# The Budget Dilemma



## Calliope (26 April 2009)

The imminent Federal Budget will set the scene to see whether the government has a plan for the future economy, now that they have squandered the surplus.

Their problem is they made promises that appeared reasonable when they made them, but if  kept would now appear to be unaffordable, when we are so deeply in debt. From a popularity point of view they have to keep their promises on raising the single pension, but it probably won't be $30.

One issue that has to be faced is the rising level of unemployment which could exceed 10%. Unemployment benefits are very low and are only intended for the transition period between one job and another for those who want work.

Workers will now face long term employment and their needs cannot be denied by any government looking for re-election. Promises will have to be dropped to accommodate them.


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## moXJO (26 April 2009)

Stimulus must be working, I have been flooded with work (construction Sydney area). Two other friends in the same trade are also extremely busy (both industrial and domestic).

Not to sure if others in trades have had jack of it and leaving or what? Good for me at the moment though.


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## Prospector (26 April 2009)

I think it depends on the Industry - we have seen some shocking examples here of work contracts disappearing overnight.

Unfortunately the GFC is a great excuse for Governments to hide behind broken electoral promises, and mismanagement of budgets in the past years.  As an example, in SA, for the last 2+years our Workcover has had a $1billion unfunded liability.  This was at a time when all was rosy and the GST monies were flooding the state coffers.  Now, of course, the unfunded liability has blown out to $1.2billion, and the Treasurer blithely states it is because of the GFC!


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## moXJO (26 April 2009)

Prospector said:


> I think it depends on the Industry - we have seen some shocking examples here of work contracts disappearing overnight.
> 
> Unfortunately the GFC is a great excuse for Governments to hide behind broken electoral promises, and mismanagement of budgets in the past years.  As an example, in SA, for the last 2+years our Workcover has had a $1billion unfunded liability.  This was at a time when all was rosy and the GST monies were flooding the state coffers.  Now, of course, the unfunded liability has blown out to $1.2billion, and the Treasurer blithely states it is because of the GFC!




Don't get me started on workcover


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## So_Cynical (26 April 2009)

Calliope said:


> Promises will have to be dropped to accommodate them.




Sure some promises will be downsized...i would expect a rich tax of some sort to be introduced.

Isn't there some sort a tax review going on?


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## badger41 (26 April 2009)

Will be interesting to see what they do regarding Superannuation. If they re-impose an exit tax, you have perhaps 2 weeks (if over 60) to get your money out of super tax free. I think they call it a "window of opportunity"

Actually I see little point in staying in super after age 60, as you probably won't be paying income tax anyway, but will certainly be paying fees to fund managers, accountants etc.

And YOU control your money, rather than the Government.

Disclosure: Pulled every last cent out of Super in March last year. One of the best financial decisions I've ever made. (Other good ones were buying and holding BHP, CSL etc 13 years ago)

Cheers, badger


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## Julia (26 April 2009)

badger41 said:


> Actually I see little point in staying in super after age 60, as you probably won't be paying income tax anyway, but will certainly be paying fees to fund managers, accountants etc.
> 
> And YOU control your money, rather than the Government.



Why would we not be paying income tax outside of the super environment?
You must be assuming some very low incomes!!

With a SMSF you control your own funds.


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## Smurf1976 (26 April 2009)

Calliope said:


> One issue that has to be faced is the rising level of unemployment which could exceed 10%. Unemployment benefits are very low and are only intended for the transition period between one job and another for those who want work.
> 
> Workers will now face long term employment and their needs cannot be denied by any government looking for re-election. Promises will have to be dropped to accommodate them.



When unemployment's low it's always possible to push the "dole bludger" argument to the employed masses.

When there's a million unemployed and 500 applicants for every job that argument falls to pieces as anyone with even limited math skills can see that there aren't enough jobs for everyone who wants one.

Given the overall situation, I wouldn't be surprised to see some scheme to avoid involuntarily unemployed workers with a mortgage losing their homes. Politically a winner all round when you consider the direct social implications plus the impact on the real estate market if we ended up with a boom in foreclosures.

Only real prediction I'll make though is that some sort of "rich tax" is quite likely, presumably kicking in at $100,000 income which is the already identified "rich" level applying to various government programs and hand outs.


