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May 09

One of the funniest things I have ever read -

Ben Pobjie writes about the Budget: the worst thing to ever happen to anyone, ever.

I’m seriously not kidding. This is hilarious reading. I read this in the library, which was not the best idea. I was biting my fist a coughing randomly to hide my under-breath laughter.

Here’s a snippet, but I highly recommend you read the entire thing.

And beyond all the detail and the microeconomic analysis and the so-called “facts”, the budget boils down to this: a desire to reverse the process of industrialisation and return to a primitive state. Piers Akerman warned us, but we would not listen. For at the centre of this budget stands the carbon tax, an attempt to tax the very air we breathe and turn our Coke flat all so Tim Flannery can strut around the country big-noting himself and making niche documentary series’.

Is it really worth it? Julia Gillard thinks so, but then given her attempts to set up a sovereign wealth fund to cover future backbencher prostitute liabilities, we shouldn’t be surprised any more at what that poorly-fitted-jacket-wearing succubus comes up with.

But we should be very concerned at the fundamental shift in our country that this budget ushers in. With the carbon tax hovering over us all like a great malevolent helicopter, we must now be prepared. Prepared for massive electricity price increases. Prepared for skyrocketing transport costs. Prepared for ever-more bitchy farmers. Conservative estimates from the Institute of Public Affairs’ well-respected Saying Numbers Unit suggest that the carbon tax will result in a 900 per cent increase in the average family’s energy bills, and cost over 15 million jobs in 2013 alone, while a report from the Centre for Transcribing Gerard Henderson’s Medicated Ramblings forecasts that at a carbon price of $23 per tonne, by 2015 the biggest industry in Australia will be child-meat.

These are sobering statistics indeed, and they make the 2012 budget’s one positive feature – the dedication of $30,000 to build a statue of Slim Dusty in Tamworth – seem almost insignificant. And all the compensation and cash splashes and clever fiscal fiddling won’t cover up the fact that Wayne Swan literally wants to kill us all.

Yes, even by the uniformly terrible standards of every federal budget ever, this one is pretty bad. Maybe not as bad as the 1997 Budget, when Peter Costello abolished Medicare and put the savings into a program to gold-plate his own groin, but definitely worse than the 1982 Budget, which consisted entirely of Paul Keating burping.

May 08

More Budget Numbers

The ABC has posted a succinct round up of the headline spending, revenue, and savings measures in the 2012-13 Budget.

This is in contrast to the rushed botch list I created during the Treasurer’s speech.

Enjoy your proper sentences, grammar, and spelling.

Winners

• $1.8 billion from July 2013 so 1.5 million families can receive increase to Family Tax Benefit A, with nearly half taking home an extra $600 a year
• $1.1 billion over four years to create new Supplementary Allowance of up to $210 a year for students, jobseekers and parents with young children on income support
• About 1 million households claiming Tax Benefit A to receive cash payment of $820 for each high school student and $410 for each primary school student under School Kids Bonus, replacing the Education Tax Refund
• $1 billion over four years to roll out the first stage of a National Disability Insurance Scheme expected to cover 10,000 people from 2013-14 and 20,000 people from 2014-15
• $515 million to treat 400,000 people on the public dental waiting list and to help dentists relocate to rural and remote areas
• $700 million over four years to allow small businesses to “carry back” past profits to offset current losses by up to $1 million
• $475 million for 76 new health infrastructure projects to upgrade regional hospitals and doctor training support
• $3.2 billion aged care package over five years including measures to almost double home care assistance and improve pay and conditions for aged care workers
• $1,000 payment to companies for each worker they hire aged over 50 for at least three months
• $50 million to extend bowel cancer screening program so people aged 50 to 70 will be offered free tests every five years
• $3.56 billion for duplication work on the Pacific Highway in New South Wales on condition of matching state funding
• Flood levy exemption extended to victims of 2012 flooding across eastern Australia
• $6 million over four years for suicide prevention measures in Western Australia’s Kimberley
• $56 million to expand in-home tutoring program for children in up to 100 disadvantaged areas

