Wayne Swan’s sixth budget has forecast a shift from the resource investment boom and into a fresh boom in production and exports, a shift Mr Swan says will shuffle the economy toward wider sources of economic growth. Businesses will endure $4.2 billion in higher taxes over four years, on the back of measures implemented to stamp out loopholes allowing companies to avoid paying tax. The corporate tax crackdown will see tighter rules for businesses that split profit across entities and attempt overseas tax dodges. Mining companies will be hit with tighter rules for depreciating mineral exploration assets, as ongoing global volatility and the high Aussie dollar hamper prices and profits and trigger significant revenue writedowns, which are at a level seen on just one other occasion since the great depression. The write downs amount to $170 billion over five years.
In other key points, the mining tax estimate has been reduced from $13.4 billion to $3.3 billion after it failed to achieve the promised spoils trumpeted last year. The government also touted a $24 billion spend on infrastructure alongside $43 billion in savings across family budgets, big business and foreign aid. Families will bear a large brunt of savings deigned as ‘responsible’ by the treasurer, including the scrapping of the baby bonus and a 0.5 per cent increase to the medicare levy which will fund the government’s DisabilityCare Australia scheme. Defence funding will be lifted by $1 billion to $25.4 billion, while expected tax receipts for fiscal 2013 were written down by $17 billion from the previous budget's estimates. Tax receipts across the next four years were $60 billion lower than mid-year estimates.
Wayne Swan confirmed superannuation pledges announced by the Government last month– lowering the tax concessions applying to super investments returning more than $100,000 a year, and providing a higher concessional contribution for those aged over sixty. Mr Swan says the government expects the deficit for the current year to tip $19.4 billion, an about face from a $1.1 billion surplus forecast offered by the government last November. The treasurer claims the budget will return to surplus- albeit modestly- in fiscal 2016, to the tune of just $800 million. GDP Growth is flagged at 3 per cent this financial year, above the recent RBA forecast of 2.5 per cent and in line with the mid-year forecast. Next year’s growth forecast is 2.75 per cent, above that of the US and in the Eurozone.
The government expects inflation to soften this year, however a mid-year forecast for the unemployment rate remains at 5.5 per cent and is expected to lift to 5.75 per cent over the next two years. Mr Swan said global market conditions had improved noticeably since December 2012, but warned there were still risks to the international stability. Export growth is tipped to hit 7 per cent this year and slow to 6.5 per cent next year, above previous expectations, while imports are expected to slow to 5 per cent this year and 6 per cent in fiscal 2014. The government’s forecast for the consumer price index (CPI) in fiscal 2013 is 2.25 per cent, a downward revision on the mid-year expectation of 3 per cent. CPI growth is then expected to drop to 2.25 per cent in the next two years, in line with the mid-year forecast for fiscal 2014, before rising to 2.5 per cent in fiscal 2015.