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## weird (26 April 2009)

Smurf1976 said:


> presumably kicking in at $100,000 income which is the already identified "rich" level applying to various government programs and hand outs.




That amount of income is not rich in Sydney ... I think the threshold would be higher, it is still about retaining votes.


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## So_Cynical (26 April 2009)

weird said:


> That amount of income is not rich in Sydney.




For a least half of Sydney it is.


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## weird (26 April 2009)

So_Cynical said:


> For a least half of Sydney it is.




Well the multiple of housing prices compared to income is scarier than I thought 

In Chatswood alone, average house price is around $1,000,000. I don't own , I'm renting atm ... will be trialing a suburb in around 3 months, before buying ... but outside of Chatswood. 

Anyhow Chatswood is not even considered an exclusive suburb of Sydney. Sydney has quite a few Asia-Pacific centers for Finance and IT,etc, next being Melbourne ... those sectors have traditionally been paying higher wages ... and of course being a hub for business, have the high flyers (CEOs, CFOs,etc) as well.

100K is not what it use to be, considering the tax it attracts. A young yuppie couple bought a house in front of mine for 1.3 million, without blinking ... I assume he works in finance., perhaps because he carries a Fin Review under his arm each day, with a suit ... drug dealers don't bother getting up early.


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## Aussiejeff (27 April 2009)

Calliope said:


> The imminent Federal Budget will set the scene to see whether the government has a plan for the future economy, now that they have squandered the surplus.
> 
> Their problem is they made promises that appeared reasonable when they made them, but if  kept would now appear to be unaffordable, when we are so deeply in debt. *From a popularity point of view they have to keep their promises on raising the single pension, but it probably won't be $30*.




LOL. Then this sneaky, underhand politician's pay rise that hasn't made the front pages in any media should please the masses of existing and soon-to-be unemployed and the accompanying masses of genuine "less wealthy" pensioners who are trying to eke out a reasonable quality of life on a meagre pension....



> [size=+1]*MPs get $4,700 allowance increase*[/size]
> April 27, 2009 - 6:19AM
> 
> Federal MPs have been awarded a $4,700 increase in their electorate allowance.
> ...



 http://news.theage.com.au/breaking-news-national/mps-get-4700-allowance-increase-20090427-ajjv.html




So_Cynical said:


> Sure some promises will be downsized...i would expect a rich tax of some sort to be introduced.
> 
> *Isn't there some sort a tax review going on?*




I suspect part of the new "rich tax" will be needed to help pay for the Pretty Pollie's latest cash grab. 




Smurf1976 said:


> When unemployment's low it's always possible to push the "dole bludger" argument to the employed masses.
> 
> When there's a million unemployed and 500 applicants for every job that argument falls to pieces as anyone with even limited math skills can see that there aren't enough jobs for everyone who wants one.
> 
> *Given the overall situation, I wouldn't be surprised to see some scheme to avoid involuntarily unemployed workers with a mortgage losing their homes. Politically a winner all round when you consider the direct social implications plus the impact on the real estate market if we ended up with a boom in foreclosures.*




Media leakage/gossip today is that ALL people in debt up to the tune of $500,000 who lose their jobs (not just mortgagees) will be given "indefinite no repayment time" by creditors under new credit legislation. I wonder how smaller lenders will cope with a sudden drought of income? Of course. A bailout will cover it!  



Smurf1976 said:


> Only real prediction I'll make though is that *some sort of "rich tax" is quite likely, presumably kicking in at $100,000 income which is the already identified "rich" level applying to various government programs and hand outs.*




It is such a pity that these Polly **ick$ couldn't take the lead and actually volunteer to take a _$10,000 CUT to their allowances_ rather than vote themselves (via an "independant tribunal - no political influence - of course!) a Ruddy RISE!! 

