Robin Hood Budget: Will it help the economy?

The treasurer, Wayne Swan, had called it the ‘no frills’ budget – and it certainly was.

Since last week’s government response to the Henry Review, tonight’s budget was more like; we have robbed the rich, now where to spend the money.

Here is a summary of the main announcements made by Treasurer Swan:-

Economy

According to treasury estimates:-

• GDP growth will accelerate to 4% in 2011-12.
• The budget will return to surplus by 2012-13.
• Unemployment is projected to fall to 4.75% next financial year.
• Inflation is projected to be contained at 2.5%.

Individual taxpayers

• Lower tax on savings, with the first $1,000 interest earned to be taxed at a discounted rate of 50% – maximum benefit of $242.50 for those on the highest marginal tax rate. (1 July 2011)
• The low-income tax offset will be raised to $1,500, effectively providing a tax-free threshhold of $16,000 for those with income of less than $30,000. (1 July 2010)
• Planned simplification of the tax system, with a no questions asked instant $500 (increasing to $1,000 by July 2013) deduction for ‘tick and flick’ tax returns. (1 July 2012)
• Tax offset threshhold for health-related expenses will be raised from $1,500 to $2,000.

Company Tax

• Resource super profits tax of 40% imposed on mining companies.
• The company tax rate to fall from 30% to 28% by 2014.
• Small business tax rate of 28% to start in 2012.
• Immediate write-off of assets valued at less than $5,000 for small businesses.
• Government will reduce the withholding tax rate for offshore borrowings to make the country more attractive to investors.

Superannuation

• Superannuation guarantee to increase from 9% to 12% by 2019-20.
• Annual government top up of $500 for people earning less than $37,000.

Health

• Government’s plan to reform the health sector will cost $7.3 billion over 5 years.
• $355 million will go towards new GP superclinics and upgrades to existing facilities.
• $417 million for an after hours health service.
• $523 million to train nurses.
• Roll-out of a new $467 million e-health records system.
• Doctors to receive a $25,000 allownace to go towards nurse’s salary.
• Reform the Pharmaceutical Benefits Scheme is expected to save $2.5 billion over the next 5 years.

Did the Rudd government do the right thing? Let us know your thoughts.

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