Losers

• Government revenues down about $150 billion since start of the global financial crisis
• Around $5 billion cut from Defence, including deferral of the delivery of the first Joint Strike Fighter aircraft and scrapping of plans to equip the Army with new self-propelled artillery
• About 100,000 parents affected by cutbacks to parenting payments and shifting of single unemployed parents onto the Newstart allowance once their children turn eight; budget saving of about $700 million over four years.
• Tax rate on superannuation contributions doubled from 15 to 30 per cent for people earning more than $300,000 a year
• Around 3,000 public service jobs already gone under increased efficiency drive
• Tax cuts for small business promised under the mining tax redirected to households because measures unable to garner enough support to pass Parliament
• $2 billion saved by not proceeding with standard tax deduction on work-related expenses that was due to begin in July 2013
• Commitment to lift spending on foreign aid to 0.5 per cent of gross national income to be met a year later than promised
• Around $1 billion could be saved by crackdown on living-away-from-home allowance for executives interstate or overseas
• Tightening of Pharmaceutical Benefits Scheme and some natural therapies to be removed from private health insurance coverage
• $2.5 billion saved by changes to Medicare levy surcharge and means-testing of private health insurance rebate;
• $923 million saved over forward estimates by scrapping of 50 per cent discount on interest income
• Recipients of Family Tax Benefit A & B and disability support to have payments cut if they travel overseas for more than six weeks a year
• Planned tax breaks for green buildings will not proceed, saving $405 million over the forward estimates
• 80 per cent cut to inbound duty free allowance reduced to 50 cigarettes or 50 grams of tobacco; $600 million saving over forward estimates
• Passenger movement charge up $8 to $55 from July 1, 2012
• Reduction in tax breaks for golden handshakes to save $196 million over forward estimates
• Phasing out of mature age worker tax offset to save $255 million over forward estimates
• Increased heavy road user charge to raise $166 million in 2012-13; almost $700 million over forward estimates

(Source: abc.net.au)

Yes, Bacon Will Cost More

Every budget has a fun fact. The 2012 Budget brings home the bacon, by making bacon more expensive.

The levy on pig slaughter has been risen from $1.35 a pig, to $2.25.

Yes, this means your pork, ham, and bacon will cost more. Realistically, you’ll only notice the $0.90 increase if you buy an entire pigs worth of meat.

And if that is going to hurt you at the supermarket, may I suggest cutting back on the bacon, fatty.

(Source: budget.australia.gov.au)

Big numbers, big graphic: Budget 2012 by the numbers.

(Source: abc.net.au)

The 2012-13 budget cuts spending to a level lower than seen during most of the Howard years.

Graph has been compressed to add clarity.

(Source: budget.gov.au)

Government tax receipts as a percentage of the economy is lower under Labor than it was under the Liberal Howard Government.

Just a quick graph I created.

• 25.1%: Average government tax receipts as a percentage of GDP under the Howard Government
• 22.6%: Average government tax receipts as a percentage of GDP under the Rudd/Gillard Governments

EDIT: ‘Government spending’ should have been labeled ‘Government tax receipts’. This has been corrected.

EDIT: Added a compressed chart to add clarity.

(Source: budget.gov.au)

New spending in the 2012-2013 Budget

(Source: budget.gov.au)

Increased revenues and savings in the 2012-2013 Budget

(Source: budget.gov.au)

Budget 2012: The Highlights

• Deficit revised up to $44b in fiscal year 2011-2012
• Net debt peaked at 9.6% of GDP, higher than previously predicted
• GDP growth revised to 3.25% in 2012-2013
• Unemployment predicted between 5-5.5% in 2012-2013
• $33.6b in savings found for 2012-2013 budget

Spending

• Increase family payments by $1.8b
• New Supplementary Allowance worth $1.1 billion for unemployed, students, families with young children
• $1.8b in increased Family Tax Benefit A
• $475m for regional health projects
• $1.75b National Partnership Agreement on Skills Reform
• $225.1m for Jobs, Education and Training Child Care Fee Assistance
• $2.1b in school children bonus
• $101m for measures to support mature age workers
• $3.6b to duplicate the Pacific Highway by 2016
• $232m for Torrens and Goodwood rail project in Adelaide
• $350m for the Roads to Recovery program
• $1b over four years for the National Disability Insurance Scheme
• $714m loss carry-back scheme for business for past profits up to $300k
• $515m for dental care
• $50m for bowel cancer research
• $234m for e-health initiatives
• $6m on Zelman Cowan scholarships
• $3.5m to create a Children’s Commissioner
• $2.2b on ‘Caring for Our Country’ over five years
• $3.3m for Substance Abuse Pilot Program
• $10.4m tourism incentive for Great Barrier Reef over four years

