# Budget 2014



## burrow (16 April 2014)

What are the predictions? And how does that affect your investments?


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## ROE (16 April 2014)

burrow said:


> What are the predictions? And how does that affect your investments?




Be nice if they get rid of Negative Gear, be good for my bank short position


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## sydboy007 (16 April 2014)

I think half the leaks / though bubbles of Ponzi Joe wont eventuate.

Most of the cost cuts will impact on the poor and marginalised the most.  Most benefits to the wealthy will remain unscathed.


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## drsmith (13 May 2014)

This feels to me like the most talked about budget I can remember and one that will define the first term of the Abbott Government.

While tax increases and spending cuts have been leaked aplenty in the lead up, the following I wouldn't recommend in a single session.

http://www.news.com.au/finance/econ...et-drinking-game/story-fn84fgcm-1226915966657


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## DeepState (13 May 2014)

ROE said:


> Be nice if they get rid of Negative Gear, be good for my bank short position




Haha. Don't hold your breath! It would stuff our property market, impact consumer confidence, reduce commencement and thus capital formation at a time when resources capex is deteriorating, damage GDP during a challenging transition period and increase unemployment by more than projected under current legislation. Not good if you want to get re-elected. It would also disenfranchise a key set of Liberal constituents. Introduction of land tax and neg gearing might be more viable when things are on a more even keel.  Anyway, the Budget release will probably defy everything I just wrote and your bank stocks will hit the floor at the opening snap tomorrow.....err.

Do you run market neutral, bias long or let net market exposure do whatever depending on your view relative to what you think fair (however derived) happens to be in your portfolio?

Cheers


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## Ves (13 May 2014)

Hockey to swing the axe violently and close down ASADA, all at once bringing an end to the supplements saga without a verdict ever being handed down.

The Bombers to magically regain form and to go on and win the 2014 flag.


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## Garpal Gumnut (13 May 2014)

This has been a good budget.

For too long Australians have lived on handouts and freebies.

We now all take the pain to advance our nation.

Bludgers and whingers will protest.

gg


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## Julia (13 May 2014)

Essentially agree with gg above.  Joe Hockey made a decent and coherent job of delivering the budget.

I do have some concern for young people under 25 not able to find a job, with the decision that it will be a six month stand down period before they can access even the miniscule Youth Allowance.  Newstart is tough enough, but what will happen to those young people who cannot live with their parents and are going to have to support themselves whilst looking for a job with no financial assistance?

I absolutely understand and agree with the impetus to drive young people, anyone really, to seek work, but some are simply more employable than others, and the unemployment rate in some regional areas makes it extremely difficult for them.


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## Wysiwyg (13 May 2014)

Garpal Gumnut said:


> This has been a good budget.gg



I'm a Labor voter but debt is dumb. This mob of Liberals have already made the Labor bunch look like rank amateurs. 

Fuel to cost more.


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## Wysiwyg (13 May 2014)

Julia said:


> I do have some concern for young people under 25 not able to find a job, with the decision that it will be a six month stand down period before they can access even the miniscule Youth Allowance.  Newstart is tough enough, but what will happen to those young people who cannot live with their parents and are going to have to support themselves whilst looking for a job with no financial assistance?



According to this woman they missed the area of greater growth.



> ACOSS chief executive Cassandra Goldie said if the government was serious about containing costs it should be talking about containing the costs that are growing the fastest rather than those growing the slowest.
> 
> "This is evidence that despite the current media focus, income support for those who are unemployed, people with disabilities and low-income families are not the primary drivers of budget expenditure growth," she said.
> 
> Newstart, family tax benefits and the disability support pension between them account for less than 3 per cent of the expected expenditure growth in the next 10 years. Hospitals, the National Disability Insurance Scheme, schools, childcare and parental leave and age pensions between them account for 50 per cent.


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## PinguPingu (13 May 2014)

Sigh, it was nice knowing you First Home Saver Account...all the while multi million dollar residences are exempt from the pension asset test..now that could really save billions. 

De-regulation of Uni fees, in the UK that caused fees to sky-rocket, glad I've just finished Uni '..some course costs will fall', hilarious. Oh and interest rate increases on HECS debt, fantastic. 

Work for the dole..was a total proven failure under Howard, it made no improvement to unemployment and just made the people more stressed and under more financial strain as they had to pay for travel, uniform and other away from home costs while 'working' for a pittance, less time on preparing and looking for a job.

6 months waiting period! Well, looks like youth homelessness will rise and probably the crime rate honestly...

$7 dollar co-payment, AMA and all medical fraternities are against this. Especially, if mostly likely, the Gov simply reduces the Medicare rebate  by $7 and forces the GP's to bear the full anger of patients and put pressure on Doctors to keep bulk billing, losing out on income. Or do clinic/surgeries just collect the money for the Gov? Because I don't know how else this will be implemented. 

All in all, a f*ck the young budget.


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## Smurf1976 (13 May 2014)

I do "get" what they seem to be trying to achieve and agree in principle - opportunity not hand outs.

But the 6 month waiting period for welfare for those under 30 seems unreasonable to me. Some people do fall on hard times through no fault of their own, and it's not as though the average person of that age would have significant savings built up. If they were going to target anyone then logically it would be the older generations, not the young, since those over (say) 50 ought to have some savings to fall back on.

I can see definite negatives in this move. Increased crime would be one, a reluctance to make long term commitments is another. Six months is a long time without an income and as the Treasurer himself admitted, we've got 700,000 more workers than we have jobs - so long as that remains then at any given time someone will be unemployed.

I'm also a bit uncertain about the infrastructure investment. A nice idea in principle, but there seems to be a huge focus on roads. Given that we're moving something like 95% (so I was told) of long distance freight (eg Brisbane to Melbourne) by road now, there would seem to be a pretty strong case for rail I'd think. 

Adding another lane to a road isn't really a "nation building" project, it's just an incremental expansion of what we've already got. But something like high speed rail Melbourne - Sydney - Brisbane sure would be and has benefits for both freight and passengers. In due course it could be extended to Adelaide and possibly to Perth as well if there's a need.

One thing though, given everything that's in it I do wonder how much trouble there will be actually getting all this through the Senate? There would seem to be quite a few things likely to upset the other parties in a significant manner. This could get interesting.....


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## McLovin (13 May 2014)

PinguPingu said:


> All in all, a f*ck the young budget.




Yes, I agree. I think they got the idea right (belt tightening) at the macro level, but they've really smacked the poor and the young and let everyone else off pretty lightly. Seriously, no dole for six months if you're under 30. If you're earning minimum wage, it's unlikely that you have six months worth of saving. I do think something needs to be done about universities because they seem to have become vocational factories but I don't know enough about it to know if the government's plan is the right path.


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## qldfrog (13 May 2014)

well we still spend billions on dud fighers and submarines, subsidise mining while all their profit is legally transferred O/S, and the one I was not expecting, the 6 months wait for below 30 to access minimum welfare;
in a way, tacit redistribution of wealth by increasing the break-in rates and literally robbing from the middle class/pensionner back to the poor homeless youth...by direct action  ;
that one is a dumb one!
ah and yes with 2% levy above 180k we are back to more than 50% taxation rate which is a no go for me;
so I know the renovation job planned at home will be DIY and I will practise my guitar skill a lot in the next 3 years...
The funny thing is that when I point this, no one seems to believe people can volontarily reduce their work time and income.
Am I really the only one to have done and plan to do that?
You mostly reach these types of figure when owner of business/consultancy; not as an employee so the freedom is often there.
Anyway, next year my tax income bill will be lower.


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## DeepState (13 May 2014)

PinguPingu said:


> All in all, a f*ck the young budget.




Without thinking any less of the sentiments regarding social security and educational elements for the young...

Budget tightening has a limited negative impact on the wider economy as they have, in my view, wisely chosen to defer the surplus date.

There are other places bearing tax burdens.  Medicare levy hits from 22.5k proportionally.  Although this is not progressive, the deficit levy of 2% hits on income >180k and is thus borne disproportionally by the wealthy.

Company tax rates for small business have been cut by 1.5%.  These are the largest source of employment.

The MYEFO projects only a small increase in in the unemployment rate from about 5.5% to 5.75% for the next two years.

