The Treasurer, Joe Hockey, has delivered the first Federal Budget of the Abbott government, increasing taxation on high income earners and re-introducing fuel excise indexation. Big cuts in foreign aid head a raft of spending reductions across most government departments with health, education, the young unemployed and seniors hit hard.

The government has earmarked $11.6 billion for infrastructure spending on road and rail projects, and will establish a $20 billion medical research fund from a new $7 co-payment for visits to the doctor.

The Budget forecasts a deficit in 2014-15 of $29.8 billion, down from the $49.9 billion deficit for 2013-14. It predicts an economic growth rate of 2.5%, a consumer price index increase of 2.25%, and a small increase in unemployment to 6.25%.

As revealed over recent weeks, the Budget imposes a 2% levy on people earning over $180,000. This is expected to raise $3.1 billion over 4 years. Indexation of fuel excise is re-introduced and is expected to raise $2.2 billion over 4 years. Company tax will be cut from 30% to 28.5% in 2015. [Read more…]