Cuts

• $212.5m cut to AusAID
• $5.4b from Defence, including 1000 civilian job cuts
• Crackdown on Family Tax Benefit A, moving adults to Youth Allowance, raising $360.9m
• Crackdown on Single Parent Payments, raising $685.8b over four years
• Cutbacks to Wine Producers Rebate, raising $40m
• Raising of Abstudy eligibility age to 21, raising $4.1m
• Cut in efficienty in the employment services arrangements, raising $162.6m
• National Water Security Plan reduced, raising $25.7m
• Medical Practice Incentive Program reduced, raising $83.5m
• Driving Murray Basin Reform plan reduced, raising $61.2m over two years
• Urban Water and Desiel Plan reduced, raising $25.7m
• Reduced funding to the Environmental Water Office, raising $13.2m over seven years
• Sustainable Australia’s Promoting Regional Living Program reduced, saving $10.9m
• Nation Building Program reduced, raising $35.4m
• Humanitarian services for refugees reduced, raising $13.1m
• Health Workforce Program reduced by $67.9m
• General Practice Superclinics Program reduced, raising $44m
• Planned expansion of Nurse Partnership Program cut, raising $23.2m
• Climate Change Department funding cut, raising $15.2m
• Digital Education Revolution Program cut by $24.4m
• AFP Overseas funding cut, raising $8.6m over four years
• UN Food and Agriculture Organization funding cut by $2.9m
• Farming Climate Change Adjustment Program reduced by $1.3m
• Renegotiation of PBS pricing, raising $104.6m over five years
• Scrapping the 1% reduction in the corporate tax rate, previously promised as part of the Mining Tax
• Removal of 50% Capital Gains Tax discount for non-residents
• Crackdown on Private Health Rebate for natural therapies
• Removal of welfare payments for people who remain overseas for extended period of time, raising $127.2m
• Elimination of ‘Tick and Flick’ Standard Tax Deduction returns
• Scrapping tax benefits for Green Buildings Program, raising $390m
• Removal of Aged Care expansion to multi-purpose services, raising $120.7m
• Scrapping planned expansion of ASIS, raising $81.6m
• Ending of the Indigenous Literacy and Numeracy Program, raising $56.3m
• Ending funding for Victoria and Queensland National Health Call Centers, raising $32.4m
• Elimination of the Workforce Innovation Program, raising $26.3m
• Ending of funding for overseas university study placements, raising $25m
• Ending of Community Based Service Deleopment Program, raising $15.7m
• Suspension of the Community Festivals Education Program, raising $10.7m
• Elimination of funding for Baccalaureate Program, raising $8.5m
• Scrapping of funding for football field in Western Sydney, raising $8m
• Ending Joint Replacement Prostheses Program, raising $5.8m
• Ending Fraud and Compliance Medicare and PBS Scheme, raising $4.4m over five years
• Ending plans to relocate Woollongong’s weather radar to Jervis Bay, raising $1.3m
• Deferring program to increase AFP recruitment, raising $25.9m
• Deferring Illicit Drug Testing and Research Program for sport, raising $5.8m
• Phasing out of Wheat Export Levy

Taxation

• Passenger Movement charge increased by $8 to $55, raising $610m
• Cost of visas increased, raising $67m over four years
• Pig slaughter levy increased to $2.25, up from $1.35
• Increase for milk and dairy levies
• Airports to pay for Australian Federal Police presence, raising $118.1 over four years
• Decrease in net Medical Expenses Tax Offset
• Higher tax on ‘Golden Handshake’ payments for executives
• Increase in the Heavy Vehicle Road User Charge, raising $698m over four years
• Cut in Living Away From Home Allowance for executives, raising $1b over four years
• Elimination 

(Source: budget.gov.au)

May 01

RBA Cuts Rates By Half A Percent -

We as Australians obsess over the central bank cash rate far more than any other country. From the US, to the UK, and Europe, no one knows how to hype interest rate announcements quite like us.

As a result, the key policy tool of the Reserve Bank (Australia’s central bank) has been highly politicized. Our discourse around interest rates is that they must always go down, to help home owners the reasoning goes. It’s a nice sentiment, but with only around 36% of households holding a mortgage, there is a far greater number of us who should have our minds on the interest rate on our savings rather than on other peoples’ homes.

On the up side, the rate cut should help 36% of households save a bit of money. I swear if these people don’t rush out and spend this extra money on retail I’ll get angry. More importantly, businesses should find it easier to borrow.

What I’m really upset about is the Australian Dollar plunging against the US Dollar. I’m going to the US in August, and I’d like our exchange rate to stay high, pretty please.

Bloomberg has more details, including videos.