So I guess they are trying to create jobs via stimulating (small) industry, clamping down on aggressive tax practices (on large industry), trying to step on the brakes gently and hitting the wealthy disproportionately to pay for a budget hole.  The harsh new initiatives on the dole could be seen as encouraging the workforce to take the new jobs expected to be created and not to be fussy about it.  The university fees and support issue is going to ultimately encourage a privileged and reduce wealth mobility across generations.  In the US system , though, you can still get student loans etc. I figure the same applies in Aust.  Ultimately, those who use the educational facilities tend to benefit from them and it is arguable they should bear the cost of this. This tide on this is not going to turn back. 

They are getting everyone to fund the medical benefits in some way and trying to correct what has been a higher than expected level of doctor visits, whilst at the same time adding spending to some areas. 

They have also made it easier and more attractive to put money into super.  This can be seen as a tax break for the rich but it is an encouragement to save for retirement and thus stave off a pension disaster later.  There is also the downsizing of housing initiative which might assist those in the middle brackets to obtain the Age Pension.  So there is a transfer to the old, from the young going on as well.  But the indexation method for pensions have also been changed.

Their expenditure in infra will also likely increase productivity in the longer term and attract foreign capital and also allow domestic super funds to grab a hold of what is probably the best hedge for investors as they move to and beyond retirement.

They mentioned high Australian dollar a few times.  Although the RBA has stopped talking it down, it looks like the Feds have decided to keep going.

The Australian Federal debt load is still at low/reasonable levels by world standards, so aims of aggressive tightening seems weird.  Nominal GDP will likely be around 5-5.5% per annum.  The debt load will erode without having to go into surplus.  The claim is that they need to retain credibility in world markets of the foreign sourced capital might cease to be available to the banks primarily, but to elsewhere in the economy as well.  This is not convincing. \\


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## CanOz (13 May 2014)

Thanks RY, was hoping you'd post your usual balanced view....

RY for PM!


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## PinguPingu (14 May 2014)

DeepState said:


> Although this is not progressive, the deficit levy of 2% hits on income >180k and is thus borne disproportionally by the wealthy.





A nice overview, and I would agree entirely if for not that paragraph. Its nots all that disproportional as on 7:30 report "structural changes are being made to the low income earners, whereas high income earners are only hit by temporary levies. If you're a 250,000 earner, you're paying about an extra $1400. If you're 24 and unemployed, you're losing $2500 a year' .. where you probably don't have the assets to help you along compared to a 180K+ earner

As for welfare- an effective means of giving back to society

The money that goes into welfare is reinvested in the economy - don't know many job seekers who chuck it all into a term deposit so he have some cash if he ever manages to get a job

Welfare goes straight back into discretionary spending, consumer staples, utilities...drinks yes but it all goes back in. 

If welfare didn't exist and you had all these poor homeless people wandering the streets you can be sure that not only would crime sky rocket, but costs for services such as policing, healthcare and clean up would go through the roof. 

the economy could fall by orders of magnitude due to the fact you no longer have enough consumers in the market. Welfare is not degenerate. Welfare supports your most unfortunate countrymen. There are not enough jobs for everyone. 

Govs should be taking money away from the public servants (which they are, good sign) who are extremely overpaid for the little work they do and instead of recirculating money and thinking up meeting committees, names and clauses and birthing  a vortex of bureaucratic hell.


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## Garpal Gumnut (14 May 2014)

This budget has hurt us all.

It is more honest than any of the Labor budgets over the last 6 years.

gg


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## prawn_86 (14 May 2014)

Not a good budget for students. Uncapped course costs and HECS indexation to increase by 2 or 3%.

Aus is already saddled with a hell of a lot private debt, what happens when university courses start costing 20 or 30k pa and the average student has a 120 - 150k HECS debt?


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## sydboy007 (14 May 2014)

$245M for school chaplains - waste
$1M for ballet students' boarding accommodation - waste
$5B on PPL - waste

I can see a massive increase in youth poverty by forcing the under 30s to wait 6 months for the dole.  So someone that moved from a high unemployment area will be forced to return there and seek help from their families?  We're heading towards the USA.  Have a walk around Satna Monica beach where people with luggage sleep on the grass by day then roam the streets at night since they'll be moved along for vagrancy if caught sleeping there at night.

Seventy-one percent of the increase in welfare payments from 2007 to 2012 was in age pension payments, but this is pretty much off the agenda.

We have superannuation tax expenditures growing at roughly 12% a year, and most of the benefit goes tot eh wealthiest who will be just as likely to save for their retirement outside of super.  There needs to be an annual limit of say 10K a year, that is accumulated each year so that as you get older and more likely to have excess income to save, you can make higher payments into super, without blowing out the budget like the present system is.

Then we have this - http://www.smh.com.au/comment/budget-pain-not-for-millionaires-who-pay-no-tax-20140512-zr9o3.html

_The reason? They managed to cut their combined taxable incomes to $82. That’s right, $1.10 each.
Cutting taxable income that far doesn’t come cheap.

Forty-five of the uber millionaires claimed a total of $64.4 million for the “cost of managing their tax affairs”. That’s a staggering $1.4 million each. (As a point of comparison an entry-level H&R Block consultation costs $49.)
_

They're probably harder to target than the poor and unemployed, but letting this kind of dodgy tax minimisation to continue just sends to wrong message to us PAYG plebs who really can't avoid the tax man.


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## DeepState (14 May 2014)

PinguPingu said:


> 1. A nice overview, and I would agree entirely if for not that paragraph. Its nots all that disproportional as on 7:30 report "structural changes are being made to the low income earners, whereas high income earners are only hit by temporary levies. If you're a 250,000 earner, you're paying about an extra $1400. If you're 24 and unemployed, you're losing $2500 a year' .. where you probably don't have the assets to help you along compared to a 180K+ earner
> 
> 2. As for welfare- an effective means of giving back to society
> 
> ...




The deferment of dole programs for under 30s is a passionate topic and one I have a lot of sympathy for, but let's explore further.

1. The statements are true, but we need to look at not just changes (structural vs temporary) but levels as well.  The wealthy already pay a disproportionate amount of their income into tax relative to an unemployed 24 year old or someone on lower income.  Whilst the budget is in deficit, the wealthy are expected to pay more as they are in a better position to shoulder it than others who are already paying tax.

From a political strategy perspective, the under 24s already don't vote Libs as a bloc preferring "progressive parties" whose preferences can be subsequently negotiated, so it is easy to sacrifice.  Law number one...stay in power. Law number two...refer to law number 1.

2. Welfare is tricky.  The unemployed youth, who are sound of body and mind, have opportunities for employment and other opportunities are trying to be created.  The overall unemployment rate of 5.5% is very close to what is essentially full employment.  There are frictions for those who are, for reasons of health or circumstance, just can't work.  Also, people are transitioning between jobs all the time.  There will undoubtedly be those who are sound of mind and body and willing to work but can't find it.  There are even programs to assist with relocation.  But, yes, this is the part that sucks.  There are always losers and this is hurting a vulnerable part of society.  Meanwhile, another vulnerable part of society, those over 50 and needing a job are going to benefit from employment programs that pay allowances to employers to take them on.

In terms of the maximum bang for buck, distributing cash for early consumption is useful for a short term stimulus but has poor multiplier effects...you spend on a sandwich and it really doesn't cause he shop owner to do much other than to pass it on in further consumption.   Spend it on infrastructure and the bang for dollar spent is much higher than a dollar spent on welfare.  This type of investment unleashes a lot more GDP and, thus, creates jobs and better standard of living than welfare expenditure or helicopter money.

Australia has a pretty decent universal healthcare system compared to the US.  Hopefully that provides a net for those who are suffering health issues.

If you look at France, a socialist democracy, it's going bankrupt and can't even meet its budget targets as laid out in Maastricht.  The Labor party wants to distance itself from the Socialist label.  I'm not saying that extreme laissare faire without community solidarity is correct, but these examples are there to highlight that high amounts of welfare don't work either and are not desired by the Opposition either.

Still, I'm sure that will be of no succour to those who are able and willing to work, but can't find any for some reason.  I can't mount the slightest argument for cutting that support figure to zero for this age bracket for the length of time being considered.


