Tue, 13th May 2008

2008 Budget Key Points

The Hon Malcolm Turnbull MP
Shadow Treasurer

• This Budget lets Australian families down.
• It is a typical Labor budget – it increases taxes, massively increases spending, plays the politics of envy and it shows that they don’t know what they are doing in running the economy.
• This is a Budget of confusion – a budget that confirms Labor has no real idea how to deal with the economic challenges facing Australia.
• The Treasurer is out of his depth. Mr Swan claimed this Budget would ease the pressure on inflation and honour Labor’s election commitments to families. But he’s failed his first test.
• This Budget will do nothing to meet Labor’s promises to keep down grocery prices, petrol prices and home interest rates.
• In fact there are multiple decisions that will actually increase inflationary pressures on Australian families.
• This is a typical Labor Budget. It is not ‘new leadership’ but ‘old Labor’. It is the first Budget in years to introduce new taxes.
• Australians should take no comfort from the decision taken by an inexperienced Treasurer to raise taxes on cars, alcohol, energy, computer software, fringe benefits, passenger movements, passports, visa applications and increase the costs of private health insurance.
• Mr Swan’s first Budget will be remembered as a taxing Budget. It confirms Labor stands for higher taxes.
• Since the Treasury forecasts at election time last year Mr Swan is expected to collect an additional $8.3 billion in revenue for 2008-09 over and above the estimates made then.
• Even with the implementation of the Coalition’s tax cuts, income tax revenue will increase from $203 billion to $245.8 billion over the next four years, an increase of $42.8 billion or 21.1%.
• Labor has failed to incorporate any revenue collection figures for its Emissions Trading Scheme which starts in 2010, even though the forward estimates go up to 2012. This is a major fudge in the Budget that cannot go unanswered.
• Higher taxes will put upwards pressure on inflation.
• Expenditure has increased by $11.9 billion in this Budget. Treasury figures show that the real growth in Budget payments in the financial year 2009-10 will be 5.5%, the highest since 1991-92 (leaving aside the introduction of the GST). Rather than a ‘meat axe’ being taken to the public service the numbers will drop by only 0.5% - virtually a statistical blip.
• The Treasury numbers show that new expenditure resulting from Labor’s policy changes over the next four years amounts to $30.1 billion. Despite the rhetoric about spending cuts, this increased expenditure is matched by $15.2 billion in decreased expenditure. The balancing item is a whopping $19.5 billion in increased revenue due to Labor’s policy changes.
• In fact, according to Treasury figures, the Budget surplus would have been larger in 2007-08 (ie 1.7% of GDP instead of 1.5%) if Mr Swan had done nothing, rather than increasing expenditure.
• Labor was left the strongest fiscal position in the history of Australia.
• Labor promised to ease the pressure on working families, but they have failed the very people they promised to help. They project fewer ‘working families’ and more welfare families.
• Unemployment will increase following this Budget - with Treasury forecasts showing 134,000 fewer people in jobs.
• In fact, despite all the rhetoric about ‘education revolutions’ and lifting productivity, the participation rate in the workforce is forecast by Treasury to fall.
• Labor cannot be trusted to keep its promises. It confirms what Peter Garrett said before the election: “Once we get in, we’ll just change it all”.
• With respect to the various Investment Funds on infrastructure, education and health, there is an appalling lack of detail with no clear explanation of what criteria will be used for the administration and expenditure of billions of dollars in taxpayers. Indeed Budget paper No 1 says that “both capital and earnings of the [Building Australia] Fund will be drawn down over time” (page 1-27).
• Labor is addicted to spin, while Australians wait for Labor to deliver on its election promise to ease the pressure on household budgets.
• Labor has chosen to play politics with the Federal Budget. Australians deserve better than that.
• Labor can’t be trusted to keep its promises. It promised to not touch private health insurance. It is gutting it. It promised to leave the baby bonus alone, it is slashing it.
• Labor was left a strong economy by the Coalition Government, which had a clear strategy to keep the economy growing so all Australians could plan their future with confidence.
• In contrast Wayne Swan’s Budget is a political grab bag. It is not an economic strategy.