Geez, what is it with these moron$? Can't they be GENUINE for a change, just to show they mean business? Grrrr.... :angry:

Hypocritical ba$tid$ the lot of 'em..... :angry:


Have anice day


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## BradK (27 April 2009)

The rich get richer and the poor and working poor get poorer. That is our system. That is what the Anzacs fought and died for - freedom and democracy my hairy dark crater! Politicians make me sick to the stomach- I do hope some social unrest comes out of this against the political and corporate elite if only to shake us out of our apathy! But I suspect it will come from the arts students and karl stefanovic will trash them with his silly smirk  

Sky high pi$$ed off! 
Brad


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## BradK (27 April 2009)

Sorry lads probably went overboard in my last post LOL

Out of interest, what is the deficeit likely to be? We came from a $22billion surplus. Also, what is the most deficeit we have ever been in? And are we about to smash some deficet records? 

Where do we borrow the money from? I know it is probably a variety of sources but what would be the main one? And what are the terms? And what happens if we don't pay it back? Do we lose our aaa rating and have to borrow at higher rates- or something more serious? And what are the consequences for everyday Australians? What are the consequences for the politicians who got us into this (besides an indexed lifelong pension?) 

As a society does it need to dawn on us a little more that this is my $350 per week that I pay to the government and we need to take a little more interest in how it is spent? Is this thing going to get worse before it gets better?  

Cheers
Brad


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## Aussiejeff (27 April 2009)

BradK said:


> Where do we borrow the money from? I know it is probably a variety of sources but what would be the main one? And what are the terms? And what happens if we don't pay it back? Do we lose our aaa rating and have to borrow at higher rates- or something more serious? And what are the consequences for everyday Australians? *What are the consequences for the politicians who got us into this (besides an indexed lifelong pension?) *
> 
> Cheers
> Brad




Oooh! I love Dorothy Dixers!

I predict the consequence to our Esteemed Ones will be ...... Higher Pay - AAA guaranteed by KRuddbank Ltd.

After all, they deserve it.


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## Calliope (27 April 2009)

It's all doom and gloom. Apparently alcohol tax will take a big hike in the Budget. The present tax raises about $5.4 billion and is a good cash cow. It would also cut off at the pass those switching from alcopops tax.

The government is doing a great job in trying to make our lives miserable.


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## drsmith (27 April 2009)

Since where giving the pollies ideas we might as well throw in petrol excise in that hasn't been increased for a while.

A simplification based on a robust tax base is what should be done.

https://www.aussiestockforums.com/forums/showpost.php?p=406361&postcount=17


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## Aussiejeff (27 April 2009)

Capital gains tax, anyone?

Death taxes re-introduced?

Coffin Levy?

*coff*


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## moXJO (27 April 2009)

I read somewhere farmers were being taxed for water in their dams on their land. Water tanks next?


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## Soft Dough (27 April 2009)

Smurf1976 said:


> I wouldn't be surprised to see some scheme to avoid involuntarily unemployed workers with a mortgage losing their homes. Politically a winner all round when you consider the direct social implications plus the impact on the real estate market if we ended up with a boom in foreclosures.




Great, an idea to protect people who made a wrong investment decision.

I know that this is going to happen.

But what is wrong with them selling the house ? 


It will be interesting to see how this occurs with people with considerable equity and other assets though.


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## Aussiejeff (27 April 2009)

Soft Dough said:


> Great, an idea to protect people who made a wrong investment decision.
> 
> I know that this is going to happen.
> 
> ...




Wot?

Sell the house you say? One of Australia's "Working Families" (tm) must SELL A HOUSE??

BLASPHEMER!

HERETIC to all that is KRudd & Good!!

BURN HIM!!!


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## Calliope (27 April 2009)

Aussiejeff said:


> Wot?
> 
> Sell the house you say? One of Australia's "Working Families" (tm) must SELL A HOUSE??
> 
> ...




Yes, it doesn't bear thinking about. To sell the *great Aussie dream.* That's what the first home owners grant is all about. So that kid's with no savings can buy a house and live happily  ever after with their  huge mortgage.

 And when they default (as they inevitably must) the government will step in and protect them from the greedy banks.


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## Julia (27 April 2009)

moXJO said:


> I read somewhere farmers were being taxed for water in their dams on their land. Water tanks next?



moXJO, you may consider you are being facetious about water tanks, but it actually has seriously been considered that water collected on home owners' properties in the tanks they have installed will be taxed on the basis that "it's a substance of common ownership that falls from the sky".