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## Calliope (14 May 2014)

Most people, who do not belong to Special Interest Groups, judge a budget on how it affects them personally. I am quite happy that this budget does not affect my standard of living negatively, with the exception of the petrol excise. But here again it is only a small impost on me.

The petrol excise increases go to the maintenance and construction of roads, so it's only fair that the biggest users pay more.


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## McLovin (14 May 2014)

DeepState said:


> Still, I'm sure that will be of no succour to those who are able and willing to work, but can't find any for some reason.  I can't mount the slightest argument for cutting that support figure to zero for this age bracket for the length of time being considered.




Me neither. It seems unnecessarily harsh, especially in the context of how easily the middle got off. The government has hurt those who fall into two camps (a) those on >$180k knowing that Labor is unlikely to try and target them with the broken promise meme (b) those who would never vote Lib. 

And while I'm happy to see the medical research fund being established, why oh why does every government have to cut the budget for the CSIRO?


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## Garpal Gumnut (14 May 2014)

prawn_86 said:


> Not a good budget for students. Uncapped course costs and HECS indexation to increase by 2 or 3%.
> 
> Aus is already saddled with a hell of a lot private debt, what happens when university courses start costing 20 or 30k pa and the average student has a 120 - 150k HECS debt?




They either pay it back, or if they cannot, then they need to get a job in mining or infrastructure to pay it back. 

This money students get through HECS is not a right, it is an obligation.

If they have too much debt, they need to work harder or sell assets. 

gg


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## McLovin (14 May 2014)

prawn_86 said:


> Not a good budget for students. Uncapped course costs and HECS indexation to increase by 2 or 3%.
> 
> Aus is already saddled with a hell of a lot private debt, what happens when university courses start costing 20 or 30k pa and the average student has a 120 - 150k HECS debt?




More of them will move overseas after finishing university. I did. Didn't have to worry about my HECS debt until I moved back to Australia a few years ago, and by that stage I could pay it off as a lump sum. Of course, in the meantime, the government missed out on a lot of income tax revenue that went to HM Inland Revenue and the IRS.

The problem I see with this is that a lot of universities have dumbed down their courses to maximise profit, and in many industries like finance even the guy processing redemptions or a spreadsheet jockey needs to have a university degree (God knows why!). Not everyone who comes out of uni with a finance/law degree is going to end up being an IB.


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## pixel (14 May 2014)

Garpal Gumnut said:


> They either pay it back, or if they cannot, then they need to get a job in mining or infrastructure to pay it back.
> 
> This money students get through HECS is not a right, it is an obligation.
> 
> ...




One problem I see with the HECS concept is: Only those students who succeed after obtaining a degree will pay back the loan. (I'd rather call it a loan than an obligation.)
Students, who bide their time in one of the many "Arts" or "Social" studies and never turn it into something useful, will never pay it back, leaving the tax payer with a swag of write-offs.

Maybe there should be a risk assessment, as with any other loan, to determine size and duration *depending on the chosen subject and likelihood of chances of success.*


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## piggybank (14 May 2014)

McLovin said:


> Not everyone who comes out of uni with a finance/law degree is going to end up being an IB.




Hi McLovin,

Please forgive me for my ignorance (but where I came from I was known as the village idiot, well actually my Dad was and I inherited his title) but what does IB mean? My (village idiot) guess is Idle B--s--d

Cheers
PB


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## McLovin (14 May 2014)

piggybank said:


> Hi McLovin,
> 
> Please forgive me for my ignorance (but where I came from I was known as the village idiot, well actually my Dad was and I inherited his title) but what does IB mean? My (village idiot) guess is Idle B--s--d
> 
> ...




Close. Investment banker.


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## Ves (14 May 2014)

pixel said:


> One problem I see with the HECS concept is: Only those students who succeed after obtaining a degree will pay back the loan. (I'd rather call it a loan than an obligation.)
> Students, who bide their time in one of the many "Arts" or "Social" studies and never turn it into something useful, will never pay it back, leaving the tax payer with a swag of write-offs.
> 
> Maybe there should be a risk assessment, as with any other loan, to determine size and duration *depending on the chosen subject and likelihood of chances of success.*



That's an interesting comment, especially regarding Arts and Social studies.

Whilst it is true that students in these courses are less likely to repay their debts according to published statistics,  it is also important to note that they also make up far less a drag on the overall "bad debt burden" than their more popular counter-part courses.   The major courses are a greater drag merely by weight of student numbers.

Source:

http://grattan.edu.au/static/files/assets/dc751829/809-doubtful-debt.pdf


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## craft (14 May 2014)

HECS Debt
Expensive Housing (debt financed)
Very little (and reducing) Tax breaks for supporting a Family.

Australia moves further down the road of intergenerational social Classes

Without parental support/inheritance getting an education, buying a house and raising a family in Australia will ensure you stay working class.  There will of course be exceptions to this statement but not many, and they will probably have to be facilitated by moving oversees for periods and/or delaying/avoiding having a family.

Oh well – capital needs labour (not Labor)


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## prawn_86 (14 May 2014)

McLovin said:


> More of them will move overseas after finishing university. I did. Didn't have to worry about my HECS debt until I moved back to Australia a few years ago, and by that stage I could pay it off as a lump sum. Of course, in the meantime, the government missed out on a lot of income tax revenue that went to HM Inland Revenue and the IRS.
> 
> The problem I see with this is that a lot of universities have dumbed down their courses to maximise profit, and in many industries like finance even the guy processing redemptions or a spreadsheet jockey needs to have a university degree (God knows why!). Not everyone who comes out of uni with a finance/law degree is going to end up being an IB.




I agree on both counts, moving o/s early on so as to not have to pay back HECS is a huge appeal for many students.



pixel said:


> One problem I see with the HECS concept is: Only those students who succeed after obtaining a degree will pay back the loan. (I'd rather call it a loan than an obligation.)
> Students, who bide their time in one of the many "Arts" or "Social" studies and never turn it into something useful, will never pay it back, leaving the tax payer with a swag of write-offs.
> 
> Maybe there should be a risk assessment, as with any other loan, to determine size and duration *depending on the chosen subject and likelihood of chances of success.*




I dont personally agree with this, because then it is still going down a segregation line. Nurses and teachers dont earn as much as a good finance grad, but i would argue, generally speaking, add more value to society



Garpal Gumnut said:


> This money students get through HECS is not a right, it is an obligation.




Meanwhile many of the baby boomers got free university with nothing to repay at all...


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## prawn_86 (14 May 2014)

If the tax rate is falling to 28.5% doesn't that also mean that franking credits will reduce?


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## burglar (14 May 2014)

prawn_86 said:


> ... Meanwhile many of the baby boomers got free university with nothing to repay at all...




Yes!
You are right !!

Baby Boomers were ground in a different mill.


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## Junior (14 May 2014)

pixel said:


> One problem I see with the HECS concept is: Only those students who succeed after obtaining a degree will pay back the loan. (I'd rather call it a loan than an obligation.)
> Students, who bide their time in one of the many "Arts" or "Social" studies and never turn it into something useful, will never pay it back, leaving the tax payer with a swag of write-offs.
> 
> Maybe there should be a risk assessment, as with any other loan, to determine size and duration *depending on the chosen subject and likelihood of chances of success.*




Is HECS repaid following death, if you never have a high enough income to pay it out during your working life?


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## craft (14 May 2014)

Junior said:


> Is HECS repaid following death, if you never have a high enough income to pay it out during your working life?




Not yet. 

Dying is a pretty radical avoidance measure.


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## Junior (14 May 2014)

craft said:


> Not yet.
> 
> Dying is a pretty radical avoidance measure.




Haha, I'm not proposing it as an avoidance measure.  Just curious from a federal budget perspective.  

Surely the bad debt ratio would be very low if this were the case.


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## prawn_86 (14 May 2014)

Junior said:


> Haha, I'm not proposing it as an avoidance measure.  Just curious from a federal budget perspective.
> 
> Surely the bad debt ratio would be very low if this were the case.




My understanding is that the biggest issue is that some people never end up earning enough, or end up doing multiple degrees.

