The Budget Dilemma

[Calliope]

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.

 

[moXJO]

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.

 

[Prospector]

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!

 

[moXJO]

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

 

[So_Cynical]

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?

 

[badger41]

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

 

[Julia]

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.

 

[Smurf1976]

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.

 

[weird]

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.

 

[So_Cynical]

That amount of income is not rich in Sydney.

For a least half of Sydney it is.

 

[weird]

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.

 

[Aussiejeff]

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.

Fairfax Media reports the [size=+1]17 per cent jump[/size] in the allowance to the new base of $32,000 is worth $90 a week to MPs - [size=+1]three times the $30 a week increase pensioners are fighting for in the budget[/size].

The $32,000 allowance is considered by many MPs to be a de facto part of their salary, and is double the annual amount a single pensioner receives from the government.

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

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.

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!

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

 

[BradK]

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

 

[BradK]

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

 

[Aussiejeff]

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.

 

[Calliope]

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.

 

[drsmith]

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

 

[Aussiejeff]

Capital gains tax, anyone?

Death taxes re-introduced?

Coffin Levy?

*coff*

 

[moXJO]

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

 

[Soft Dough]

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.