murray-Darling Basin.

In this Budget, I am announcing a new injection of $500 million to the Murray-Darling Basin Commission. This money will be used to undertake a range of capital works and improvements to protect the resources of the basin and enhance environmental flows. The Government will seek the cooperation of State Governments to maintain their contribution in real terms to the Commission.

Our road, rail and water initiatives represent a major investment in our regions and our future.

Health and Medical Research

In this Budget the Government’s investment in infrastructure runs further than physical infrastructure. This Budget makes major new investment in health and medical research — an area where Australia is a world leader. Our scientists have made many breakthroughs of world importance such as the bionic ear, treatment of stomach ulcers, and melanoma treatment. We look to them to make many more.

In 1995-96 annual grants to the National Health and Medical Research Council (NHMRC) were around $127 million per annum. In the 1999-2000 Budget I announced a plan to double that funding. In the 2004‑05 Budget I announced a plan to increase it again. Tonight I am announcing a further increase in funding for the NHMRC which will take base funding to over $700 million per annum by 2009-10. This is a five-fold increase over the 1995-96 levels of spending on health and medical research.

As part of this increase I am announcing 65 additional health and medical fellowships over the next nine years for researchers doing important work in unlocking the causes of diseases and searching for their cures.

And tonight I am announcing new funding of $235 million for the physical infrastructure — the laboratories, the equipment that our researchers need to do their work.

This will fund new infrastructure at facilities of world renown such as the Howard Florey Institute ($37 million), the Garvan and Victor Chang Institutes ($14 million), and the Murdoch Children’s Research Institute ($10 million). All up this new investment in scientific infrastructure amounts to around $806 million over five years.

In 2006-07 the Government will spend $48 billion on health and aged care. It spent $20 billion in 1996‑97 when it was first elected.

Tonight’s Budget includes the new $1.9 billion package over five years for Mental Health Services for increased services, increased respite places, and for specialist mental health nurses. It also provides more funds to train more doctors and nurses as part of a package agreed by the Council of Australian Governments.

A New Comprehensive Tax Plan

Mr Speaker, tonight I am announcing a new comprehensive tax reform plan with three parts:-

  • first another instalment in income tax reform;
  • second a major improvement in business tax; and
  • third a plan to simplify and streamline superannuation which represents the most significant change in nearly 20 years.

Our tax system exists to fund the decent services in health and aged care and other services that Australians legitimately expect and are entitled to receive. If we can fund these services, balance our Budget, defend and secure the country, and reduce the tax burden we should aim to do so. This year we will do so. And we will reduce personal income tax very significantly.

Since 2000 we have reduced the marginal tax rates at the lower end of the income scale.

Tonight I announce that from 1 July 2006 we will reduce the marginal tax rates at the upper end of the income scale. We will reduce the 47 and 42 cent rates to 45 and 40 cents. This will give Australia four marginal tax rates of 15, 30, 40 and 45 cents.

In addition we will increase the thresholds so that the 15 cent rate will apply up to $25,000, the 30 cent rate up to $75,000, the 40 cent rate up to $150,000 and the 45 cent rate will apply to income above that.

Across the forward estimates more than 80 per cent of taxpayers will have a top marginal tax rate of 30 cents. Only 2 per cent of taxpayers will be affected by the top marginal tax rate on 1 July.

Six years ago the threshold for the top marginal tax rate was $50,000. If that threshold had been indexed in 1996 it would have stood below $64,000 by 1 July this year. By 1 July this year that threshold will be $150,000.

For low income earners, the Low Income Tax Offset will increase from $235 to $600. It will phase out from $25,000 to $40,000. It means a low income earner will not pay tax until their annual income exceeds $10,000.

These changes and the change to the 30 per cent threshold will provide more incentive for those outside the workforce to re-enter it and those on part-time work to take additional hours.

Senior Australians who are eligible for the Senior Australians Tax Offset will pay no tax on their annual income up to $24,867 for singles and up to $41,360 for couples.

These changes will make the Australian tax system more competitive and bring Australia’s upper income tax rates into line with OECD averages.

Business Tax

Our plan here has two parts — depreciation and reform of small business taxation.

We recently received a report on the International Comparison of Australia’s taxes. It showed that our company tax rate — which this Government cut to 30 per cent — is internationally competitive but that Australia had the equal lowest value of depreciation allowances in comparator countries. Evidence suggests that a diminishing value rate of 200 per cent is more appropriate in a world of rapidly advancing technology than Australia’s current rate of 150 per cent. Therefore we will move to enhance our taxation arrangements by moving to a 200 per cent diminishing value rate on eligible business assets acquired after tonight.

The measure will cut business tax by $3.7 billion over the next four years. It will encourage Australian business to undertake investment in new plant and equipment, to keep pace with new technology, and to remain ultra-competitive.

