2009 Australian federal budget
Encyclopedia
The 2009 to 2010 Australia
n federal budget
was released on 12 May 2009 by the Treasurer of Australia
, Wayne Swan
. Swan has commented that the budget will be tougher than in previous years. "Projected government revenue has fallen by $200 billion since the last budget because of the global economic crisis."
There were many allegedly planned leak
s which released a number of headline details and bad news in the weeks beforehand.
Inflation
on tax strategy, argued the need for a single means test—more comprehensive than testing assets and income separately, standard practice since 1985—to promote other forms of saving.
challenged the government's projections for a return to budget surplus, claiming that growth projections were above historical trends. The Leader of the Opposition
, Malcolm Turnbull
, called on the Prime Minister to reveal the full economic modelling used in the Treasury outlook.
In his formal response to the budget, Turnbull announced opposition to the reduction in private health insurance rebates, proposing that the funds be sourced by raising the tax on cigarettes by 3 cents instead. The Greens criticised the budget for supporting the coal industry and indicated their support for Turnbull's cigarette tax proposal. Family First Senator Steve Fielding criticised the government for breaking its election promise
to maintain private health insurance rebates.
and the Australian Industry Group
supporting the capital spending but critical of the plan to return to budget surplus. National Seniors Australia and ACOSS welcomed the increase to age pensions, but raised concerns that sole parents, the young and unemployed had been ignored. International ratings agencies Standard & Poor's
, and Fitch Group, said that the budget did not risk Australia's AAA rating as the country's finances remained sound.
An ongoing Westpac
survey found that consumer confidence dropped as a result of the budget. Surveyed consumers anticipated that stimulus payments in the form of cash bonuses were no longer an option for the government, and their expectations of a turnaround during the following five years dwindled. The fall is equal to about half of last month's gain.
Come 22 May, as senators and Treasury officials prepared for the Senate estimates committee
hearings on the budget, the government faced strident criticism from chief executives, unions and small companies over the changes to employee share schemes.
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
n federal budget
Federal Budget (Australia)
The Australian Federal Budget is a document that demonstrates the Australian Government's planned financial performance, and the framework it intends to conduct its operations in the following financial year...
was released on 12 May 2009 by the Treasurer of Australia
Treasurer of Australia
The Treasurer of Australia is the minister in the Government of Australia responsible for government expenditure and revenue raising. He is the head of the Department of the Treasury. The Treasurer plays a key role in the economic policy of the government...
, Wayne Swan
Wayne Swan
Wayne Maxwell Swan is the Deputy Prime Minister of Australia and an Australian politician. He has been an Australian Labor Party member of the Australian House of Representatives from 1993 to 1996, and then re elected in 1998 till today , representing the Division of Lilley, QLD...
. Swan has commented that the budget will be tougher than in previous years. "Projected government revenue has fallen by $200 billion since the last budget because of the global economic crisis."
There were many allegedly planned leak
Leak
A leak is a hole or other opening, usually unintended and therefore undesired, in a container or fluid-containing system, such as a tank or a ship's hull, through which the contents of the container can escape or outside matter can enter the container...
s which released a number of headline details and bad news in the weeks beforehand.
Deficit
- A 2009-10 deficit of $57.6 billion - 4.9% of GDP;
- A 2010-11 deficit of $57.1 billion - 4.7% of GDP;
- A 2011-12 deficit of $44.5 billion - 3.4% of GDP;
- A 2012-13 deficit of $28.2 billion - 2% of GDP and;
- A return to surplus in 2015-16.
Rising unemployment
- 8.25% for 2009-10;
- 8.5% for 2010-11;
- 7.5% for 2011-12 and;
- 6.5% for 2012-13.
Moderately decreased growth
Real GDP- -0.5% for 2009-10;
- 2.25% for 2010-11;
- 4.5% for 2011-12 and;
- 4.5% for 2012-13.
Inflation
- 1.75% for 2009-10;
- 1.5% for 2010-11;
- 2.0% for 2011-12 and;
- 2.5% for 2012-13.
Revenue mix
A $210 billion decrease in revenue was forecast over the next four years, with the 2009-10 deficit expected to be in excess of $50 billion. Labor suggested that the decrease in revenue, brought about by the global financial crisis, was the primary reason for the deficit,.Taxation
Labor budgetary policy on taxation is to keep it below the 2007-2008 level of 24.7% of GDP over the medium term. After taking into account regulatory changes to eliminate "tax minimisation" through employee share schemes, taxation receipts come in at 22% of GDP. The government has not indicated whether it will be modifying its target for 2010–2011, in light of the forecast contraction in growth.- Income tax cuts worth $11 billion.
- A 30-50% small business tax break for eligible assets. Total cost unknown.
