Sunday, May 03, 2009

Budget: Mixed News, As Always

Oh, dear. I have been so busy that I have not had time to post for 2 weeks. It seems like an eternity. It's 2009 Budget time, a time when politicians like to sprout, er, "leak" good news to the voters by using the media. They also like to prepare us for bad news, by leaking possible increases in taxes.

So, Prime Minister Rudd, and the State leaders have reached a "compact with young Australians", specifically those under 20. The following extract is from the press release via the PM's office:
"This compact with young Australians will ensure that every Australian under the age of 25 will be entitled to an education or training place. This is an important undertaking to the nation, an important undertaking to mums and dads concerned out there about their kids, an important undertaking to young Australians themselves."

Sounds good ... but just how many young Australians under 20 were at the COAG meeting that decided this. Hint: it's a nice round number! And its dressed up nicely with references to "mum and dad". There is also a sting in the tail, not just for the kids, but for "mum and dad" who receive Family Tax benefit A.
"The other part of this initiative is that we've also strengthened conditionality in welfare payments. To support this new Compact, the Commonwealth Government will strengthen the conditions unemployed young people must pass to receive the youth allowance. Anyone under the age of 20 without a year 12 equivalent qualification must be in education or training in order to receive Youth Allowance. The same conditions must be met if parents of young people in the same circumstances wish to receive Family Tax Benefit A."

Ah, yes. We'll not only make it harder for the kids, but we'll possibly punish the parents as well. Notwithstanding that the part about education & training might be good policy, the second part, about the Family Tax Benefit A, is social engineering, with a big stick, using tax policy.

There's the news about the massive investment, over 20 years, in defence capability. The fine print is that "savings" of about $2 million /year are to be made from the current defence budget: savings additional to those required under the Howard government. There will be plenty of opportunities for re-"announcements" of this future spending in this, and later, budgets. I suspect that not much of the new spending will occur soon.

News, too, that the budget "might" defer tax cuts announced last year, especially for "the rich" - applying the same formula used for the RuddBank's personal stimulus tax rebate, those earning more that $100,000 should worry. Just a little: it is after all, only a "leak", and many kites are flown to test voter reaction. There will be some bad news in the budget though, because this is a recession, and 2009 is not an election year.