I would be for a cap on total HECS per person along the lines of you are only allowed 2 undergrad and one postgrad degree or something like that, but have no idea if that would actually do anything to help the budget


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## Ves (14 May 2014)

Junior said:


> Haha, I'm not proposing it as an avoidance measure.  Just curious from a federal budget perspective.
> 
> Surely the bad debt ratio would be very low if this were the case.



See post #29.   I linked a report from the Grattan Institute.  Section 6 is on this topic (from page 38 onwards).

There is both a benefit from introducing such a measure to the budget,  and also social costs of such a measure.   The numbers are not straight forward  (on a basic level you need to estimate how many people with HECS / HELP debts will die & the size of their debt & also their estate).

There is also a discussion on the prospective vs. retrospective nature of any measures to legislate the repayment upon death of student HECS / HELP debt.   For instance,  were those who already had a HECS or HELP debt misled into thinking that it would not need to be repaid if they died?


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## sptrawler (14 May 2014)

burglar said:


> Yes!
> You are right !!
> 
> Baby Boomers were ground in a different mill.




Yes you are right.
Back then only the top 5% or so went to uni. You had exams that filtered students at various levels.
Nursing, teaching and surfing weren't degrees, nurses were trained in hospitals and earned a wage.
Now everyone and their dog goes to uni for all sorts of useless degrees, someones got to pay for it.

As McLovin said the uni's are about making money now, not so much about the end product.


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## McLovin (14 May 2014)

prawn_86 said:


> If the tax rate is falling to 28.5% doesn't that also mean that franking credits will reduce?




Yer. The PPL levy paid by the top 3,000 companies will also not have franking credits attached because it's a "levy".


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## craft (14 May 2014)

McLovin said:


> Yer. The PPL levy paid by the top 3,000 companies will also not have franking credits attached because it's a "levy".




Largely under the radar but the devil is always in the detail.

A retiree living on 100K of grossed up dividends would currently have a net income of $73,553 that will reduce by *$1,290 *directly as a result of the PPL being funded by a ‘levy’ and the implication on franking credits.

edit:
The above is for outside the super system

For inside super (over 60 and receiving tax free status) the current net figure is 100K reducing by $2,097.


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## craft (14 May 2014)

And for super funds in accumulation mode a 100K of current grossed up dividend income is reduced by a net $1,783 over the pre PPL levy situation.


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## Julia (14 May 2014)

On the six month stand down period for young people, is that only if they do not engage in any 'learning program'?
eg the government says young people should be 'earning or learning'.

If they receive youth allowance or newstart while learning something useful then that's reasonable enough.

Kate Carnell suggested one means of improving the situation for employment of young people would be to abolish or moderate penalty rates.  She believes there would be many more jobs at weekends etc if businesses were not obliged to pay such high rates.  Sounds sensible, doesn't it?

There are kids out there from multi generational welfare families who have no concept of actually working for a living.  I spent about 12 years volunteering with a community agency doing emergency relief applications.
Just an astonishing number of young people turned up with bare, dirty feet and clothes, a face full of metal, and tatts everywhere.  When asked how their search for work was going, there was just a blank face.


----------



## Garpal Gumnut (14 May 2014)

I'm probably down about $8000 pa over next 3 years on this budget.

Money well spent. 

gg


----------



## trainspotter (14 May 2014)

Julia said:


> There are kids out there from multi generational welfare families who have no concept of actually working for a living.  I spent about 12 years volunteering with a community agency doing emergency relief applications.
> Just an astonishing number of young people turned up with bare, dirty feet and clothes, *a face full of metal, and tatts everywhere*.  When asked how their search for work was going, there was just a blank face.




And they wonder why they can't get work? Cracks me up they can afford $500 for a tattoo and some piercings but not enough for a decent set of clothes for a job interview.


----------



## Junior (14 May 2014)

craft said:


> Largely under the radar but the devil is always in the detail.
> 
> A retiree living on 100K of grossed up dividends would currently have a net income of $73,553 that will reduce by *$1,290 *directly as a result of the PPL being funded by a ‘levy’ and the implication on franking credits.
> 
> ...




Also...if the company has to be less tax, there should be higher profits to distribute to shareholders = higher dividend payments.


----------



## waimate01 (14 May 2014)

Junior said:


> Also...if the company has to be less tax, there should be higher profits to distribute to shareholders = higher dividend payments.




Dividend payment is grossed-up and marginal tax paid in the hands of the recipient. For an Australian-resident taxpayer, this means net-net the reduced company tax rate has no benefit.

The benefit lies in the area of retained earnings reinvested in items of a capital (ie, depreciable, not deductable) nature, because the company sees less erosion in its retained earnings.

It's effect is to encourage companies to reinvest profits, not to increase spendable cash in the hands of domestic shareholders.


----------



## Smurf1976 (14 May 2014)

Julia said:


> On the six month stand down period for young people, is that only if they do not engage in any 'learning program'?
> eg the government says young people should be 'earning or learning'.



Listening to the budget last night, it sounded very much like wait 6 months (zero income) and then you will qualify for the dole if you work for it (work for the dole). That is, an outright no dole for 6 months policy. That's how I interpreted what was said.

My own view is that such a policy is unnecessarily harsh, will have unfortunate consequences, and it's simply un-Australian to not be assisting those in genuine need for whatever reason. Six months is too long, six weeks maybe OK but not six months. And why the age 30 bit? If it's such a good idea then why not apply it to everyone?

I don't dispute the need to fix the budget, but this sounds very much like a case of using the budget situation as a convenient excuse to implement policies on purely ideological grounds whether or not there's a financial imperative to to so. I mean seriously, we're saying no help to people in need for 6 months. Surely there's got to be another way to find some savings.


----------



## DeepState (14 May 2014)

waimate01 said:


> ...Dividend payment is grossed-up and marginal tax paid in the hands of the recipient. For an Australian-resident taxpayer, *this means net-net the reduced company tax rate has no benefit*.




Not quite accurate.

From KPMG:




Cheers


----------



## Ves (14 May 2014)

waimate01 said:


> The benefit lies in the area of retained earnings reinvested in items of a capital (ie, depreciable, not deductable) nature, because the company sees less erosion in its retained earnings.
> 
> It's effect is to encourage companies to reinvest profits, not to increase spendable cash in the hands of domestic shareholders.



You're missing the impact of the PPL Levy.

Company currently pays tax at 30%.

After changes tax rate is 28.5%,   but the largest 3000 companies pay a 1.5% PPL levy.

The whole point is that the 1.5% levy is a levy and not a tax,  so no franking credits are generated on it.

Cash flow for taxes and levies is exactly the same in the company's hands. There is no extra cash to reinvest.


----------



## pixel (14 May 2014)

DeepState said:


> Not quite accurate.
> 
> From KPMG:
> 
> ...




If you compare the paid-out dividend, your contradiction has merits. But you'll have to compare apples and apples, which is the company's after-tax profit that's paid out as dividend.
If a company's before-tax profit is $100, under 30% tax, it can pay out 70c. Grossed-up by the Franking Credit, the investor gets $100, of which $30 has been paid in tax.
After the reduction to 28.5%, the $100 before-tax profit become $71.50 dividend, grossed-up to $100 with $28.50 tax paid.
In both cases, you pay your own marginal tax rate on those $100; whether you receive a credit of $30 now or $28.50 later won't make a penny difference *because you have to add the $1.50 additional dividend you received when the dividend was paid out.*

PS Ves: The PPL Levy has probably less impact than Labor's Super Profits Tax.


----------



## waimate01 (14 May 2014)

DeepState said:


> Not quite accurate.
> 
> From KPMG:
> 
> ...




KMPG miss the point that with a lower tax rate, the amount of proceeds available for distribution via dividends is higher, thus the "100" at the top of each column is an assumption which is not necessarily correct.


----------



## waimate01 (14 May 2014)

Ves said:


> You're missing the impact of the PPL Levy.




Agreed - ignoring the effects of the PPL. My comment applied to the non-benefit to shareholders of lower company tax rates.


----------



## Ves (14 May 2014)

In addition to my previous post - a source for my comments.