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## Julia (27 April 2009)

Soft Dough said:


> Great, an idea to protect people who made a wrong investment decision.
> 
> I know that this is going to happen.
> 
> ...



Might reassure you to know that not everyone has gone soft.
Foreclosure on a house in our street last week.   Bailiff came to throw the people out - gave them five days.  Then changed the locks and posted a notice on the front door that anyone other than the mortgagor on the property would be trespassing and police would be called.  
Property would be worth around $650K.  No idea what equity owners had.


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## moXJO (27 April 2009)

Julia said:


> moXJO, you may consider you are being facetious about water tanks, but it actually has seriously been considered that water collected on home owners' properties in the tanks they have installed will be taxed on the basis that "it's a substance of common ownership that falls from the sky".




Crazy stuff, makes you want to kick a pollie


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## BradK (27 April 2009)

Where does the money come from when we go into deficeit? And what are the terms? 

Brad


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## Smurf1976 (28 April 2009)

weird said:


> That amount of income is not rich in Sydney ... I think the threshold would be higher, it is still about retaining votes.



I'm only saying that since it's the threshold level used in various other government programs which presumably reflects current thinking as to what is "rich".


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## Aussiejeff (28 April 2009)

> *TREASURER Wayne Swan has ramped up expectations of a horror budget on May 12, warning of "very tough calls" and "decimated government revenues"* in the face of the most challenging conditions in 75 years.
> 
> The language, the Treasurer's strongest yet, came as forecaster Access Economics warned there would be no new tax cuts for a decade and Victoria's economy would shrink for two years.
> 
> ...



http://www.theage.com.au/national/tough-calls-on-budget-as-deficit-heads-for-50bn-20090427-ako0.html

Of course, the Pretty Pollie's _"fully-independent-and-at-arm's-length-with-no-pressure-on-their-jobs-if-they-don't-give-the-pollies-a-pay-rise-because-they-set-them-up-in-the-first-place-and-pay-them"_ Remuneration Tribunal couldn't possibly reverse their decision to up Pollie's allowances, now, could they?

Come to think of it, how many times in the past _eons_ have pollies had their pay frozen _*gasp*_ or reduced _*horror*_ due to the poor hoi poloi suffering "tough economic times"?

Funny.

None spring immediately to mind.


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## moXJO (28 April 2009)

Look!!!  Its time for labor to show its economic conservatism now the money has run out.


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## Calliope (28 April 2009)

Poor old Swanny has a real juggling act. He has to produce a tight "horror budget" without alienating all those who have become dependant on taxpayer funded handouts and who have raised Rudd's popularity ratings.

The minority outside this government created demographic can expect a good slugging.


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## Soft Dough (28 April 2009)

Calliope said:


> Poor old Swanny has a real juggling act. He has to produce a tight "horror budget" without alienating all those who have become dependant on taxpayer funded handouts and who have raised Rudd's popularity ratings.
> 
> The minority outside this government created demographic can expect a good slugging.




ie the people who are least likely to vote labor....

It works out beautifully for the government, they cannot annoy high income earners any more than they already do, and low income earners will cheer them all the way when they are increasing taxes of high income earners.


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## Aussiejeff (28 April 2009)

Soft Dough said:


> ie the people who are least likely to vote labor....
> 
> It works out beautifully for the government, they cannot annoy high income earners any more than they already do, and *low income earners will cheer them all the way when they are increasing taxes of high income earners.*




Robbin' da 'Hood?


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## Calliope (29 April 2009)

It has been tipped that the dole queue will reach 1,000,000 by the end of next year. On the present rate of $227 p/w for a single person you would need to budget for $12 billion annually to cover that meagre rate. That many people receiving that barely subsistence allowance, will be a powerful voting block at the next election.
*
Budget cannot afford higher dole payments*



> Phillip Coorey Chief Political Correspondent
> April 29, 2009
> PLEAS from the welfare lobby for unemployment benefits to be increased in next month's budget are falling on deaf ears because the Government is reluctant to commit to what will be a burgeoning and permanent expense.
> 
> ...




http://business.smh.com.au/business/budget-cannot-afford-higher-dole-payments-20090428-am0v.html


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## Mr J (29 April 2009)

> said yesterday the dole, as well as sole parent payments, were below the poverty line and there were cases of people subsisting on baked beans.