The Government will also reduce the complexity of small business tax arrangements. In April this year, the Government announced reforms to the fringe benefits tax in response to the Task Force on Reducing Red Tape.

This Budget takes progress much further with a range of measures which will reduce the complexity faced by small business. These include changes to make the Simplified Tax System more attractive, aligning thresholds for small businesses to make it easier for them to understand their eligibility for various concessions, and simplifying and extending access to the small business capital gains tax concessions. These changes will provide benefits worth $435 million to small business over the next four years.

Mr Speaker, this Budget also includes measures to protect the integrity of the tax system. These measures include: ensuring appropriate tax is paid on income distributed by Australian resident trustees to non-resident trusts; increasing resources for the High Wealth Individuals Taskforce; funding the co-ordinated law enforcement action code-named Operation Wickenby to get at international tax evasion and crime. These measures will recover revenue of around $2.3 billion over the next four years.

Superannuation

Mr Speaker, tonight I release a plan to simplify and streamline superannuation. This plan represents the most significant change to Australia’s superannuation system in decades. It will sweep away the current raft of complexity faced by retirees, increase retirement incomes, give greater flexibility as to how and when superannuation can be drawn down, and improve incentives for older Australians to stay in the workforce.

At the core of the plan is the proposal to exempt Australians aged 60 or over from any tax on their end benefits where these are paid from a taxed superannuation fund. This would apply from 1 July 2007. There would be no tax on a lump sum. There would be no tax on a superannuation pension. This would be the most direct way of cutting through the complexity of the current system.

Reasonable benefit limits would be abolished. Age based limits would be abolished. A simple universal contribution limit would apply. People would not be forced to draw down on their superannuation. The self-employed would be able to claim a full deduction for their superannuation contributions. The self employed would be eligible for the Government co-contribution. It would be easier for people to find and transfer their superannuation between funds.

It is also proposed to halve the pension assets test taper rate from $3.00 to $1.50 per fortnight for every $1,000 of assets above the free area with effect from 20 September 2007. The current taper rate of $3.00 means that a retiree loses more age pension than they earn on their additional savings if they do not achieve a return of at least 7.8 per cent a year. This is a large disincentive to save for retirement.

Family Assistance

Mr Speaker, a fundamental part of our tax system is the assistance that we provide to families who are raising children. Helping families is one of the highest priorities of this Government.

Since 1996 we have doubled assistance to families through the Family Tax Benefit system. The maximum payment per child under Part A has increased from around $2,400 to $4,200 a year.

Tonight I am announcing further enhancements to Family Tax Benefit Part A.

Currently, families can receive the maximum amount if they earn less than $33,361. Last year I announced that we would increase this to $37,500 from 1 July 2006. Instead we will now increase it to $40,000. This will provide additional assistance to almost half a million Australian families at a cost of $993 million over four years.

The Government will also expand eligibility for the Large Family Supplement to include families with three children with effect from 1 July this year. This will provide additional assistance to nearly 350,000 Australian families with a payment of an extra $248 per year.

Mr Speaker, this Government recognises the availability of child care is important for many Australians and that finding the right option to meet the needs of families is an important decision for parents wishing to return to the workforce.

Tonight I announce that the Government will remove the limit on the number of subsidised outside school hours care and family day care places. This means any new service set up by any eligible group will be funded. There will be no limit on funded places. It is expected that this will generate an additional 25,000 places by 2009. In 1996 there were 300,000 childcare places in Australia. We are budgeting for over 700,000 in 2009.

And from 1 July parents will be eligible to receive the new Childcare Rebate. This will rebate 30 per cent of out of pocket childcare expenses up to $4,000 per child per annum.

Supporting Older Australians and Carers

Our strong Budget position allows us this year to provide further assistance to older Australians. This recognises the important place they hold within our community. This Government introduced a Utilities Allowance — a bi-annual payment to age pensioners to assist with the cost of utilities — in 2005. At the same time a Seniors Concession Allowance was introduced for certain self-funded retirees who do not get pensioner concessions.

This year the Government will provide an additional one-off payment equal to the annual amount of the utilities allowance of $102.80 to each household with a person of Age or Service Pension age eligible for that allowance. A $102.80 payment will also be provided to each self-funded retiree who is eligible for Seniors Concession Allowance. These bonuses will be paid by 30 June 2006, at a cost of $193 million.

We will also extend eligibility for the Utilities Allowance to cover other groups of older Australians — recipients of Mature Age Allowance, Partner Allowance and Widow Allowance. These recipients will be paid the bonus by 30 June 2006 and receive the Utilities Allowance on the same basis as age pensioners from the 2006-07 financial year onwards.

The Government will also assist people in rural areas who cannot access the Age and Service Pension because of increases in the value of their family property. From 1 January 2007, the Government will exempt the value of properties from the pension assets test for eligible rural people, where they have had a 20 year connection with the land and it is not reasonable for them to realise the asset or lease the land to realise an income.

