$43 billion of cuts in Australian Budget

May 15th, 2013 at 7:56 am by David Farrar

As I’ve previously blogged, the Australian Government have been unable to get a path back to surplus, despite the mining boon and previously strong economic growth.

So yesterday’s Budget saw $43 billion of spending cuts and tax increases on the back of a $13 billion deficit for the upcoming year. This is what happens when you let spending get out of control.

Some of the major announcements:

  • Scrapping family tax benefits and bonuses $4.9b
  • A 15% surtax on super fund earnings over $100,000 a year

It will be interesting to compare and contrast the NZ and Australian budgets on Thursday.

Tags:

29 Responses to “$43 billion of cuts in Australian Budget”

  1. peteremcc (341 comments) says:

    Are these actual cuts?

    Or just cuts in the rate of increase of spending?

    Vote: Thumb up 2 Thumb down 1 You need to be logged in to vote
  2. Harriet (4,010 comments) says:

    Swan has not listened to big business the whole time he has been treasurer, he also bought in the carbon tax and the mining tax which have returned next to nothing in tax, and against their will, and now wonders why Company tax receipts are down!

    The position Swan has now taken with the budget is one of politics for the election:

    School spending and a couple of other major spends are up so that Abbott has to commit to keeping them – giving Labour ‘ownership’ of them for the election campaign. the elcetion is a forgone conclusion – Labour looses, but maintains as many seats as possable.

    The baby bonus is gone too, although you still get [I believe] $1000 for your first baby.

    Vote: Thumb up 4 Thumb down 0 You need to be logged in to vote
  3. Cunningham (746 comments) says:

    Even for a country with as much wealth as Australia, socialism can have such destructive results. What kind of damage would Labour and the communist Greens do to NZ?

    Vote: Thumb up 17 Thumb down 0 You need to be logged in to vote
  4. Manolo (12,624 comments) says:

    Juliar is toast, burnt toast!

    Vote: Thumb up 10 Thumb down 0 You need to be logged in to vote
  5. pollywog (1,153 comments) says:

    Hmmm…maybe not so lucky a country after all?

    Vote: Thumb up 4 Thumb down 0 You need to be logged in to vote
  6. Cunningham (746 comments) says:

    pollywog (1,069) yes very unlucky to have a socialist government in charge at this time!

    Vote: Thumb up 8 Thumb down 0 You need to be logged in to vote
  7. willtruth (245 comments) says:

    Isn’t this more an indictment of the NZ economic strategy? We’ve been pursuing a surplus, but had sluggish economic growth. Australia has used an expansionary fiscal policy to counter the effects of the financial crisis and has had stellar economic growth.

    Yes, they are lucky to have the mining boom, but I feel they have also been a bit smarter.

    Vote: Thumb up 0 Thumb down 16 You need to be logged in to vote
  8. Ed Snack (1,535 comments) says:

    Willtruth, no, sorry, the expansionary policy has come back and bitten them, hard. Sheer spendthrift incompetence is their problem, actual tax receipts are up to unprecedented levels but no matter how much they tax they spend (wastefully) even more. The success they’ve had has been as a result of the resources boom in prices, but that is over for now (although prices remain high in historical terms in general) as prices have dropped from their peaks and demand is not growing as it was. The mining industry has also stopped growing.

    And face it, the GFC has 2008-9, although the after effects have lingered there’s little excuse for stimulatory spending continuing for so long except as a political sop.

    Vote: Thumb up 11 Thumb down 0 You need to be logged in to vote
  9. Cunningham (746 comments) says:

    willtruth (219) you can’t keep spending recklessly and expect no consequences. We are now growing faster then Aus (according to recent article in Herald) despite all we have had to endure. Chickens come home to roost eventually.

    Vote: Thumb up 7 Thumb down 0 You need to be logged in to vote
  10. All_on_Red (941 comments) says:

    “and has had stellar economic growth. ”

    Under John Howard perhaps but utter rubbish under the present Labor bunch. Australia is stagnating and has been sliding down hill for years. The mining boom is long over. Projects are being cancelled and redundancies abound as others are scaled back or rationalised. Apart from mining where else is Australia earning its income? There is no manufacturing base exporting. Heck, each Holden gets subsidised by about $9000 per car. The live cattle market has been killed off- I could go on. They get 18000 illegal immigrants a year and still cant deal with the problem. The deficit this year is more like $19 Billion too. Governments trying to stimulate growth through increasing their own spending just does not work. The waste over there is just enormous. Billions have been overspent on useless projects or because of bad policy which have produced no benefit or been effective.Gillard and Swan will go down as the running the worst Australian Government ever.