> The Government confirmed that it was committed to cutting the company tax rate by 1.5 percentage points (to 28.5%) from 1 July 2015. F*or large companies, the reduction will offset the cost of the Government’s 1.5% Paid Parental Leave levy.*




http://sites.thomsonreuters.com.au/...t-70-welfare-means-testing-other-tax-changes/

Found under "Revenue measures" 

Pixel, can you provide a source that says differently, ie.  what makes you think large ASX listed companies will not have to pay the 1.5% PPL scheme levy (and therefore be able to retain the cash)?


----------



## McLovin (14 May 2014)

pixel said:


> If you compare the paid-out dividend, your contradiction has merits. But you'll have to compare apples and apples, which is the company's after-tax profit that's paid out as dividend.
> If a company's before-tax profit is $100, under 30% tax, it can pay out 70c. Grossed-up by the Franking Credit, the investor gets $100, of which $30 has been paid in tax.
> After the reduction to 28.5%, the $100 before-tax profit become $71.50 dividend, grossed-up to $100 with $28.50 tax paid.
> In both cases, you pay your own marginal tax rate on those $100; whether you receive a credit of $30 now or $28.50 later won't make a penny difference because you have to add the $1.50 additional dividend you received when the dividend was paid out.




That's not correct. The dividend will remain $70 but the denominator will be 0.715 instead of 0.7.  There are no franking credits attached to the additional 1.5% levy.

So in your example, the grossed up dividend will be $70/0.715= $97.90 ( the .715 represents franking credits available not tax paid by the company)

Applying at 15% tax rate...

Current system: 

Grossed up div: $100

Tax @15% $15

Franking credits $30

*Refund $15*

New System:

Grossed up dividend: $97.90

Tax @15% $14.685

Franking credits: $27.90

*Refund $13.215*


----------



## DeepState (14 May 2014)

Julia said:


> On the six month stand down period for young people, is that only if they do not engage in any 'learning program'?
> eg the government says young people should be 'earning or learning'.
> 
> If they receive youth allowance or newstart while learning something useful then that's reasonable enough.




Newstart Age ($510 per fortnight) lifted to 25.  Waiting period is six months.  Only payable for six months.  Newstart payments are 1mth for every year worked prior to application.

Youth Allowance ($414 per fortnight) also has six month wait period.  Payable for six months.

Exceptions apply to the waiting period to single parents, apprentices, disabled...

To qualify, in the period before they receive income support, they will be required to attend gov't job seeking programs.  Refusing work will result in loss of benefit or penalties.

During Newstart or Youth Allowance, they will eventually need to work 25hrs per week as per work for the dole.

If still unemployed after 12 months, then they move to work for the dole.  Hours of work will rise to 25hr per week from 1 July 2015 (from 15hrs currently).

....it's a squeeze from all angles (age, time wait, hours worked for benefit, reduction in length of benefit payment to a max of six months - less if you are on Newstart and have not worked six years, freeze on indexation).  I read it as no income for the first six months unless in particularly extenuating circumstances.

Cheers


----------



## DeepState (14 May 2014)

waimate01 said:


> KMPG miss the point that with a lower tax rate, the amount of proceeds available for distribution via dividends is higher, thus the "100" at the top of each column is an assumption which is not necessarily correct.




And from Pixel too.

The KPMG illustration is obviously to demonstrate the change in the tax rates and thus franking on the calculation of tax payable on a (hundred) dollar of cash dividend.  What you both say is correct (in terms of cash payment), but it also involves the assumption that dividend payments as a percentage of profit will not change...ie full payout.  

Let's explore:

By reducing the corporate tax rate, at least for smaller businesses, all things equal and as Waimate pointed out him/her/yourself, it encourages retention of earnings as the cost of equity capital has come down at the margin.  This is an implicit intent of reducing the corporate tax rate because this stuff creates growth and employment more effectively than returning dividends which are generally applied to direct consumption or saving if returned ultimately to a direct holder. If not distributed but retained in a major super fund or something, not much changes as the distribution is reinvested. Even for large companies where the mix of tax type between a levy and a tax has changed, dividends are also less valuable (to domestic investors) with a lower attaching franking credit.  At the margin this will reduce the attractiveness of paying a dividend relative to retaining earnings where projects and initiatives become more viable in a relative sense for every dollar of distributable profit that emerges.  These effects will lower the payout ratios from whatever they are now - all else equal.

Personally, I have no idea what that payout ratio will become.  But it will generally be expected to lower, with all else being equal, relative to the current situation.  That is what would be expected with these changes and it is part of a process of deepening capital investment.  Further, it is interesting that the corporate tax rate in Aust is higher than elsewhere in general and so is our yield.  I think that, maybe, part of the difference arises because of a lack of a dividend imputation system (whose benefits are now weaker for Aust) and a lower tax rate which encourages capital retention.

Cheers


----------



## sydboy007 (15 May 2014)

http://www.businessspectator.com.au/article/2014/5/13/politics/another-budget-bounty-lucky-party

basically for the budget to meet it's forecasts we're looking at private debt grow of a tad over 6% each year (less than half the Howard years)

_But the second thing to say is that this required rate of growth of private debt sits on top of a much bigger private debt pyramid than the Howard years commenced with. When John Winston Howard came to power, private sector debt in Australia (the sum of household plus business debt) was roughly 85 per cent of GDP. When Tony Abbott took over, it was roughly 145 per cent of GDP.

So for private debt to grow at 7 per cent of GDP per year when it is currently about 1.4 times GDP means an annual growth rate of private debt of about 10 per cent per year (correct level is something like 6.2%-9.5%)-- 5 per cent faster than the expected rate of growth of nominal GDP (correct level is up to 4.5%).

So for Joe Hockey’s budget books to balance, how high would Australian private sector debt need to be by 2025? On the back of the envelope calculations here, it would need to be about 250 per cent of GDP_


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## DeepState (15 May 2014)

sydboy007 said:


> http://www.businessspectator.com.au/article/2014/5/13/politics/another-budget-bounty-lucky-party
> 
> basically for the budget to meet it's forecasts we're looking at private debt grow of a tad over 6% each year (less than half the Howard years)
> 
> ...




Relax! Steve Keen is no monetary economist and seems to have messed up his maths, let alone making a travisty of the money multiplier...


----------



## CanOz (15 May 2014)

sydboy007 said:


> .... back of the envelope calculations here, it would need to be about 250 per cent of GDP[/I]




 ... you know where that got ya!


----------



## Smurf1976 (15 May 2014)

I seriously doubt that we'll see major growth in private debt at least in terms of % of GDP.

The "spend like there's no tomorrow, "equity mate" will take care of the debt" thing was pretty much killed by the GFC so far as I can tell. Consumers just don't seem anywhere near as willing to borrow and spend as they were pre-2008.

That plus we don't really have anything obvious to spend the money on anyway, apart from (mostly overseas) travel. Homes have already been renovated on mass in recent times. There's no new expensive tech device that everyone wants - if someone hasn't bought a computer and flat screen TV by now then they're probably not going to buy one ever. Most homes now have air-conditioning. The solar boom is over too. Per capita car travel is trending down in practically all developed countries - car's aren't the thing they used to be either economically or socially (and to the extent that people do spend on vehicles, it's going to be 100% on imports soon anyway).

So if private debt is going to increase then it's either going into speculation or business investment I'd expect. But speculation is non-productive by its' very nature, and business will only borrow to invest if they can make a profit by doing so.

The whole easy money, borrow an spend, "equity mate" thing was a once in a lifetime experience that won't be repeated soon in my opinion. The world has changed and pinning hopes on a revival of a past trend is foolish at best.


----------



## sptrawler (16 May 2014)

It's interesting that Labor are against raising the pension age, yet they raised it from 65 to 67 in 2009.


----------



## pixel (16 May 2014)

sptrawler said:


> It's interesting that Labor are against raising the pension age, yet they raised it from 65 to 67 in 2009.




Given the coalition's rejection of everything during Labor's tenure, it is utterly unsurprising that Labor refuses to rubber-stamp the current razor-gang.


----------



## Judd (16 May 2014)

sptrawler said:


> It's interesting that Labor are against raising the pension age, yet they raised it from 65 to 67 in 2009.




Politics.  Normal.  Sadly.


----------



## Calliope (16 May 2014)

pixel said:


> Given the coalition's rejection of everything during Labor's tenure, it is utterly unsurprising that Labor refuses to rubber-stamp the current razor-gang.