Carers of people with disabilities — whether they are children or older people — make a special, selfless contribution to our society. In recognition of this, tonight I announce as I did in the past two Budgets an additional $1,000 to be paid this financial year to over 100,000 people eligible for the Carer Payment. This year the $1,000 bonus will also be extended to the 25,000 people who receive either the Wife Pension or the Veterans’ Affairs Partner Service Pension and are carers.

As in the last two Budgets, there will be an additional $600 payment this financial year to those people receiving Carer Allowance. It is estimated that around 370,000 people will receive this additional payment. It will not affect the carer’s social security entitlements and the bonuses are tax free.

Maintaining our Commitment to Defence

Mr Speaker, this Budget continues this Government’s strong commitment to defence and national security.

In the year 2000 with our Defence White Paper, the Government made a landmark decision to undertake a ten-year investment in our defence capabilities. This provided the Australian Defence Force with the certainty to plan ahead for projects like the Airborne Early Warning and Control (AEWC) aircraft, naval Air Warfare Destroyers, Abrams Battle Tanks and the Joint Strike Fighter.

In this Budget I announce that we will provide for three per cent real growth in defence funding for the defence planning period between 2011-12 and 2015-16. This decision, at a cost of $10.7 billion, will ensure that the Australian Defence Force continues to be provided with a firm basis for its long-term planning.

In addition to this, the Budget provides further funding for significant improvements to the capability of our armed forces. We will provide $2.2 billion to acquire up to four new C-17 heavy lift aircraft which can transport an Abrams Tank or a Chinook Helicopter. This airlift will assist the rapid deployment of ADF resources and improve our capacity for disaster relief. We will also provide $1.5 billion over ten years to improve the Army’s sustainability, survivability and readiness.

The strength of Australia’s military, however, will always remain the quality of its people. The Government is providing $250 million to improve recruitment and retention arrangements for the Australian Defence Force. And we are increasing pay to attract and retain personnel for the Active Reserve.

Strengthening National security

Strong intelligence is critical to the Government’s national security strategy. The best way of thwarting terrorism is to interrupt and intercept terrorists before they can achieve their deadly ambitions. This Budget contains $802 million over the five years to 2009-10 to strengthen Australia’s intelligence capabilities.

The Government will increase the Australian Security Intelligence Organisation’s staffing from around 1,200 to over 1,800 staff, and improve its technical capabilities. A further $125 million will enable increased operations of the Australian Secret Intelligence Service.

And we will work closely with other governments in the region to meet the threat of terrorism at home and abroad. This Budget contains $93 million in measures to build further capacity in law enforcement and cooperation among key security agencies in the region.

In September 2005, the Government accepted the recommendations of the Wheeler Report into security and policing at Australia’s airports. We announced an initial range of measures to implement those recommendations.

Tonight I am announcing further measures, including counter-terrorism first response, community policing, and closed circuit television monitoring to increase security at airports.

Mr Speaker, this Budget contains $1.5 billion over the five years to 2009-10 in new measures to strengthen Australia’s national security. In total, the Government has now committed $8.1 billion in new spending on national security over the nine years from 2001-02.

Combating Illegal Fishing

Increasingly, illegal fishing vessels have been entering Australia’s sovereign waters. They pose a number of risks, including quarantine, illegal immigration, importation of prohibited goods and endangering fish stocks.

In this Budget, I am announcing an additional $389 million over four years to combat illegal fishing. With increased surface and air surveillance and patrol capability, we expect to double the number of fishing vessels apprehended in Australia’s northern waters each year. We will engage rangers from Indigenous communities in Northern Australia to assist in locating vessels hiding in inland waters.

We will detain and prosecute illegal fishermen. We will construct five new dedicated boat destruction facilities in Northern Australia to destroy and burn seized vessels. This will provide a strong deterrent against illegal fishing and ensure that Australia’s sovereign interests are protected.

Building Skills and New Innovation

Under the new national training agreement covering 2005 to 2008 the Australian Government will provide $5 billion to enhance our training and skills. This Budget is taking research funding and investment in innovation to record levels. It is necessary to work at ways to turn the fruits of innovation to commercial projects.

We will introduce a new investment vehicle — the Early Stage Venture Capital Limited Partnership — to increase the provision of start up capital for small, innovative firms. Existing restrictions on venture capital limited partnerships will be eased. The Government will provide $200 million to establish up to ten new funds in a new round of the Innovation Investment Fund programme.

Economic Outlook

Mr Speaker, Australia’s impressive economic performance of the last decade is set to continue. The outlook is for ongoing solid economic growth coupled with low unemployment and moderate inflation.

GDP is expected to grow by 3¼ per cent in 2006-07, following more modest growth in 2005-06. Economic growth will continue to be supported by strong global demand for Australia’s commodities. This is generating robust growth in business investment and should lead to an increase in export growth.