Expenditure mix
Overall expenditure is expected to increase in 2009/2010 by 1.6% of GDP. The key feature of the budget was a third round of spending to provide long-term stimulus. Overall, spending has increased by 4.6% of GDP since the last Howard/Costello budget (2007/2008).General government
- Payments to the States increased to $50.1 billion
- First home owners grantFirst time home buyer grantA first-time home buyer grant is a grant specifically for/targeted at those buying their first home — perhaps a starter home.Like other grants, the first-time buyer does not hold an obligation to repay the grant....
boost to be extended for another six months, but at a reduced rate after three. Expected to cost $539 million. - Reduced spending on agriculture
Social security and welfare
Labor budgetary policy separates aged care from other welfare expenditure. The budget saw synchronised changes across the public sector as the government decided to lift the pension age and also moved to lift the superannuation preservation age. Two reports which accompanied the budget, the Pension Review Report and the Henry reviewKen Henry (Australian public servant)
Dr. Kenneth Ross "Ken" Henry AC is an Australian economist and public servant. He served as the Secretary of the Department of the Treasury from 2001 to 2011. On 1 June 2011, he was appointed as Special Advisor to the Prime Minister...
on tax strategy, argued the need for a single means test—more comprehensive than testing assets and income separately, standard practice since 1985—to promote other forms of saving.
- A pension increase of $32.49 per week for singles and $10.14 per week combined for couples on the full rate.
- The qualifying age for the Old Age PensionPensionIn general, a pension is an arrangement to provide people with an income when they are no longer earning a regular income from employment. Pensions should not be confused with severance pay; the former is paid in regular installments, while the latter is paid in one lump sum.The terms retirement...
will be progressively increased to 67 years by 2023, reflecting increases in life expectancy, and consistent with international trends. - System will cost $36 billion by 2012-2013
Initiatives
- Starting in 2011, there will be an 18-week minimum wageMinimum wageA minimum wage is the lowest hourly, daily or monthly remuneration that employers may legally pay to workers. Equivalently, it is the lowest wage at which workers may sell their labour. Although minimum wage laws are in effect in a great many jurisdictions, there are differences of opinion about...
parental leaveParental leaveParental leave is an employee benefit that provides paid or unpaid time off work to care for a child or make arrangements for the child's welfare. Often, the term parental leave includes maternity, paternity, and adoption leave...
. This paid parental leave scheme will be for 18 weeks at $544 a week. Total cost unknown.
Infrastructure, transport and energy
The government will invest more than $22 billion for "Nation Building Infrastructure" in transport, broadband, clean energy, universities and health care.| Infrastructure investments | |
|---|---|
| Capital type | Breakdown of numbers |
| $8.5 billion investment in transport | |
| $4.7 billion down-payment on the National Broadband Network National Broadband Network The National Broadband Network is a national wholesale-only, open-access data network under development in Australia. Up to one gigabit per second connections are sold to retail service providers , who then sell Internet access and other services to consumers... |
|
| $4.5 billion investment in clean energy development | |
| $1.584 billion investment in universities and trade schools | |
| $1.1 billion investment in public research agencies | |
- $8.5 billion investment in transport
- $4.6 billion for improvements to metropolitan trains
- $3.4 billion for improvements to national roads
- $389 million for ports in Western Australia and the Northern Territory
- $4.7 billion down-payment on the National Broadband NetworkNational Broadband NetworkThe National Broadband Network is a national wholesale-only, open-access data network under development in Australia. Up to one gigabit per second connections are sold to retail service providers , who then sell Internet access and other services to consumers...
- $4.5 billion investment in clean energy development
- $2 billion for a Carbon Capture and Storage program
- $1.5 billion for a solar energy program
- $465 million seed funding for Renewables Australia
- $3.2 billion investment in hospitals
Education
- $1.584 billion investment in universities and trade schools
- $934 million for 31 approved projects
- $613 million for infrastructure
- $322 million for laboratories and research training facilities
- $650 million set aside for projects related to clean energy
- $400 million for laboratories and research training facilities
- $250 million for infrastructure
- $934 million for 31 approved projects
- $1.1 billion investment in public research agencies
- $901 million for research infrastructure related to the critical disciplines
Defence
- $1.7 billion for military operations in AfghanistanWar in Afghanistan (2001–present)The War in Afghanistan began on October 7, 2001, as the armed forces of the United States of America, the United Kingdom, Australia, and the Afghan United Front launched Operation Enduring Freedom...
, East TimorOperation AstuteOperation Astute is an Australian-led military deployment to East Timor to quell unrest and return stability in the 2006 East Timor crisis. It is currently headed by Brigadier Bill Sowry, and commenced on 25 May 2006 under the command of Brigadier Michael Slater...
and the Solomon Islands - $654 million to combat people smugglingPeople smugglingPeople smuggling is defined as "the facilitation, transportation, attempted transportation or illegal entry of a person or persons across an international border, in violation of one or more countries laws, either clandestinely or through deception, such as the use of fraudulent documents"...
