All will be revealed by Wayne Swan in next week’s Budget and, by all (media) accounts it’s going to be a “horror” Budget.
We’ve already been warned that “Middle-class” welfare will be targeted and that the looming Budget deficit may take several years to restore itself to the black.
Interestingly, we’ve had very few “precise” Budget measures leaked to the media as in previous years.
The budget is expected to record a deficit for next financial year of at least $50 billion but probably closer to $70 billion.
In a search for savings, and the billions needed to increase pensions, the budget will target those on higher incomes.
According to The Sydney Morning Herald, Such measures will include the means-testing of middle-class welfare, probably at a combined income level for families of $150,000.
The Government could means-test the $3.5 billion-a-year health insurance rebate, reducing the 30 per cent tax break for those on high incomes.
That would breach Labor’s election pledge but the Government could argue that high earners would benefit from tax cuts of up to $41 a week.
For the first time, the budget will contain long-range revenue and spending projections, beyond the standard four-year estimates, to plot a path back to surplus. It will pledge that once growth returns to trend levels, spending growth will be capped at 2 per cent and all tax revenues directed to pay off the deficit.
Speaking from a position of great experience, Shadow Treasurer Joe Hockey has said that “Kevin Rudd will never deliver a surplus budget.”
So what would you like to see in next week’s Budget?
(Next week, I’ll post an analysis of The Budget and what economists think of it).