The unemployment rate is expected to remain around its current level — a 30 year low. Inflation should remain contained. Over 1.7 million jobs have been created in Australia since 1996 and the proportion of the Australian population in employment is around record levels.

For the first time, in 2006-07, the Australian economy will grow to $1 trillion.

Australia’s sustained economic growth is the result of the Government’s strong economic management and ongoing economic reform. Maintaining this course will secure the achievements of the past decade and provide the foundation for future growth and prosperity.

Conclusion

We will face further challenges in the future. Some — like the ageing of the population — we can predict now and begin to prepare for. Others may come with a surprise. But we will meet those challenges stronger because we are free of Government debt.

We will meet them stronger with this plan for tax reform — for individuals, for business — and the largest superannuation reform in decades.

We will meet our challenges stronger for the investment in families, the aged, in defence and security, in transport and water which will build better opportunities for the future.

This is a Budget which will build opportunity for the future.

I commend the Bill to the House.

Filed Under: Audio, Budget, Economy, Howard Government Tagged With:

Beazley Replies To Federal Budget; Offers Detailed Alternative

May 12, 2005

The Leader of the Opposition, Kim Beazley, has responded to the Federal Budget and offered a detailed alternative to the government’s proposed tax cuts.

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This is the prepared transcript of the Budget Reply Speech, delivered to the House of Representatives by the Leader of the Opposition, Kim Beazley.

Mr Speaker, our great country is about to enter the second decade of conservative rule. History will mark 1996 to 2006 as the Liberal/National Government’s decade of deception. Year after year of lowering the ‘truth’ bar then deliberately crawling under it.

With one common theme — the Government deceives, and Australians pay. But Mr Speaker, this year we’ve learned why this Government has been so deceitful. We uncover their motive with each new economic indicator: With one of the highest foreign debt levels in the world; with a record current account deficit; with household debt rising and rising.

And with the tragedy of a Government that turns away tens of thousands of Australians from TAFE colleges whilst the Treasurer makes a virtue in his Budget speech of importing skills from overseas to make up for the difference.

Mr Speaker, sadly we’re learning the truth. They’ve squandered this chance to make Australia secure for our children and grandchildren. They have surfed a wave of prosperity but left the tough decisions to future generations. [Read more...]

Filed Under: A.L.P., Audio, Audio2005, Budget, Howard Government Tagged With:

Peter Costello’s 10th Budget Speech 2005-06

May 10, 2005

The Treasurer, Peter Costello, has delivered his 10th, and possibly last, Federal Budget. The budget contains major reforms to social welfare, as well as personal and business tax cuts.

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This is the prepared transcript of the Treasurer’s Budget Speech, delivered on the Second Reading of the Appropriation Bill (No. 1) 2005-06.

Mr Speaker, I move that the Bill now be read a second time.

Introduction

The Budget I announce tonight is framed for the future — the future opportunities of our young people, the future care of our aged, the future health services that our citizens will need and demand, the security of the nation, and the future growth of the Australian economy which is necessary if we are going to realise these goals.

The economic management of the Australian Government affects the lives of all our citizens. Economic management matters because the lives of our citizens matter — the decisions we make affect their mortgages, their businesses, and whether they can find a job.

I bring this Budget down at a time when more Australians are in work than ever before. Our unemployment rate has fallen to a low unmatched for 28 years.

This is not an accident. This is not a fluke. This is the outcome of sound economic management. Things could have been very different. But the aim of economic policy is to grow an economy and create jobs.

We should now aim for an economy where every Australian who wants work can find it.

At a time when more Australians are participating in work than ever before we want to spread that participation further. We want to encourage more people to join the workforce. Tonight I announce the largest ever programme designed to assist those on welfare move out of welfare and into work.

Although in the short term it will cost money, in the long term it will strengthen our economy.

And the Budget includes measures to prepare our country for the great demographic change now taking place that will reshape our society over the next 10, 20 and 30 years.

Tonight I announce details of the Future Fund — an investment fund — which will help us prepare for the coming changes.

Also tonight I will announce tax cuts for business and tax cuts for individuals to drive growth in our economy.

Mr Speaker this is the 10th Budget I have presented to this House. Before that the last Budget of the Labor Government was in deficit — a deficit of 2 per cent of GDP — around $19 billion in today’s terms. The Budget I announce tonight is in surplus — a surplus of 1 per cent of GDP — $8.9 billion. It is the eighth surplus Budget I have presented.

Ten years ago the Australian Government carried net debt of $96 billion. By 30 June next year we will have reduced that net debt by $90 billion. We are paying off Labor’s debt and soon we can begin saving— saving for the future, saving for the ageing of the population, saving the opportunities of future generations.

Welfare to Work

Over the last nine years, unemployment has fallen far in Australia but we still have many people of working age, under 65, who are not in the workforce.

