Aspects of Revenue and Expenditure

Questions: 1. Discuss the various aspects of expenditure and revenue in the Australian budget in May 2014?2. Comment on various stakeholders reaction to this budget like businesses, consumer and industry etc.? Answers: Aspects of Revenue and Expenditure Revenue A temporary budget repair levy was introduced to enable the high earning segment to contribute to the increasing Australian income. This was applicable from 1st July 2014 to 30th June 2017. Any individual whose taxable income is more than $180000 will have to pay 2%. This would apply to approximately 400000 Australians. The Australian government has exempted announced but unlegislated tax measures. It also points out it determination to repeal minerals resource rent tax and carbon tax. All these fiscal decisions have reduced the revenue by $5.7 bn in accrual terms. Federal fuel excise indexation was brought back into action. This action is expected to generate $ 3.7 bn in the next four years and adjustments would be made bi-annually. Expenditure Spend on Family Tax Benefit Part B has been squeezed. Single parents having income in lower strata will be now eligible for $750 per year only when the youngest child would be between 6 to 12 years. Paid parental leave scheme brought will be brought into action which will be capped at $100000 per annum. Restart, new wage subsidy for old Australians aged above 50 years and on six months of income support is introduced. This is to encourage businesses to employ them. Subsidy for employers on hiring people was introduced. Government would pay $10000 over 12 months for full-time employment and pro-rated subsidy for part-time employment. A freeze on funding foreign aid was implemented leading to savings of $7.6 bn over 5 years. A significant amount was allocated for infrastructure development in the country, especially road transport. Similarly, funding for climate change initiatives and renewable energy was slashed. A slash of $ 4.7 bn from higher education for four years was introduced. Stakeholders reaction to the budget Reaction of consumers/citizens There was a critical response amongst Australia citizen regarding this budget. There major losers among this were senior citizens, people with disabilities and people facing health issues. The most significant impact was of the slashing of $653 million across four years which will reduce the capacity to provide state-of- the art care for ageing patients. Other decisions like abolishment of seniors supplement and harder qualifying norms for seniors health card were criticized. Communities working for disabled severely criticized the rule of tightening norms of receiving disability pension. Rolling back of hospital funding and health cuts in various areas including preventive health drew wide criticism from the medical community and general public. Patients, as a whole would be losers in this budget as they has expected a $7 visit to the GP but now would have to actually shell out more for the their entire treatment process. Criticism was also drawn for the higher education costs likely to be faced by students due to uncapping of university fees. Reduction of minimum threshold of income to begin repayment of education loan was lowered by 10% which drew severe criticism from the student community. Dropping of the Gonski School funding also drew wide criticism across the student community. A drop in the standard of public service was also evident in this budget. Australian Government announced scrapping of 16500 Commonwealth public servants which will severely impact the standards of public service. Many federal agencies were also set to be scrapped. Overall, this budget drew a negative reaction from citizens of Australia who believes that this would impact them negatively in many areas. Reaction of industry/businesses Industry reaction to this budget was more or less positive. The budget allocated significant amount of funds for areas like infrastructure development, mining and defense capability building. The allocation of $11.6 bn for new projects was appreciated by the industry who said that this would help in long term growth and would assist several industries together. There was a huge outlay for roads and airports in this budget which the industry expects to boost connectivity improve transport facilities and give a thrust to sectors like logistics, tourism and travel. The establishment of Entrepreneurs Establishment Program which would cost the government $484.2 million was appreciated and was called upon as a futuristic decision. The private sector expected a 1.5% rate cut in the budget to fund parental leave scheme but this was not mentioned in the budget. This drew criticism from several quarters. Automobile industry criticized the governments move to cancel programs which would lead firms to back out from Australian manufacturing. Thus, it was a mixed reaction for industry and business with some positives and some negatives in the budget. References Russell, Dr Lesley. (2014). Analysis of 2014-15 Health Budget. Philips. Jacquline (2014). A Budget that divides the Nation. The Australian Governments 2014-15 Science, Research and Innovation Budget Tables.