Budget of few surprises
The 2010 Budget has been widely acknowledged as a prudent one. Whilst there are some reservations about the Federal Government’s outlook on inflation, this can nonetheless be regarded as a wise budget. Australia’s fiscal strength remains, however, heavily reliant on the strength of China and the proposed 40% super profits tax on resources. Treasury are forecasting the underlying cash balance to return to surplus in 2012/13, three years earlier than expected. Given the debt woes in Europe, this is a smart move by the Treasurer, however there is little scope to move. The budget also forecasts real GDP to expand by 3.25% in 2010/11 and 4% the year after.
The attempt to increase savings levels of Australians by offering a 50% tax discount on the first $1,000 of interest earned is regarded as a positive step. Also affecting the banking sector, Wayne Swan is attempting to lure foreign banks back to Australia by cutting the levels of interest withholding tax that banks pay in offshore borrowing. In summary, this budget proposes the following:
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Tax returns will be simpler with the option of using a standard deduction;
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Instant write offs of small business assets under $5,000
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50% tax discount for the first $1,000 of interest earned on deposits in banks and credit unions
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Health system to get extra $2.2bn
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$1.5bn for defence operations and border security
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Skills for sustainable growth strategy investing $661 in workforce skills
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Rail to get $1bn
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Renewable Energy future fund of $652m
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Increases to the Age Pension and the Pension Supplement:
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Single Senior – A projected increase of 18.1% of their Real Disposable Income
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Pensioner Couple – A projected increase of 8.1% of their Real Disposable Income
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An increase in the low income tax offset to $1,500;
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Increasing Super Guarantee to 12 per cent