Unemployed people looking for work are entitled to the unemployment benefit called Newstart. But there are many other people of working age who receive income support without any obligation to look for work.

And the number of people on these benefits is growing very fast. For example the number of people on a Disability Pension is about 6.5 per cent of the Australian workforce. The number increased by around 21 per cent over the five years to June 2004. The number of people on Parenting Payment for single parents is around 4.3 per cent of the workforce. The number increased around 18 per cent over the same period.

People who are unable to find work deserve support from the taxes paid by those who are working. But those who are working deserve to know that others capable of work are at least looking for work in return for their income support.

If more people are able to move from welfare to work then this will help them with higher incomes and better participation in mainstream economic life. It will also reduce the obligation on other taxpayers whose taxes pay for the welfare support.

Our proposal for reform announced tonight is to start on 1 July 2006. From 1 July 2006 those on Parenting Payment will be expected to look for at least part-time work when their youngest child turns six and is ready for school.

Tonight I am announcing a massive increase in outside school hours child care which will assist those parents.

Of course if they are unable to find work they will keep their payment. Those on Parenting Payment at present will keep it. Those coming on to Parenting Payment after 1 July 2006 will continue to receive it while their youngest child is under six and then move to enhanced Newstart when that youngest child turns six.

Changes to Disability Support Pensions will also come into effect on 1 July 2006. Those on Disability Pensions at present will not be affected by any of these changes.

But from 1 July 2006 a person capable of part-time work will no longer be entitled to a Disability Pension if they are capable of working more than 15 hours a week at award wages. The object of these changes is to protect the genuinely disabled but to encourage those capable of part-time work to look for it.

The largest category of disability at present is musculo-skeletal injury — principally bad backs. A person in this category may be unable to hold down a full-time manual job but they may be capable of part-time work, especially non-manual work. Of course if they are unable to find it they will continue to receive income support through enhanced Newstart. But they will have an obligation to look for work.

In order to assist people to look for work, rehabilitation services will be increased by 41,700 places. Education and training opportunities will be increased and schemes to assist employers to employ people with disabilities will be expanded.

More than $2 billion will be spent on services over four years to assist these groups find work. The cost of these services will exceed the reduction in welfare support over the next four years.

But in the longer term as more people join the workforce it will make the economy significantly stronger.

In the future we are going to have proportionately fewer people of working age, under 65, compared to those of retirement age. We need to encourage as many people of working age as we can to join our workforce.

In order to improve incentives for people to move out of welfare into work, tonight I am announcing a tax cut for low income earners. The 17 cent tax rate which applies between $6,000 and $21,600 will be cut to 15 cents in the dollar. This change will take effect on 1 July 2005.

In addition, the rate at which a person in part-time work loses their entitlement to income support under Newstart will be reduced. Instead of 70 cents in the dollar withdrawal it will be 60 cents after they have earned $250 per fortnight. This will introduce an enhanced Newstart.

For people with disabilities, we are introducing a new comprehensive work capacity assessment. And we will use it to refer them to the employment services they need. A new $80 million Pre-Vocational Participation Account will support people with disabilities by providing services that will allow them to quickly become job ready.

For parents and mature aged job seekers, we are providing additional assistance through a new $48 million Employment Preparation Service. This will allow Job Network providers to provide skills training to equip these clients for a job.

For the very long-term unemployed, there will be a new Wage Assist programme with wage subsidies to employers, delivered through Job Network. But those who have a pattern of job avoidance can be required to undertake full-time work for the dole.

Skills and training

Mr Speaker, a skilled and adaptable workforce is critical to boosting the productive capacity of our economy in the years ahead.

Skills are not only important to business — they increase the ability of employees to find satisfying work. And the chances of doing that are better today than they have been for three decades.

As our economy changes the nature of work may change but a strong vocational and technical education system will better equip employees to upskill and adapt.

In this Budget I announce an extra 4,500 pre-vocational training places for people interested in a career in a traditional trade, and an additional 7,000 School Based New Apprenticeships so more students can begin their apprenticeship while continuing their school studies.

And as we promised during the election, this Government will establish 24 Australian Technical Colleges for 7,200 year 11 and 12 students. This will allow young Australians an opportunity to learn the best trade skills. It will enhance the prestige of technical education. We should value trade training as highly as any other form of post-secondary education.

At a time when we have low unemployment we will help meet immediate labour shortages by increasing our skilled migration intake by 20,000 places in 2005-06 to 97,500. Business will be supported in identifying their needs for skilled migration, and identifying those who can provide it.

Along with our $5 billion investment through the vocational education and training agreements, these initiatives represent a comprehensive approach to meeting Australia’s skills needs now and into the future.

A sustainable first-class health system

The Australian Government is budgeting to spend $45 billion on health and aged care in 2005-06 compared to $20 billion in 1995-96.

