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AUSTRALIA


“HARSH” SAVINGS MEASURES INAUSTRALIAN BUDGET


On 13 May 2014 the Treasurer, Hon. Joe Hockey, MP, delivered the first Budget of the Abbott Liberal/National Government. In the weeks leading up to the Budget the message became clear that the government would introduce harsh savings measures and increased taxes in order to bring the Budget back on a surplus trajectory. Mr


Hon. Joe Hockey, MP


Hockey noted that “on the back of five budget deficits in a row we have inherited a further $123 billion of deficits and $667 billion of debt. This challenge is not of our making, but we, the women and men behind me, accept responsibility to fix it. Doing nothing is not an option. Fellow members, the days of borrow and spend must come to an end”. Mr Hockey emphasized that all Australians need to contribute to the challenge ahead noting that “the age of entitlement is over”. In relation to the business community Mr Hockey commented that rather than corporate welfare the focus will be on strengthening the overall


business environment. Mr Hockey stated that “the government will start by abolishing a range of industry assistance programmes, saving over $845 million. We will refocus our effort on innovation and self-reliance”. In order to assist business, the company tax rate will be cut by 1.5 percentage points for around 800,000 businesses. In addition, Mr Hockey noted that the government would remove over $1 billion in red tape “because regulation means more staff doing paperwork and fewer staff helping customers”. During the period before the Budget, the prospect that a “deficit levy” would be introduced was publicly debated. On Budget night, Mr Hockey confirmed that high income earners would be subject to a two per cent increase in their personal tax rate for three years. This measure will affect people earning over $180,000. Under Mr Hockey’s commitment that all Australians must contribute, he indicated that there will be a one year pay freeze on MPs and senior public servant salaries.


Older Australians were not left untouched by the Budget. Mr Hockey confirmed that while it would honour its election commitment not to change pensions in the first term of government, pension increases from September 2017 would be linked to increases in the CPI rather than the current wage based indexation arrangements. In addition, Mr Hockey confirmed pre-Budget speculation that the


pension eligibility age would be lifted to 70 by 2035. This measure received wide criticism from the age and welfare sectors. Unemployment benefits


will be scaled back. Mr Hockey emphasized that young people should be earning or learning. As such, Mr Hockey advised that “people under 30 will wait up to six months before getting unemployment benefits, and then will have to participate in Work for the Dole to be eligible for income support”. The Australian universal


medicare system, highly regarded internationally, was not left untouched. Mr Hockey confirmed that he would seek to introduce a $7 medicare co-payment payable every time a person visits a doctor. Mr Hockey advised that the payment would go to a $20 billion


In relation to the foreign aid budget, Mr Hockey confirmed that the aid budget would be reduced by $7.9 billion over nine years. In addition, the Australian Public Service will be reduced in size over three years by 16 500 staff. The 2014 Budget was


Hon. Bill Shorten, MP


Medical Research Future Fund. A further measure is the


reintroduction of fuel indexation. Mr Hockey noted that “every dollar raised by the increases will be linked by law to the road building budget”.


notable for how it was almost roundly condemned by State Premiers through to welfare groups. The Budget of 1996 was severe in terms of its cuts but was considered to have more coherence. For example, the 2014 Budget makes significant cuts to expenditure but, at the same time, Prime Minister Abbott is intent on introducing a costly paid parental leave programme. On 15 May the Leader of the Opposition, Hon. Bill Shorten, MP, gave his address in reply to the Budget speech. Mr Shorten focused his attack on the Budget by drawing attention to Prime Minister Abbott’s “broken promises”. As an Opposition Leader, Mr Abbott led a highly effective and sustained attack on the then Prime Minister Julia Gillard by focusing on her commitment before the 2010 election not to introduce a carbon tax but then doing so in government. Mr Shorten used the same tactics against Mr Abbott stating that “the Australian people have now witnessed this Prime Minister repeatedly promising one thing before an election while doing something completely different afterwards. Say what you like, Prime Minister. Spin as hard as you can. Australians know a


The Parliamentarian | 2014: Issue Three | 205


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