The Coalition made the mistake of trying to save money, and Bill Shorten and apparently the electorate don't like it. If they had followed Labor/Green policy to borrow and spend and not worry where the money was coming from, then they would be sitting pretty now.

Political expediency turns the Ant and the Cricket moral on it's head.


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## Smurf1976 (16 May 2014)

Calliope said:


> The Coalition made the mistake of trying to save money, and Bill Shorten and apparently the electorate don't like it.



It's the manner of saving money, not the concept per se, that has upset many I think.

A temporary rise in tax for high income earners versus a permanent cut to welfare for those under 30 especially and a permanent increase in military spending.

It all sounds very ideologically driven, a typical right wing / conservative approach. If money was the real focus, then there are alternative ways of going about that I'd think.


----------



## Calliope (16 May 2014)

Smurf1976 said:


> It all sounds very ideologically driven, a typical right wing / conservative approach.




Yes, it is simply a case of the greedy, right-wing, cigar-smoking rich grinding down the hard-working poor.

What baffles me is that Abbott and Hockey with all the resources of Treasury can't get it right when we have so many budgetry strategists on ASF who know all the answers.


----------



## sptrawler (16 May 2014)

Smurf1976 said:


> It's the manner of saving money, not the concept per se, that has upset many I think.
> 
> A temporary rise in tax for high income earners versus a permanent cut to welfare for those under 30 especially and a permanent increase in military spending.
> 
> It all sounds very ideologically driven, a typical right wing / conservative approach. If money was the real focus, then there are alternative ways of going about that I'd think.




Apparently they are focusing on spending this budget, the white paper due to be commenced, looks at the tax side.
Apparently the quickest way to stop the blow out is to curtail outgoings, seems like it wasn't well recieved.lol

Maybe the tax increase on high income earners will be a permanent sugestion, who knows.
Oh well, let's career on regardless.


----------



## DeepState (16 May 2014)

The Budget explanation for all this fiscal responsibility is largely to prevent extensive build up of debt to ensure that we remain credible in the eyes of the international market.  Gee, let's take a look:

What is Australia's net debt to GDP ratio and interest payments to GDP ratio likely to look like (Source: Statement 10, Budget Paper 1):




....around 11% of GDP with interest payments of 0.5% of GDP (which equates to about 2% of receipts on an underlying cash basis).  Wow, massive problem with that right now. Not.


What does the rest of the Advanced World look like (Source: IMF):




The list rolls over a page and Australia is somewhere close to the bottom of it.  And we are going to lose credibility in the world capital markets?  Are you nuts?

Nominal GDP will likely grow at around 4-5.5% per annum.  So long as the budget deficit is less than that figure, our net debt to GDP will decline.  As far as I can tell, our butts actually aren't on fire and, if it were, other countries will be in worse shape and capital will flee from them to the butt that is burning at a lower temperature.  I don't understand why we are taking such measures when there is actually no need.  There could be a slightly negative budget balance and all would be fine.  The GFC saw only a slight deterioration in the budget position, for example.  That was huge.  

I'm not saying that no tightening was required, I'm just wondering why there is urgency to return to surplus when it doesn't seem called for.  All these nations face some form of demographic aging which will place pressure on health and pension expenses too.  In Australia's case, if the participation rate of those aged 15-70 remains the same as it does today (it won't because pension ages are being pushed back so these figures are worse than reality/projections) the dependency ratio deteriorate by 5% of what it was between 2013 and 2030 and a further 3% between 2030 and 2050.  Does that strike you as some sort of monster demographic disaster on our doorstep particularly given pension expenditure is increasingly becoming self-funded?


----------



## Smurf1976 (16 May 2014)

Conservative governments - low welfare, low corporate taxation, big military etc.

Socialist governments - higher welfare, higher taxation, less focus on military etc.

What the Coalition has done looks awfully like just an implementation of ideology using the budget situation as a convenient excuse. Cutting welfare etc whilst raising military spending to 2% of GDP - exactly the sort of thing they'd like to do even if we had a surplus.

How about closing some of the tax loopholes as an alternative?


----------



## sptrawler (16 May 2014)

Smurf1976 said:


> How about closing some of the tax loopholes as an alternative?




Isn't that what the 'white paper' on taxation is meant to identify?

I think from my basic understanding of the fiscal model, minor changes to handouts, has a minimal effect on the equilibrium of the system. It is a known cost and a known saving.

Changes to the 'tax take', has a much larger ripple effect.
For example, the low interest rate climate currently in place, is stimulating employment in the building sector which is counteracting the contraction in mining related employment.
Hit neg gearing and the effect may be immediate and excessive.

I'm sure everyone would love some big tax hits, however the economy is in a fairly precarious state. That is spending is low, businesses are hitting the wall, our manufacturing isn't competitive, our wages are high relative to competition, our welfare system is generous.

It is great, but it is going backwards.
I know they use computer modelling and small changes to inputs give radical changes to outcomes.
A bit like controlling on the bypass, as opposed to opening the main v/v


----------



## Calliope (16 May 2014)

Smurf1976 said:


> Conservative governments - low welfare, low corporate taxation, big military etc.
> 
> Socialist governments - higher welfare, higher taxation, less focus on military etc.
> 
> ...




I guess David Marr is your mentor. You certainly think alike.

On Q&A;



> Sharman Stone : …Australia has some of the lowest productivity per worker in the developed world and it has been going down over the last 10 years. We have about the highest, I have to say, minimum wage as well in the developed world –
> 
> *David Marr : [interjecting] Yes, let’s get that down.*
> 
> ...


----------



## DeepState (16 May 2014)

Smurf1976 said:


> Conservative governments - low welfare, low corporate taxation, big military etc.
> 
> Socialist governments - higher welfare, higher taxation, less focus on military etc.
> 
> ...




Hi Smurf

You've made mention of the military expenditure twice in this thread.  Just want to point out a couple of things.  

This from Statement 6 of Budget Paper 1:




There is a budgeted plan to *increase* military expenditure *by 2% per annum* for the year to 2013/14.  It is presently closer to 1.1% of GDP.  As nominal GDP will be materially higher than 2%, the proportion of military expenditure to GDP will actually decline. Over the period through to the end of the projection, it will rise by a further 5.4% per annum.  This is close to the rate of nominal GDP growth and hence military expenditure will be pretty much static as a percentage of GDP.  

The US has criticized Australia for its very low military budget and, thus, limited role that it can play in the Pacific Sphere.  For a country with our land mass and coastline, albeit being an island affords some protection, this level of expenditure is very low by world standards.

Cheers


----------



## sptrawler (17 May 2014)

Not wanting to make an issue of military spending, but some of the posters that condem the spending on military equipment, were the same posters that mentioned the closing of manufacturing and smelting would reduce our military capacity.

Not saying it is right or wrong, but to argue one way then the other, is confusing.

Australia is surrounded by culturally and religiously different countries, we have a very small population in a very large country.
To not have state of the art and up to date military capacity and strong alliances, would be idiotic.IMO


----------



## Smurf1976 (17 May 2014)

DeepState said:


> There is a budgeted plan to *increase* military expenditure *by 2% per annum* for the year to 2013/14.  It is presently closer to 1.1% of GDP.  As nominal GDP will be materially higher than 2%, the proportion of military expenditure to GDP will actually decline. Over the period through to the end of the projection, it will rise by a further 5.4% per annum.  This is close to the rate of nominal GDP growth and hence military expenditure will be pretty much static as a percentage of GDP.




So unless I misheard what the Treasurer himself said then he's told a big fat lie. I thought he said they were increasing military spending to 2% of GDP? Or did I mishear that during the budget?


----------



## DeepState (18 May 2014)

Smurf1976 said:


> So unless I misheard what the Treasurer himself said then he's told a big fat lie. I thought he said they were increasing military spending to 2% of GDP? Or did I mishear that during the budget?




Hi Smurf

No.  I told a big fat lie. But I did it without intention. Upon review of his speech, the Treasurer actually did say that they want to increase defence to 2% of GDP within a decade.  I was looking at the actions within the projection period and noticed the 2% growth there and, mistakenly, thought is was you that mixed things up.  Actually, it was me.