This funding includes Medicare rebates, the Medicare Safety Net, payments to the states for state hospitals, the Pharmaceutical Benefits Scheme, Home and Community Care and aged care.

As a result of scientific advance and the ageing of the population, no area of spending will grow faster than health in the coming decades.

Our population is entitled to first-class health services. But we will only be able to afford them if we get health costs on a sustainable financial basis.

Pharmaceutical and Medicare benefits

Mr Speaker, Australians continue to have access to new improved drugs under the Pharmaceutical Benefits Scheme. Over 70 new drugs have been listed since the last Budget, and access to a further 55 have been expanded. This Budget will continue special funding for the life-extending drug Herceptin to treat breast cancer — at a cost between $50,000 and $100,000 per patient per year.

To sustain the affordability of new drugs the Government will ensure significant price reductions when the first new brand of an existing medicine is added to the PBS.

At present no matter the cost of a prescription drug the price charged to a concession-card holder is $4.60 and to general patients $28.60. Some of these pharmaceuticals cost hundreds of dollars, some cost thousands. After 52 scripts in a year the concession-card holder is entitled to free scripts for the rest of the year. Sometimes this has led to hoarding. So from 1 January 2006 the PBS Safety Net will increase by two scripts per year each year until 2009. For general patients, the Safety Net threshold increases will be the dollar equivalent of 2 prescriptions per year.

Mr Speaker, the Government will also raise the Medicare Safety Net thresholds to the levels the Government originally proposed. Setting the thresholds at these levels will help ensure the sustainability of this important Government initiative.

It is only under this Government that a Safety Net will exist at all, covering 80 per cent of out-of-pocket, out-of-hospital Medicare costs over the thresholds.

The Medicare Safety Net is expected to pay over $1.1 billion in benefits over the next four years. Around 1.5 million Australians are expected to receive benefits in 2006.

The Government has also made significant investments in Medicare, which have made GP services more accessible and affordable, and sustained an increase in bulk-billing rates across the country. The Medicare rebate for GP services was increased to 100 per cent of the schedule fee on 1 January 2005 at a cost of $2.3 billion over five years.

The changes I announce tonight ensure that future generations can continue to receive first-class health care services. Small steps taken today will help to put the health system on a sustainable basis for the future.

Mr Speaker, in this Budget the Government is providing new investment to tackle cancer and dementia.

Cancer

Cancer is a cruel disease. We all know someone who has it, or has died from it. It is the largest underlying cause of death in Australia.

Mr Speaker, this Budget includes a major package to improve cancer care through bowel cancer screening, dedicated cancer research, training of cancer nurses, and increased funding for palliative care.

However the best way to beat cancer is to prevent it. Screening and prevention initiatives are therefore an important element of funding in this Budget. The Government will provide $5.5 million over two years to raise national awareness of skin cancer and encourage action to prevent it.

And we all know that smoking causes cancer and heart disease. While smoking rates have declined in recent years, far too many young Australians continue to smoke — with 43,000 teenagers becoming regular smokers each year. Tonight I am announcing a new Youth Campaign, which will commit $25 million over four years to help discourage young Australians from taking up smoking.

Dementia

Mr Speaker this Budget makes dementia a National Health Priority. The $321 million package will enhance the quality of life of dementia sufferers and their carers. It includes 2000 new Extended Aged Care at Home places dedicated to people with dementia, which will provide them with individually planned and coordinated nursing care and support services to help them remain living at home for longer, in familiar surroundings.

As life expectancy increases, dementia will become more common. Accordingly the package will offer more opportunities for dementia-specific training for carers, community and residential care workers, and people working in services such as the police, transport and emergency services.

Recognising the contribution of carers

Carer Payment is available to a person on low income providing constant care for a person with a disability or a child with a profound disability. Carer Allowance is available where a person provides daily care to a person with a disability.

In recognition of the contribution these people make, tonight I announce as I did last Budget an additional $1,000 to be paid to those 90,000 people on the Carer Payment and an additional $600 payment to those 300,000 receiving Carer Allowance. These are people helping those who cannot look after themselves. We value the work they do. They deserve this recognition. It will cost $317 million in this year. It will not affect the carer’s social security entitlements and it is tax-free.

Superannuation savings

Mr Speaker, this Government is committed to providing Australians with greater choice and flexibility in their retirement income arrangements.

Last year I announced a new scheme for low and middle income earners under which a Government co‑contribution of $1.50 would be paid into superannuation for each after tax dollar a qualifying person contributed themselves. I also announced a plan to reduce the superannuation surcharge for middle and upper income earners.

The surcharge was introduced in 1996 when Labor left a large Budget deficit. We have now paid off most of Labor’s legacy. We have previously tried to reduce this surcharge but the Labor Party has blocked it, so tonight I announce the complete abolition of the surcharge from contributions and termination payments made or received from 1 July 2005. This measure will save taxpayers $2.5 billion over the next four years.

