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DEFICIT
INTRODUCTION
Just last week the Leader of the Opposition declared he would be elected Australias next Prime Minister. Its now time for Tony Abbott to come clean on his plans for the budget. This document indicates that as the Government is returning the budget to surplus in 2012-13, the Liberals would plunge it in to deficit. On the analysis below, Opposition policies would put the budget $9 billion into the red in 2012-13. Even though the Opposition would be in deficit in 2012-13, they are still touting a long shopping list of multibillion dollar promises on a weekly basis. The Oppositions budget position will go from bad to worse when their aspirational promises are added to their existing commitments. In the last few days we have learned that Tony Abbotts $70 billion worth of cuts will be kept a secret until after the election. Mr Abbott needs to come clean with voters about where those cuts are coming from. And, while the Leader of the Nationals the man who would become Australias Deputy Prime Minister thinks their policy development has never been better, their shadow Finance spokesperson has said that all of their policies are still yet to be finalised. Is it any wonder the Coalition cannot say when they will return the budget to surplus, or deliver additional tax cuts, or rule out cuts to services? At the last election they got it wrong by $10.6 billion and their costings firm was fined for professional misconduct. Its time for Tony Abbott to replace hubris with honesty and come clean with the Australian people.
ASSUMPTIONS
Repeal of the Clean Energy Future (CEF) Package The estimate assumes that all elements of the CEF package are repealed, but that the tax reform elements and pension increases are retained. Trebling the tax-free threshold means millions of Australians will no longer have to file tax returns. The CEF reforms also significantly simplify the tax system. It is therefore assumed that the Opposition would not return the tax-free threshold to its pre-CEF rate. The Government is delivering increased payments to pensioners as part of the CEF package. It is assumed that these payments will be retained by the Opposition and that they will not cut pensions. Reinstating 30% Private Health Insurance (PHI) Rebate The Opposition have committed to unwind the means testing of the private health insurance rebate. Mental Health Package Tony Abbott announced a $430 million mental health package on 21 April 2011. The estimate assumes that the funding is evenly spread over four years. See: http://www.tonyabbott.com.au/ Life Saving Australia The Opposition Leader committed to funding for life saving clubs on Australia Day 2012. See: http://www.tonyabbott.com.au/ Nauru Immigration Policy The Department of Immigration and Citizenship has released costs for the Nauru policy on the Departments website. The estimate assumes that the capital costs for establishment are spent in the first year, with the operating costs evenly spread over four years.
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Chronic Dental Disease Scheme (CDDS) The Opposition continue to block the Government closing the CDDS, confirming their support for the existing scheme. Repeal of the Mineral Rent Resource Tax (MRRT) and associated measures The MRRT spreads the benefits of the resources boom to all Australians. Repealing this package would mean that 2.7 million small businesses would miss out on tax breaks, 3.6 million low income workers would miss out on the low income superannuation contribution, and regional Australia would miss out on a regional infrastructure fund. The estimate assumes that all elements of the MRRT package are repealed, except the superannuation guarantee increase from 9% to 12% for which the Opposition have previously indicated support. Adjusted Coalition 2010 Election Commitments Having avoided scrutiny throughout the 2010 election campaign, the Coalitions election costings were finally submitted to the Treasury and Department of Finance and Deregulation after election day. The completed costing found a $10.6 billion black hole of errors across the forward estimates. And the firm hired to audit their costings was fined for professional miscounduct. The adjusted estimates account for these errors, and remove a number of savings that are no longer available to offset Coalition spending commitments, for example: The Green Car Innovation Fund has been closed The Renewable Energy Future Fund has been exhausted
In total, these spending proposals run into the tens of billions of dollars, including: A national dental scheme as part of Medicare Proceeding with a national disability insurance scheme Unspecified additional welfare to work programs A bigger naval presence in Northern Australia and in the Southern Ocean Extending the solar hot water rebate Big spending on road infrastructure within Sydney Another failed broadband plan to roll back the NBN Any additional costs associated with rolling back the carbon price, including any compensation arrangements to industry A possible second additional round of income tax cuts
The Nationals Policy Platform: In December 2011, The Nationals set out the policy agenda they intend to take to the next election. Out of 180 policies the Opposition committed to, amongst other measures, a $2 billion regional telecommunications fund, an un-costed increase to the private health insurance rebate for seniors to 40 per cent and removing indexation for HECS. In addition, The Nationals also committed the Opposition to: Doubling the baby bonus Funding to redevelop a range of rail networks, including upgrading the Sydney to Brisbane coastal rail link and the inland rail network from Brisbane to Melbourne Building a range of new country dams Expanding zonal tax allowances Tax deductibility of water infrastructure Paying for carer superannuation A 30 per cent investment allowance for regional businesses
Further information is available at http://nationals.org.au/Policy.aspx. Additional Spending from Direct Action: If the Opposition remains committed to delivering a 5 per cent reduction in our carbon emissions, then Treasury has estimated that the costs of sourcing carbon emissions through direct action and restricting the use of international permits could see an effective carbon price of around $62 per tonne by 2020. That would represent a total cost of around $48 billion to the budget. Currently, the Opposition have not identified offsets for this spending that would be required to meet the bipartisan 5 per cent target. If applied to households via the tax system, this would mean a $1300 increase in tax per household each year.
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RETURN TO SURPLUS
One of our most fundamental commitments was to bring the budget back to surplus in 2012-13. TONY ABBOTT THE AUSTRALIAN 25 AUGUST 2010 We will do it as soon as possible. Youve got to be measured on this. JOE HOCKEY 7 FEBRUARY 2012 Well it just depends. ANDREW ROBB ABC24 6 FEBRUARY 2012
TAX CUTS
...more tax cuts will be in prospect. We will aim for tax cuts in our first term. TONY ABBOTT NPC 31 JANUARY 2012 JULIE BISHOP SKY 1 FEBRUARY 2012
Im not going to go into the time frame of exactly when theyll be delivered. BARNABY JOYCE DOORSTOP 31 JANUARY 2012
PRE-BUDGET
DEFICIT TONY ABBOTT AND THE COALITION
Authorised G. Wright, 5/9 Sydney Avenue, Barton, ACT 2600 Printed by BlueStar, 90 Sheppard Street, Hume, ACT 2620