    Vote: Thumb up 9 Thumb down 0 You need to be logged in to vote
  11. Ross12 (927 comments) says:

    willtruth

    How can they have done things smarter if they now have to have $43 billion in cuts in the Budget??

    Simple logic says the exact opposite to what you are saying. NZ has done it better because despite major natural disasters , the GFC effects and the meltdown of many finance companies we are still heading in a positive direction, even if it is slowly.

    Vote: Thumb up 8 Thumb down 0 You need to be logged in to vote
  12. willtruth (245 comments) says:

    Ed. You say “the expansionary policy has come back and bitten them, hard”. But the Reserve Bank forecasts for Aussie growth in 2013 and 2014 are for 2.5% and 3.0%. That’s down from what they had, but still way better than what we’ve been having.

    Vote: Thumb up 0 Thumb down 8 You need to be logged in to vote
  13. Ross12 (927 comments) says:

    willtruth –we all know how good RB forecasts are.
    By the way I forgot to mention in my previous post that it was recently announced over there that the money collected with the Queensland Flood Relief levy would NOT be distributed because of the state of the Federal finances. If you call that doing things right then I clearly operate with a completely different financial and moral compass to them.

    Vote: Thumb up 6 Thumb down 0 You need to be logged in to vote
  14. gravedodger (1,426 comments) says:

    @ Harriet, $2k for a first and $1k for a second, all with a leadtime of the gestation period.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  15. willtruth (245 comments) says:

    I’m not saying the Aussies do everything right. But I just look at them with their GDP per capita of 67K and I feel bad that ours is only 38K. Of course, the gap has been there for a while but it has expanded rapidly in the years since the GFC.

    But maybe I’m wrong. Maybe it is entirely down to the mining boom. The truth is that we don’t know, but I wouldn’t be so quick to gloat about their supposedly terrible fiscal situation when it doesn’t seem to be causing them any actual problem in terms of denting their stellar economy.

    Vote: Thumb up 0 Thumb down 7 You need to be logged in to vote
  16. edd (145 comments) says:

    Germany has the fifth biggest economy in the world, the highest standard of living in the world, without tons of natural resources and without the highest wages in the world. I think we need to pay some attention to how they get shit done. They are kicking ass right in the middle of the big Euro crisis that John Key is so afraid of after all…

    Vote: Thumb up 3 Thumb down 0 You need to be logged in to vote
  17. All_on_Red (941 comments) says:

    Will does a have a point about the forecast growth.(and so does Ross…) Revenue actually increased for the first few years of labor but is now declining as the effect of the scale down of mining kicks in. The problem is that Govt Spending has just gone through the roof and out the other side completely blowing all that money and more away. The Govt seemed to think the mining boom would go on forever and spent accordingly.
    If Howard/Costello was still running the place they would be a lot better off. They had less revenue and still produced a surplus. Labor with Swan as Treasurer has never produced a surplus.

    Vote: Thumb up 4 Thumb down 0 You need to be logged in to vote
  18. toms (301 comments) says:

    If Abbot wins he will be an utter disaster for NZ. Australia will get a government induced recession whether it needs it or not, a bit of God-bothering Abbot’s Presbyterian austerity for the naughty country. That would in turn tank our economy, for two reasons – one, Australia is a critically important export market whose (along with China) economic success has shielded our economy from the worst consequences of having a provincial shop keeper for a minister of finance and two because if tens of thousands of New Zealanders start returning home to NZ and onto the dole then all sorts of social hell will break loose. So you righties had better pray Gillard wins and and the Australian economy keeps performing, because if we can’t keep exporting (both goods and our surplus blue collar labour) to Aussie we’ll soon be having a revolution on our hands here.

    Vote: Thumb up 0 Thumb down 11 You need to be logged in to vote
  19. Kleva Kiwi (267 comments) says:

    @Willtruth – We do know.
    It is purely the mining boom that is proping up the Australian economy. Western Australian has all the positive signs, then the likes of Victoria, Tasmania NSW etc are all preforming worse reporting 0.5-1.5%. And even then there has been a huge raft of mine closures recently like the downsizing of all coal production and bauxite. The Auzzie labour market is stuffed. Menial tasks get a kings ransom these days resulting in services being exported to more affordable countries.
    Fact is socialist Labour policies have stuff Auzzie and the Gillard/previous governments have squandered all the wealth generated from mining.