Investing for the future

Mr Speaker, through prudent management of the Budget the Government has been able to run a succession of Budget surpluses. This has allowed us to retire most of the $96 billion debt we inherited on coming to office. Australia’s performance in reducing debt is the envy of many countries around the world.

Our task now is to begin saving for the future to meet the costs of our ageing population. One way this saving will be done is through a Future Fund. It will begin to fund the liabilities we have already incurred but not yet made provision to pay for. Earnings will accumulate in this Fund and it will be safeguarded by legislation. Whilst the Fund will invest the money allocated to it, no Government will be able to draw money out of it until it is sufficient to meet all the unfunded liabilities to which it is dedicated. A statutory independent board will be created to manage the Fund.

Funding transport links

Mr Speaker, the availability, efficiency and cost effectiveness of infrastructure crucially affects the productivity of our businesses and contributes significantly to our overall wellbeing. Given the large distances between our major population centres, transport infrastructure is particularly crucial. It is an investment in our future.

Accordingly, in last year’s Budget I announced AusLink, the national land transport infrastructure programme to upgrade Australia’s road and rail transport systems. Since the last Budget the Government has announced an additional $1.2 billion in funding, bringing the Government’s total commitment to transport infrastructure to $12 billion between 2004-05 and 2008-09.

Under AusLink the Government will spend $815 million on the Hume Highway, $765 million on the Pacific Highway, $546 million on the Bruce Highway, $186 million on the Geelong Bypass, $94 million on the Port River Expressway in South Australia, and $170 million on the Mandurah Bypass and Kwinana Freeway extension in Western Australia. We will also be committing $755 million to rail lines along the Eastern Seaboard in conjunction with the Australian Rail Track Corporation.

We are also providing an additional $150 million over 5 years to expand the Roads to Recovery Programme.

And to ensure that we minimise dangers on our roads, the Government will also provide $90 million to continue the Road Safety Blackspot Programme.

Making business competitive

Mr Speaker, we have a strong economy. Businesses are growing.

As we go forward, we want our businesses to be as productive and competitive as they can be. And that means government — at all levels — should address impediments to business activity.

Tonight I announce $1.8 billion of tax cuts to enhance the competitiveness of Australian business. From midnight tonight, the 3 per cent tariff on imported business inputs which do not have substitutes manufactured in Australia will be abolished. This will save business $1.3 billion over five years.

And the Australian Government will continue to support business to get full relief from state government stamp duties and business taxes that were to be abolished by the GST.

I also announce changes to the tax treatment of certain legitimate business costs which are currently not recognised under the law. Allowing deductions for these so-called ‘blackhole’ expenditures from 1 July 2005 will cut tax by $205 million over three years. These changes recognise pre-business expenses and encourage new investment.

Personal tax cuts

Australians deserve the lowest possible taxes consistent with responsible budget management and the provision of efficient government services.

After we balance our budget, reduce Labor’s debt, and fund our services we should reduce taxes as far as is prudent.

Mr Speaker, tonight I announce further personal income tax cuts worth $21.7 billion over four years.

These tax cuts will assist low income earners, boost disposable incomes, reward participation and hard work. They build on the $14.7 billion in income tax cuts provided in last year’s Budget.

From 1 July this year, the 17 per cent marginal tax rate will be cut to 15 per cent.

The 42 per cent tax threshold will increase from $58,000 to $63,000 on 1 July 2005 and to $70,000 on 1 July 2006.

From 1 July 2005, the 47 per cent threshold will increase from $70,000 to $95,000 and on 1 July 2006 increase again to $125,000.

These changes ensure that more than 80 per cent of taxpayers face a top marginal income tax rate of 30 per cent or less over the forward estimates period. And from 1 July 2006, the top marginal rate will apply to only 3 per cent of taxpayers.

If the threshold for the top marginal rate had been indexed to inflation since 1996, on 1 July 2006 it would have stood below $64,000. Under the measures I announce tonight it will stand at $125,000.

The cut in the lowest rate of tax benefits Seniors too and means that Senior Australians eligible for the Senior Australian Tax Offset will now pay no tax on their annual income up to $21,968 for a single and no tax on equal incomes up to a joint $36,494 for a couple.

International engagement

Mr Speaker, Australia’s economic prosperity will be enhanced by the strength of the economies in our neighbourhood, and our effective integration and engagement with them.

We want to reduce remaining barriers to trade, including through free trade agreements. We have signed the historic agreement with the United States and other agreements are in prospect.

Mr Speaker, we have proven to be a good neighbour. Australians are a generous people. Australians responded in a typical spirit by opening their hearts and wallets to the victims of the Boxing Day tsunami. Many Australians were directly affected by it; we were all touched by the extent of human loss and devastation.

