Wayne Swan has managed to find $7 billion in savings to get the Federal Budget back in surplus by 2012-13, but that sort of cost-cutting doesn’t happen without leaving a few scars.
So who are the winners and losers from yesterday’s mini budget? Let’s take a look:
Accountants around the country will be quietly toasting Swan’s decision to defer the introduction of automatic tax deductions for work expenses for 12 months. Taxpayers hoping to claim an automatic $500 deduction will be filing off to their tax agent for at least another year.
The Australian Taxation Office will be stepping up its data matching blitz and has been charged with finding another $328 million in the next two financial years. That’s likely to mean plenty of more work for the ATO and its super computers, but we’re sure it is work they’ll relish.
The budget for disaster relief has blown out by $2.3 billion to well over $11 billion. Given most of this money is being spent rebuilding assets, there are likely to be some construction and building services companies enjoying a timely boost.
Employers who use foreign workers will be hit with a double blow. The Government will crack down severely on living-away-from-home allowances for foreign executives, saving more than $682 million. On top of this, employers will pay between 5% and 15% more for foreign worker visas in a measure that will raise $613 million over the next four years.
Aviation and trucking companies are unhappy with new taxes on aviation fuel (which will raise $920 million over the next four years) and taxes for liquid and gaseous fuels (raising $420 million). It is worth remembering that 85% of trucking operators are small business people, so this won’t just hit the transport giants.
A total of $1.1 billion will be saved by drastically scaling back superannuation co-contributions from $1,000 to $250. This will be used to fund rebates for low-income earners.
The baby bonus has been wound back from $5,437 to $5,000 from September 1 next year and will then be frozen at that level until July 1, 2015.
The public service union expects about 3,000 jobs to go as the public service attempts to reduce its expenses by $1.5 billion.
Cut backs in the public service will mean an inevitable slowdown in the Canberra area. Retailers would probably be the first hit, as they usually are in these circumstances.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
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