Treasurer Wayne Swan has delivered his Federal Budget, along with its promised surplus.
Swan has predicted a $1.5bn surplus for the 2012-13 financial year. However, such projections rely on the Australian economy growing by 3.25% in 2012-13 and 3% in 2013-14. The projection is also dependent on resources companies bearing the full weight of the carbon tax, rather than finding creative ways around it.
Swan has touted the Budget as delivering further benefits to families and businesses, saying it includes measures to stimulate small business and entrepreneurship.
Small business owners missed out on a mooted cut to the 1% company tax rate, which was previously scuttled by the Coalition. Swan took aim at the Opposition for that result, but vowed that small business would not be left out in the cold.
"The Government has always been committed to sharing fairly the benefits of the resources boom. We will not allow this parliamentary gridlock to deny Australians the benefits they deserve. So in this Budget the funds for company tax cuts have been redirected to families in a way that also helps the economy, including small businesses," he said.
At the heart of the Government's offering to small business is a $714m loss carry-back scheme allowing business owners to offset a current year tax loss of up to $1m against tax paid in previous years, receiving a refund up to $300,000.
"This will support businesses when they need it — providing an injection of funds to invest in new ideas, equipment and markets.We estimate this will help around 110,000 businesses over the first four years, providing cash flow when it is needed most, rather than down the track," Swan said.
But the Government may be giving with one hand to take away with the other, one group has said. The Institute of Public Accountants has claimed their scrutiny of the Budget has revealed it does little for small business.
"New reforms are being funded by previously announced reforms which are now being cancelled. On balance, many small businesses may not be better off. Last week’s announcement that businesses will be able to carry back up to $1m worth of losses and offset it against the previous profits was a welcome relief. However, this measure doesn't go far enough - it doesn't benefit profitable businesses or provide immediate relief. Unincorporated small businesses which make up over 66% will receive no relief," the Institute's CEO Andrew Conway said.
The crux of the Budget has been its delivery of further welfare benefits to families. The Government has touted its increased cost of living payments as spreading the benefits of the mining boom, with Swan indicating that $3.6bn of the mining tax will go to fund the initiatives.
Among the initiatives for families are an increase to the Family Tax Benefit Part A, a new supplementary allowance for the unemployed, students and parents with young children, an extra $2.1bn injected into a new Schoolkids Bonus to replace the Education Tax Refund and more than tripling the tax-free threshold from $6,000 to $18,200.
Superannuation has also gotten a boost. The Budget has increased the guarantee rate to 12%.
"By raising the superannuation guarantee rate to 12%, we will boost the retirement savings of 8.4m workers and increase our pool of national savings. As a result of this reform, a 30-year-old worker on average full-time earnings will retire at age 67 with an additional $118,000 in super," Swan claimed.
The Treasurer also said the Budget would provide a higher concessional contributions cap for older Australians with super balances below $500,000.
The housing market
There was little new in the Budget for housing. The Treasurer retained existing commitments to the Housing Affordability Fund and the National Rental Assistance Scheme, but the housing industry has claimed this did not go far enough.
"The Budget was an opportunity to introduce measures to progress housing supply-side reforms with the states and territories, reduce the excessive tax burden on new housing, and expand and extend existing measures aimed at boosting housing supply," HIA senior economist Andrew Harvey said.
Harvey lamented the lack of measures to boost supply or help states and territories remove stamp duties.
"Without dedicated housing policy measures and housing supply-side reforms the residential building sector will continue to act as a drag on the macro-economy and the nation’s growing housing shortage will continue to place undue pressure on the household budgets of home buyers and renters," he said.
Your free time
There was also little cheer for vice-loving Australians, with both cigarettes and grog about to become dearer. The Budget will slash the duty free allowance on cigarettes from 250 to 50, raising an additional $600m from smokers over the next four years. The Government will also look to steadily increase its take from beer by an additional $200m over the next three years.