I suppose she wants the doll to maintain their previous standard of living .


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## Soft Dough (29 April 2009)

Mr J said:


> I suppose she wants the doll to maintain their previous standard of living .




This is a prelude to the aging population and how stuffed the budgets of future generations is going to be.

Even more of a reason for Rudd to look at medium and long term solutions to problems like housing ( ie to get the cost down ) and healthcare instead of money handouts to facilitate consumption, which is one of the reasons we are in this mess.

I am a firm believer that a lot of this poverty is due to increased house prices driving increased rents which is due to loose monetary policy directing funds into unproductive asset classes such as housing.  A problem made bad by costlello and howard and made worse by swan and rudd.


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## Struzball (29 April 2009)

Mr J said:


> I suppose she wants the doll to maintain their previous standard of living .




Maybe they should head over to the frugal thread 

https://www.aussiestockforums.com/forums/showthread.php?t=15269


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## drsmith (29 April 2009)

With the Henry Tax Review to be delivered in December I suspect that tax/welfare changes in the May budget will be limited to trimming around the edges and possibly include,

1) Increases in fuel/alcohol/cigarette excises (The usual old favourites for a government with it's hands out).
2) Means testing of the private health insurance rebate (consistent with ALP ideology), most likely at the income level at which the medicare surcharge kicks in.
3) Income tax cuts scheduled for 2009/10 and 2010/2011 dropped either partially or in full.
4) God knows with super but I can't see anything too major given the Henry Review above. Same for so-called middle class welfare. These areas may be considered too difficult to deal with politically prior to the next election.
5) An increase to the single aged pension but less than $30 per week.
6) Dividend imputation to remain intact (Henry review item).

Anything else to add to the above speculation ?


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## Calliope (3 May 2009)

*Costello preys on St Kevin's miracle*

May 02, 2009
Article from:  The Australian



> Peter Costello, launching Peter Hartcher's book To the Bitter End in Canberra this week, expresses amazement at The Australian Financial Review's naivety
> 
> I AM astounded that the Government, after $100 billion in new discretionary spending since the last election, is briefing to the effect that it is making really hard decisions to save money in the budget. I am even more astounded that this is being seriously reported.
> 
> ...


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## Aussiejeff (3 May 2009)

Calliope said:


> *Costello preys on St Kevin's miracle*
> 
> May 02, 2009
> Article from:  The Australian




Petie just doesn't get it.

We truly CAN "spend and save at the same time".

SPEND now and we will SAVE KRudd's a$$ at the next election.


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## Dowdy (3 May 2009)

Now he's spending another hundred billion we don't have on a defence force we don't need.

This guy is really screwing up the country


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## Calliope (6 May 2009)

It is now official *temporary* now means six years. In Swanspeak he can still insist that the deficit will be *temporary.*

Every time governments introduce a nasty or unpopular measure it is always *temporary.*

One thing that was *temporary* was the $900 handouts using borrowed money. These will be clawed back soon enough.


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## Prospector (6 May 2009)

Last night Swan indicated that their projections on the value of the $900 handout in creating more jobs was based on the assumption that everyone spent every dollar on buying goods that had only been made in Australia from Australian materials.  Even my cat would know those assumptions are gobsmackingly stupid.  Reckless.  Even criminal for a Government to make.

I suspect that maybe 1 term might convince even the Ruddites that they have no idea, but the damage in the meantime...

Bring back Costello, please.....


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## Gspot (6 May 2009)

Lets see... we could cut all the duplication from our 200 year old system, thanks to marvellous changes made in transport and communication, in that 200 years. This could save upto $30 billion a YEAR.
Or we can lift GST to 15%.
HMMM I wonder what the self serving sponges that make up our MANY governments decides on?


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## Glen48 (6 May 2009)

GST up to 12%??
I read were USA workers are flat out looking after foreclosed homes because the Councils fine the banks $1K a day if the pool is green and the lawns not kept neat and the place is on a bad way.
Another is spray painting the dead grass Green prior to an Auction.


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