Sorry about that Chief.

Max


----------



## Smurf1976 (18 May 2014)

sptrawler said:


> Not wanting to make an issue of military spending, but some of the posters that condem the spending on military equipment, were the same posters that mentioned the closing of manufacturing and smelting would reduce our military capacity.
> 
> Not saying it is right or wrong, but to argue one way then the other, is confusing.



We're effectively doing both. Increasing spending whilst still allowing industry to decline.

So we end up with a military that's a bit more effective under "normal" circumstances but which fails in the event of a major war. A bit like having a fire fighting pump that doesn't work if it gets too hot or having a heater that doesn't work if it snows. Works until you need it most, then it stops working when your enemy fails to send more parts or ammunition to use against them. 

It's like the US military discovering a couple of years ago that their high tech weapons couldn't be manufactured without materials from China. Better hope that China's on the same side in the next war then. 

My real point though is about ideology and I'm not saying it's wrong or right, just observing. Conservative governments like the military etc and dislike welfare. Reverse that for those to the political Left. We have a conservative government and, despite the apparent financial difficulties, they've found a way to increase military spending whilst cutting back on welfare. A course of action that fits well with their ideology, the budget situation just being somewhat convenient in that regard. 

Overall I do think the Coalition is doing a better job than Labor did, no real argument there I think. But they do seem to be showing a definite ideological, rather than purely financial or practical, bias in the manner of allocating funds and this won't be to their long term advantage.

Wrap too many ideological things up in what is properly a financial issue and you start alienating voters on two fronts both financial and ideological. Then we end up with a Labor government to mess the finances up again.


----------



## qldfrog (18 May 2014)

and I would add:
spending for military expense per se: we need to be able to defend ourself, but I see the big tickets which came lately as useless for that:
submarines (to do what? unless you have nuclear heads in on board missiles, a submarine is a useless toy with very limited fire power and a very high cost )
figher jets: we just bought fighers which if leaving brisbane would not be able to go to cape york and back , or just..
what for???
switch this into drones for surveillance , awacs systems for long range alert and get hundreds of ground to air top of the range missile if we feel threatened..
ahhh but that can not be usefull in irak /afghanistan..

yet a few tweak there would have EASILY saved a few billions AND have actually increased our defence capacity...
so my anger to this budget, that plus the on going NDIS/parental leave and super rort for currentretiree


----------



## Smurf1976 (18 May 2014)

qldfrog said:


> figher jets: we just bought fighers which if leaving brisbane would not be able to go to cape york and back , or just..




And if they do get back to Brisbane, well then we need an ongoing supply of fuel to fill them up with for the next mission and of course parts to maintain them with. 

If we're concerned about defence then simply having a lot of expensive equipment isn't enough. We also need the ability to make fuel to run it, parts to maintain it and so on. We're spending big on equipment whilst allowing everything from the manufacture of mechanical parts (and the metal to make them with) to fuel refining go offshore. All good under normal circumstances but has big flaws in the event of a real, major war breaking out.

It's like installing the greatest security system at home to keep burglars out. Then a thief works out that it can be disabled simply by turning the power off....


----------



## sptrawler (18 May 2014)

It would also seem sensible to refuel and deploy them out of Darwin, Townsville and Curtin, in the event of a threat, not Brisbane.

Flying from Brisbane to Cape York, then back to Brisbane, would appear poor military tactics, but does support your theory.


----------



## qldfrog (18 May 2014)

sure Brisbane to Cape was just to demonstrate the pathetic range of the fleet we purchased, as opposed to russian or chinase potential opponents
definitively not a military tactic recommendation


----------



## bigdog (18 May 2014)

*MORE BUDGET NASTIES NOT DECLARED BY HOCKEY!!*

http://www.theage.com.au/money/budg...ers-and-matureage-workers-20140516-zreh5.html

Budget's secret sting for pensioners and mature-age workers

Date
    May 16, 2014 
David Potts 

New rules discourage anyone over 65 from remaining in the workforce. 

Pensioners, mature-age workers and self-funded retirees will be stung sooner than expected by the budget.
Those eligible for the part pension from next January will be hit by an effective 50 per cent tax as super payments are included in both means tests, financial advisers warn.

Worse, after July 1 this year those on concession cards which are available to pensioners could lose as much as $2000 a year, says Louise Biti, head of technical services at Strategy Steps, which advises financial planners.
The pension concession and Commonwealth Seniors Health cards offer travel, electricity, phone and council rate discounts in an agreement with the states.

But buried in the budget documents the government reveals it will be "terminating" this agreement after July 1, saving  $1.3 billion over four years.

"It will hurt pensioners the most. This will cost $1000 to $2000 a year. No one was expecting that. Since it's not a direct payment to pensioners the government didn't want to highlight this," Biti says.

The separate abolition on September 20 of the "seniors supplement" attached to the Seniors Health card for self-funded retirees will cost couples $1320 a year.

But the biggest sting is the government's decision to count super drawdowns as part of the assets test from next January.

This will bring super into the deeming net where it is assumed to earn a certain return, as is the case for term deposits and other financial investments.

Currently super pension income is adjusted by dividing the balance by the pensioner’s life expectancy.

Under deeming, super will be simultaneously caught by both the assets and income tests.

For example, a 65-year-old with $250,000 in super on the full pension would, after January 1, be assessed as earning $8284, which is above the $7176 income threshold. Every dollar earned above $7176 would lose 50 cents of pension.

In a double whammy, you lose some of the pension to begin with, then another 50 cents in every dollar you earn if you keep a part-time job, financial planner Paul Moran, principal of Moran Howlett Financial Planning, says.

“Under the assets test you could work part-time to use up the income test threshold but now if you have a super pension you’ll lose half. The change amounts to a new tax of 50 per cent for many existing and soon-to-be pensioners and veterans. It’s a huge hit,” Moran says.

It will hit even harder in 2017 when deeming starts with balances of $30,000 (or $50,000 for couples) instead of the current $46,600/$77,400.

Those getting the age pension before December 31 will be exempted from the new super deeming rule. But this will also discourage anybody over 65 from remaining in the workforce, at the risk of being caught in the new rules from next year.

“There’s an incentive to retire if you reach 65 this year. Or you could resign, go on the pension and then go back to work part-time and start a super payment so long as you do it before December 31,” Moran says.

“These are not wealthy people. So getting $100 less a fortnight is very material to them,” he adds.

In another budget hit, the mature age worker’s tax offset for those in the workforce aged over 55 and earning less than $63,000 a year will be scrapped on July 1.

Although this will pay for the new $10,000 subsidy to employers for hiring older workers who had been on the dole for six months, Biti warns this could backfire.

“A boss might sack you and hire somebody else and get the $10,000,” she says.

Other budget booby traps include:

The fringe benefits tax rising to 49 per cent for those earning over $180,000 paying the deficit levy.

The franking credit from dividends drops from 30 to 28.5 per cent after July 1, 2015.

A freeze on the thresholds for the private health insurance rebate and Medicare levy surcharge from July 1, 2015. This will reduce the value of the rebate for some and push others into the surcharge as wages rise.

The abolition of the twice-yearly income support bonus on Centrelink and Veterans’ Affairs payments.

The abolition of the dependent spouse tax offset from July 1.
One piece of good news that has escaped notice is Treasurer Joe Hockey’s claim that households will save “on average around $550 next year alone” from the abolition of the carbon tax.

And while the Medicare levy rises to 2 per cent on July 1, it appears the higher tax-free threshold of $19,400 due to start on July 1, 2015 has also been spared the axe.


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## sptrawler (18 May 2014)

Labor and the left should be happy with that, bigdog, they say people with money in super shouldn't get any pension or perks. 
Labor will wave that through.


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## Smurf1976 (18 May 2014)

bigdog said:


> One piece of good news that has escaped notice is Treasurer Joe Hockey’s claim that households will save “on average around $550 next year alone” from the abolition of the carbon tax.




There's really only a benefit in some states however and even that is at least partially offset. There's 3 carbon-based fossil fuels we use, and only one of them is getting cheaper for most under this plan whilst the other two get more expensive.

Oil (petrol and diesel) - gets more expensive due to fuel excise indexation.