The Australian Government also contributed to the relief effort. Our $1 billion aid contribution towards the economic and humanitarian rehabilitation of Indonesia is our largest ever single aid contribution.

Our assistance goes beyond the immediate reconstruction needs of Indonesia. It represents a programme of long-term sustained cooperation and capacity building between our two countries.

In light of the events of the tsunami, the Government will develop a Tsunami Warning System to provide 24 hour surveillance for accurate and early detection and warning in the event of a tsunami threatening the west or east coast of Australia or South West Pacific nations. This measure will cost $68.9 million over the next four years.

Our involvement in Indonesia is part of the Government’s commitment to our near neighbours and region. We remain active in ongoing programmes to restore law and order in the Solomon Islands and to improve governance in Papua New Guinea. Funding of more than $840 million is committed for these purposes in this Budget.

Beyond the region, we remain committed to the stabilisation and reconstruction of Iraq. This Budget provides $511 million over four years to continue Australia’s contribution to this task.

National security

Mr Speaker, this year’s Budget continues the Government’s strong commitment to Australia’s national security. The attack on Australia’s Jakarta embassy in September last year highlighted the need to protect our representatives overseas. We will provide $522 million for protective security, including enhancements at Australia’s overseas diplomatic missions.

We are also committing $226 million to further enhance border protection, including new technologies such as ePassports and biometrics, to help border authorities to verify travellers’ identities quickly and reliably.

We will also commit $239 million to strengthen Australia’s intelligence capabilities, in areas such as counter‑terrorism investigations and language skills development.

Taking into account measures announced tonight, the Government will have committed $5.6 billion over the eight year period from 2001-02 to improve security, both at home and in our region.

Economic outlook

Mr Speaker, the Australian economy is set to continue its impressive performance. Once again the outlook is for solid economic growth, low unemployment and moderate inflation.

In year-average terms, GDP growth is expected to be 3 per cent in 2005-06, after passing through a period of more modest growth in 2004-05.

The rebalancing of economic growth from domestic to external sources is expected to continue. Strong world demand for mineral exports has increased prices and delivered higher incomes to Australians. Significant investment by mining companies and strong world demand is expected to substantially boost export growth in 2005-06.

The unemployment rate is expected to remain around its 28-year low.

This strong economic performance is not an accident. It requires sound economic management and a commitment to ongoing reform. It requires businesses and consumers that are confident about Australia’s future. And it requires prudent policies that lock in our achievements for future generations.

Conclusion

This Budget is about sharing the benefits of this strong economic management not just with more Australians, but with all Australians:-

  • to increase their participation in the workforce;
  • to build their skills;
  • to reward their effort;
  • to enhance their security; and
  • to fund their future.

I commend the Bill to the House.

Filed Under: Audio, Budget, Howard Government Tagged With: ,

Simon Crean’s 2003 Budget Reply Speech

May 15, 2003

This is the prepared text of the Budget Reply by the Leader of the Opposition, Simon Crean.

In responding to the government’s budget, Crean made a series of commitments on Medicare, education, water and corporate salaries.

  • Listen to Crean’s speech:

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Simon CreanMr Speaker.

Tuesday’s Budget should have improved life for Australian families. That’s the test any government budget should meet.

Australian families are under growing pressure. They are working longer hours and paying record taxes. The last thing Australian families need is to pay more for vital services like health and education.

But that’s what Tuesday’s Budget was all about.

A civilised society demands health care based on medical need and education for all based on ability.

I believe that health and education are not just about providing services to individuals. They are public goods, for all Australians. We must invest in these vital services.

But under the Howard Government we are heading in the opposite direction.

Instead of improving life for families, this Budget is making things worse. It is giving Australian families a miserly $4 tax cut, while destroying Medicare and charging them more for education.

The Howard Government failed the test on Tuesday night.

It’s time for something new. [Read more...]

Filed Under: A.L.P., Audio, Audio2003, Budget Tagged With: ,

$6 Billion Corporate Welfare Costing Taxpayers More Than Unemployment and Sickness Benefits

Dec 06, 1999

A report by the Sydney Morning Herald today provides a fascinating insight into the amount of taxpayers money that goes to the corporate sector either directly or as tax breaks.

The paper says that “each year, Australian taxpayers hand over more than $6 billion to selected parts of the corporate sector in direct outlays and tax breaks, more than is spent on unemployment and sickness benefits ($5.8 billion).”

The paper reports that $60 billion has been handed out in the past decade, much of it to some of the world’s richest corporations, on an apparently ad hoc basis and “often with no strings attached by various Federal and State governments”.

The paper argues that the Howard Government’s rhetoric on mutual obligation where social welfare is concerned has not extended to corporate welfare. Furthermore, the paper says handouts to the business sector have had brought few benefits other than to shareholders of some companies.

Filed Under: Budget, Social Welfare Tagged With: ,