Budget Predictions for 2015
On May 13 when Treasurer Joe Hockey delivers the 2014/2015 Federal Budget, he will be either one of the most respected men in the country for instigating much needed structural reform or one of the most unpopular, if predictions of a slash and burn approach to social welfare come true.
The Treasurer has been laying the foundation for reform for some time. Australia’s economic growth – once a point of pride during the GFC – is now looking a little flaccid at 2.8% in 2013. We’ve come through the GFC but we’ve failed to do much more than just survive since. The Government’s challenge is to ensure that they do not hinder productivity and do as much as possible to encourage growth. Any reforms will be measured against this philosophy.
One of the first moves by the Government when it came to power was to appoint the National Commission of Audit headed by Business Council of Australia President and former Transfield Chairman Tony Shepherd. The Commission’s function is to look at how to improve the efficiency and productivity of Government expenditure. In other words, help identify how the Government can get a better ‘bang for its buck’ in the impending Budget.
In mid February, the Commission of Audit completed the first phase of its review and presented it to the Government. While the report and the Government’s response to it have not been made public, key recommendations of the report have already been leaked to the media. It’s not uncommon for Government to leak its own bad news before delivering the Budget to prepare the population for what’s to come and in some circumstances to ‘test check’ how a particular measure is likely to be received before it’s confirmed.
This month, we look at the Budget rumours and what might occur.
Rumour – The end of ‘middle class welfare’
Mr Shepherd was recently quoted as saying that “People who can look after themselves should look after themselves. They shouldn’t rely on government … If people are getting welfare who are well and truly able to look after themselves, that’s not fair. When our report comes out you’ll see it all.’’
The question is, how reform be structured? The rumour is that the income test for Family Tax Benefit B will be reduced. Previous proposals have recommended combining family payments including Family Tax Benefit A and B, into one.
Our view is that access will be tightened to family payments. There is also a high likelihood of a restructure to how family payments are applied.
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