Next Tuesday evening the Australian Treasurer, Joe Hockey, will reveal the 2015-16 federal budget. The budget has been described as “measured, responsible and fair” and after last year’s demolition of Australian public confidence, it better be. The crux of the problem last year is that the budget hits pensioners hard, very hard. And given the fact that over 60s make up almost one in four Australian people, it gave almost 25% of the population reason to dislike the Liberal government.
At the moment only portions of the budget have been revealed or hinted to and in some good news, they seem to be relatively kind to seniors and older Australians. But, last year’s budget was promised to be kind and it was full of absolute land mines shocking the entire country.
So to make sure that the seniors don’t cop the brunt of shocking cuts this year, we’ve decided to share some advice from leading economists and political experts who can fix the budget crisis, without touching a single pensioner, senior or self funded retiree.
1. Tighten middle class welfare
This is a concept that stems from Sydney Morning Herald report, Craig Emerson. The 2014 budget did restrict some welfare availability however a couple with two children earning annual incomes above $110,000 still receive a family tax benefit. This amount of income is definitely enough to cover a modest lifestyle, even with children. This isn’t anything to do with “class” it’s completely to do with living within your means and not crying poor when the reality is very different. Family Tax benefit payments account for over half of the family assistance budget and in the last year have cost $19 billion. There’s definitely room for tightening there.
2. Increase tobacco excise
The last increase to tax on tobacco was in September 2014 when it increased by a further 13.7%. This increase coupled with the further plan to increase it each year across four years was expected to bring in over $5 billion in additional revenue. On top of this, the public health system is strained by smoking related illnesses including cancer, heart disease, lung disease and a multitude of chronic illnesses. Continually putting pressure on smokers to stop will ultimately reduce the number of people who lean on the public health system for smoking related illnesses, meaning the Australian public health system – that currently accounts for over $140.2 billion of our federal budget spend – can be eased. It’s a long term strategy but one that is worthwhile.
3. Crack down on multinational profit shifting
Reinstate the scrapped $1.1 billion worth of measures the previous government planned to attack multinational profit shifting – large corporations moving their funds to avoid paying the rightful amount of Australian tax. Earlier this year, the government claimed they did not know exactly how much revenue they lose to companies using the tactic but previous ATO reports suggest it could be as high as $60 billion. That’s $60 billion that could be used to repair the budget and allow for government spending where it is needed most.
4. Reform dividend imputation
This is where things get a little complex, but the essence of this is that companies are rewarded from the government for working hard and returning shareholders good dividends. Dr Nicholas Gruen of Lateral Economics believes that removing this expense completely could save well over $20 billion each year and instead of this expense, reduce company tax rates to 19%.
So Mr Hockey, please remember the above when you read out the budget on Tuesday night. Older Australians have paid their taxes all their lives, were hit the hardest last year and to be frank, it’s time we had a good break.
Tell us, where else should the budget tighten up? What would you like to see cut or increased and where would you like to see more funding?