- $685 million for national securityNational securityNational security is the requirement to maintain the survival of the state through the use of economic, diplomacy, power projection and political power. The concept developed mostly in the United States of America after World War II...
- $36 million cut in funding for quarantine and plant and animal health
Health
- $64 billion over five years for public hospitals and health;
- $1.5bn to upgrade hospitals around Australia;
- Private health insurance rebate to be means tested;
- $2 billion for cancer care infrastructure;
- Medibank PrivateMedibank PrivateMedibank is an Australian government-owned private health insurer, established under the Fraser government in 1976 through the Health Insurance Commission . It is Australia's largest health insurance provider with 3.6 million members under two brands, and the only health insurer present in every...
to become a for-profit Government owned business.
Initiatives
- $136 million to develop an advertising-free digital children's channel on the ABCABC TelevisionABC Television is a service of the Australian Broadcasting Corporation launched in 1956. As a public broadcasting broadcaster, the ABC provides four non-commercial channels within Australia, and a partially advertising-funded satellite channel overseas....
and $22 million for SBSSpecial Broadcasting ServiceThe Special Broadcasting Service is a hybrid-funded Australian public broadcasting radio and television network. The stated purpose of SBS is "to provide multilingual and multicultural radio and television services that inform, educate and entertain all Australians and, in doing so, reflect...
to produce local material.
Opposition and crossbench response
Shadow Treasurer Joe HockeyJoe Hockey
Joseph Benedict "Joe" Hockey , is an Australian politician and member of the Australian House of Representatives, representing the Division of North Sydney for the Liberal Party of Australia since 1996....
challenged the government's projections for a return to budget surplus, claiming that growth projections were above historical trends. The Leader of the Opposition
Leader of the Opposition
The Leader of the Opposition is a title traditionally held by the leader of the largest party not in government in a Westminster System of parliamentary government...
, Malcolm Turnbull
Malcolm Turnbull
Malcolm Bligh Turnbull is an Australian politician. He has been a member of the Australian House of Representatives since 2004, and was Leader of the Opposition and parliamentary leader of the Liberal Party from 16 September 2008 to 1 December 2009.Turnbull has represented the Division...
, called on the Prime Minister to reveal the full economic modelling used in the Treasury outlook.
In his formal response to the budget, Turnbull announced opposition to the reduction in private health insurance rebates, proposing that the funds be sourced by raising the tax on cigarettes by 3 cents instead. The Greens criticised the budget for supporting the coal industry and indicated their support for Turnbull's cigarette tax proposal. Family First Senator Steve Fielding criticised the government for breaking its election promise
Election promise
An election promise is a promise made to the public by a politician who is trying to win an election. They have long been a central element of elections and remain so today...
to maintain private health insurance rebates.
Reception
Reaction from business lobby groups was mixed, with the Australian Chamber of Commerce and IndustryAustralian Chamber of Commerce and Industry
The Australian Chamber of Commerce and Industry has been the peak council of Australian business associations for 105 years and traces its heritage back to Australia’s first chamber of commerce in 1826.Its motto is “Leading Australian Business.”...
and the Australian Industry Group
Australian Industry Group
The Australian Industry Group, also called Ai Group, is an employers' organisation, whose member's employ over 750,000 staff from throughout Australia...
supporting the capital spending but critical of the plan to return to budget surplus. National Seniors Australia and ACOSS welcomed the increase to age pensions, but raised concerns that sole parents, the young and unemployed had been ignored. International ratings agencies Standard & Poor's
Standard & Poor's
Standard & Poor's is a United States-based financial services company. It is a division of The McGraw-Hill Companies that publishes financial research and analysis on stocks and bonds. It is well known for its stock-market indices, the US-based S&P 500, the Australian S&P/ASX 200, the Canadian...
, and Fitch Group, said that the budget did not risk Australia's AAA rating as the country's finances remained sound.
An ongoing Westpac
Westpac
Westpac , is a multinational financial services, one of the Australian "big four" banks and the second-largest bank in New Zealand....
survey found that consumer confidence dropped as a result of the budget. Surveyed consumers anticipated that stimulus payments in the form of cash bonuses were no longer an option for the government, and their expectations of a turnaround during the following five years dwindled. The fall is equal to about half of last month's gain.
Come 22 May, as senators and Treasury officials prepared for the Senate estimates committee
Australian Senate committees
This article is about committees of the Senate. For consideration of bills 'in committee', see Committee of the WholeThe committees of the Australian Senate are committees of Senators, established by the Australian Senate, for purposes determined by that body...
hearings on the budget, the government faced strident criticism from chief executives, unions and small companies over the changes to employee share schemes.