    Vote: Thumb up 4 Thumb down 0 You need to be logged in to vote
  20. Sir Cullen's Sidekick (522 comments) says:

    This is exactly what will happen to NZ in 2014 with Labour-Greens taking over. So get ready for that. Whatever surplus John Key and Bill English manage to bring in 2014 will be gone within a year.

    Vote: Thumb up 8 Thumb down 0 You need to be logged in to vote
  21. kowtow (6,705 comments) says:

    toms is a bigotted idiot.

    A “provincial shop keeper” probably has more idea of the importance of balancing the books than any number of sophisticated ,urban ,bum bandit fucken PhD’s.

    Revolution?……..oh do fuck off back to your Che poster and Little Red Book.

    Vote: Thumb up 9 Thumb down 2 You need to be logged in to vote
  22. hmmokrightitis (1,458 comments) says:

    Australia had a great opportunity to make a shit load of money over the last 5 years, and have pissed it away, courtesy of Julia. They have had a two speed economy for that time – mining at full speed largely out west, and everything else out east.

    The mining commodities they have been pulling out of the ground are now fetching less on global markets, for a range of reasons. The big city economies are sluggish and slowing even more. They built in structural issues around future spend that they have now realised will utterly fuck the country in 10 years, and have started to unwind some of the worst excesses, but many remain. Abbot will inherit what JK did in 2008.

    There is pain to come. As for toms revolution, yeah, nah. You forget what currency values do to economies as they tank toms. NZ is well placed for the next 10 years. But of course the potential labour/greens gubbermint will fix that.

    Vote: Thumb up 9 Thumb down 0 You need to be logged in to vote
  23. willtruth (245 comments) says:

    Kleva Kiwi, you are very confident that it is purely the mining boom, but where do you get your stats from? You say NSW is growing at 0.5 – 1.5, but from what I can tell this is wrong.

    Vote: Thumb up 0 Thumb down 4 You need to be logged in to vote
  24. Kimble (4,092 comments) says:

    Labor has form in creating taxes that don’t raise any revenue. The Super Surtax is another one of those.

    Someone putting $100k into Super is doing so because of the 15% existing tax rate. Nothing more. Raise the taxes on it, and they will structure their income so that money goes into a business instead.

    The Company tax rate? 30%. Why do you ask?

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  25. Ross12 (927 comments) says:

    One of the things about Australia’s boom was that it wasn’t really a mining boom as such. It was a construction boom for the mining projects. Lots of infrastructure etc has been built. Once they are built then many of these mines don’t actually employ alot of people ( relative to the construction phase). In the past 12-18 mths a very large number of projects have to cancelled or put on the “back burner”.

    BTW Toms it is IF Abbott gets in , it is WHEN.

    Vote: Thumb up 3 Thumb down 0 You need to be logged in to vote
  26. Andronicus (185 comments) says:

    Anyone who claims the Gillard government is socialist has rocks in his head.

    This government has been unlucky at least to the extent that the Rudd spending to avoid the GFC, while necessary, left them no room for an election year lolly scramble. The budget is the work of a government that knows its time is up.

    Abbott is a frightening prospect. He is unpredictable, lacks judgement and at times gives the impression not everything is quite in line upstairs.

    Vote: Thumb up 0 Thumb down 4 You need to be logged in to vote
  27. RightNow (6,338 comments) says:

    “So you righties had better pray Gillard wins and the Australian economy keeps performing…”

    Mutually exclusive. Even with help from God.

    Vote: Thumb up 0 Thumb down 1 You need to be logged in to vote
  28. RightNow (6,338 comments) says:

    Andronicus “…Rudd spending to avoid the GFC, while necessary, left them no room for an election year lolly scramble.”

    It’s as if you’ve just blocked your ears and covered your eyes since Gillard has been PM. They’ve had increased government revenues and have still managed to blow the lot on lolly scrambles. The reason there’s nothing now is because they’ve spent even more than the revenue increases. And their excuse boils down to they were hoping for bigger revenue increases and it’s not their fault.

    Gillard, Swan, Emerson, Combet, Albanese – they all lack judgement and nothing is in line upstairs for them.

    Vote: Thumb up 1 Thumb down 0 You need to be logged in to vote
  29. UpandComer (496 comments) says:

    The mining boom is all that is keeping the OZ economy alive. If the Iron ore price drops too much below $130, expect those deficits to massively increase.

    Labour in Australia are criminal. Yet still, Labour here and the Greens are even worse.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote

Leave a Reply

You must be logged in to post a comment.