Gas - gets more expensive in Qld, NSW, ACT, Vic, Tas and SA (but not WA or NT) due to the move to export parity pricing 3 years from now.

So overall, there's a benefit in WA and the NT definitely, and a lesser benefit in Qld and NSW. In Vic and SA the rising gas price cancels out the benefits for most households, and Tas is a net gainer from the carbon tax anyway thus stands to lose.

So it's a $550 saving for a minority (WA, NT), a lesser saving for a large chunk of the population (Qld, NSW), no real saving for another big chunk (Vic, SA) and a loss for a minority (Tas). It sure ain't an across the board saving that's for sure.

And that is, of course, assuming that the "savings" don't simply disappear as an increase in profits rather than a reduction in prices. Coal is primarily used to generate electricity, and with gas set to become uneconomic for baseload (2017), a significant amount of coal-fired capacity removed from the market and the reduction in hydro output (2014 and further in 2015) it's quite likely that the end of the carbon tax won't be fully reflected in wholesale power prices at least after 2017.

More politics....


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## Smurf1976 (18 May 2014)

sptrawler said:


> It would also seem sensible to refuel and deploy them out of Darwin, Townsville and Curtin, in the event of a threat, not Brisbane.



Regardless of whether we're operating them out of Brisbane, Darwin or wherever we still need fuel to put in the tank and spares to maintain them with.

No fuel = immediately useless. No spares = useless as soon as something breaks and needs replacement.

Armed with that knowledge, any real enemy would just need to stage a faux war, wait until we use up all the fuel and parts we've got flying around, then commence the real war. Easy.


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## sptrawler (18 May 2014)

Smurf1976 said:


> Regardless of whether we're operating them out of Brisbane, Darwin or wherever we still need fuel to put in the tank and spares to maintain them with.
> 
> No fuel = immediately useless. No spares = useless as soon as something breaks and needs replacement.
> 
> Armed with that knowledge, any real enemy would just need to stage a faux war, wait until we use up all the fuel and parts we've got flying around, then commence the real war. Easy.




Being completely honest, the ability of Australia to defend its immense shoreline with the population we have is virtualy imposible. 
The alliances we have would be required, part of the alliance with the U.S requires us to purchase equipment and compatible technology from them.
So it really becomes an issue of do you go alone, do you maintain existing alliances or do you form new ones.
If we form new ones with a senior power, we will have to purchase equipment and technology from them.
Well that's my understanding of it. 
I would think the fighters would be bought ,no matter which party is in power, behind the scenes the U.S still needs sales.


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## sptrawler (19 May 2014)

Taking the seniors concession card from pensioners sounds a bit rough. 
Changing their indexation is one thing, removing concessions on rates, utilities and transport will be a big hit on them. 
Now that is one that needs throwing out of the budget.


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## Knobby22 (19 May 2014)

noco can tell us why it is good.


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## CanOz (19 May 2014)

The guys in NZ got thier stuff together....

*New Zealand forecasts 2014-15 surplus in budget that bears striking difference to Australia's*



> It is hard to imagine the contained New Zealand finance minister bopping in his office ahead of delivering the nation's budget, as Joe Hockey apparently did.
> 
> But the Australian Treasurer's dance song Best Day of My Life would have been more appropriate for his New Zealand counterpart Bill English, who has served up one of the rarest of economic dishes: a forecast budget surplus of $NZ372 million ($340 million) in 2014-15, after a $NZ2.4 billion ($2.2 billion) deficit this financial year.
> 
> ...


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## bigdog (19 May 2014)

Did you know that the medicare levy is increasing from 1.5% to 2.0% on July 1 2014?

This is a 33% increase in the levy.

Labour introduced the increased levy in 2013.
From July next year, the levy will rise by 0.5 percentage points to 2 per cent, which is expected to raise $11 billion for the scheme over four years.

http://www.abc.net.au/news/2013-05-15/medicare-levy-increase-passes-lower-house/4692240
*Legislation to increase the Medicare levy to help fund DisabilityCare has passed the Lower House of Federal Parliament.*

From July next year, the levy will rise by 0.5 percentage points to 2 per cent, which is expected to raise $11 billion for the scheme over four years.

The bill was introduced into the House of Representatives this morning and has passed with bipartisan support.

It will now be considered by the Senate.

Opposition families spokesman Kevin Andrews has told Parliament the Coalition is hoping it will not be a permanent measure.

"Although this legislation will pass with our support, we view the levy increase as only a temporary measure until the budget has been repaired and is in a strong surplus," he said.


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## qldfrog (20 May 2014)

yes I know->so that + extra levy: +2.5% on the "rich":
which seems to be defined as "every one who has more $ than I and so should be taxed to death".
And this is a liberal government...
Now making sure I do not belong to these nasty people who dare to work hard to be successfull;
Europe descent to the bottom all over again.
So much angst....


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## Wysiwyg (20 May 2014)

bigdog said:


> Did you know that the medicare levy is increasing from 1.5% to 2.0% on July 1 2014?



I choose not private health so I pay a 1% Medicare Levy Surcharge in addition to the Medicare Levy of 1.5%. So with this new charge I will pay 3% of my taxable income which effectively lessens any tax refund for over payment of tax. I will be claiming all my entitlements to the maximum from now on. Stuff this system, you do the right thing and make your own way in life and they hit you wherever they can regardless. I would  not spend more than $250 on health care per year, maybe a visit for a cold or cautery for a sunspot.  



> "Although this legislation will pass with our support, *we view the levy increase as only a temporary measure* until the budget has been repaired and is in a strong surplus," he said.



Thankfully!


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## sptrawler (20 May 2014)

Now for my pet hate the media.

Apparently the treasurer was on t.v last night answering questions about the budget, all I've heard all day is that the $7 medicare levy is a tax apparently.

Is that all that came out of an hour interview, my god, no wonder chanell 10 is going 'guts up', that's all they repeated on the news.

Unfortunately I was a captive audience in a doctors surgery. 
Then I pick up the west newspaper, same crap.OMG


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## sptrawler (20 May 2014)

sptrawler said:


> Now for my pet hate the media.
> 
> Apparently the treasurer was on t.v last night answering questions about the budget, all I've heard all day is that the $7 medicare levy is a tax apparently.
> 
> ...




IMO here is more crazy reporting, by 'the west'.

Barnett decided against wasting taxpayers money, by not going to Newmans call to arms.

https://au.news.yahoo.com/thewest/wa/a/23665171/barnett-defends-missing-meeting/

Why should he have to defend his decision, just because the leader of the opposition said he should have gone?

If he had gone, no doubt McGowan would be complaining it was a waste of taxpayers money and the 'west' would talk that up.

The media has gone mad.IMO

Just heard on the channel 10 evening news that Hockey said the preservation age is going to be lifted. Has anyone got a link or is it just more media B.S talk up.


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## Julia (20 May 2014)

sptrawler said:


> Just heard on the channel 10 evening news that Hockey said the preservation age is going to be lifted. Has anyone got a link or is it just more media B.S talk up.



Probably referring to his comment on Q and A last night where - in answer to persistent repetition of the question from Tony Jones, Mr Hockey agreed and he and Mr Abbott 'had in mind' that further consideration would need to be given to a discussion with all stake holders about the best way to manage the future of Super.

But no doubt the irresponsible media will have easily translated that into a fait accompli that Mr Hockey has declared the preservation age will be raised.

Soon all this stuff will settle down, we can go on with our lives, and eventually see what makes it through the Senate.  Meantime, the media are revelling in anything that might enhance their presence.


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## sptrawler (20 May 2014)

Julia said:


> Probably referring to his comment on Q and A last night where - in answer to persistent repetition of the question from Tony Jones, Mr Hockey agreed and he and Mr Abbott 'had in mind' that further consideration would need to be given to a discussion with all stake holders about the best way to manage the future of Super.
> 
> But no doubt the irresponsible media will have easily translated that into a fait accompli that Mr Hockey has declared the preservation age will be raised.
> 
> Soon all this stuff will settle down, we can go on with our lives, and eventually see what makes it through the Senate.  Meantime, the media are revelling in anything that might enhance their presence.




I read Hockey is going to sue Fairfax, at last something might happen. Probably a storm in a teacup but he might shake them up a bit.


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