In July 2013 Justin recently a Federal Budget update to the Tamworth branch of the Association of Independent Retirees. The presentation sought to clarify some of the major announcements which arose from the budget.
1. Slide 1
Budget Update
A Presentation to the
Association of Independent Retirees, Tamworth
21st May 2013
Justin Baiocchi, Chartered Financial Analyst
Director: Baiocchi Griffin Private Wealth AFSL .424658
2. Slide 2
Level 1, 462 – 464 Peel Street TAMWORTH NSW 2340
AFSL No. 424658
This presentation and the associated discussion is
general in nature and does not take your individual
situation into account. You should not act on
anything contained herein, or discussed as a
consequence of the contents of this document, without
receiving personal financial advice from a suitably
qualified person such as a financial advisor.
General Advice Warning
3. Slide 3
Level 1, 462 – 464 Peel Street TAMWORTH NSW 2340
AFSL No. 424658
What will be covered
A general overview of the Budget
and
A look at the impact on retirees, people nearing
retirement and our local region
Please feel free to ask questions during the
presentation
4. Slide 4
Level 1, 462 – 464 Peel Street TAMWORTH NSW 2340
AFSL No. 424658
2013/14 Budget: a general overview
Not your typical election year budget…
No usual freebies, handouts and bribes ahead of the election…but why?
5. Slide 5
Level 1, 462 – 464 Peel Street TAMWORTH NSW 2340
AFSL No. 424658
2013/14 Budget: a general overview
No money for bribes and handouts…tax revenue for 2013/14 will be $16.6 billion
less than expected. Govt. had forecast tax revenue to increase by 10.8%, instead it
was 5.3%. Bad luck or bad forecasting?
6. Slide 6
Level 1, 462 – 464 Peel Street TAMWORTH NSW 2340
AFSL No. 424658
2013/14 Budget: a general overview
Instead of the usual pre-election budget, what Swan delivered was…
Big Spending - $398.3 billion in government spending
and “savings”
Big Taxes - $25.5 billion in increased revenue through tax hikes,
reduced concessions, higher excise etc.
$3 tax increase for every $1 in spending cuts.
7. Slide 7
Level 1, 462 – 464 Peel Street TAMWORTH NSW 2340
AFSL No. 424658
2013/14 Budget: a general overview
Where the money goes (billion)
Social security & welfare $138.1
Other purposes $73.6
All other functions $47.1
Health $64.6
Education $29.7
General public services $23.0
Defence $22.0
8. Slide 8
Level 1, 462 – 464 Peel Street TAMWORTH NSW 2340
AFSL No. 424658
2013/14 Budget: a general overview
Could be viewed as a ‘legacy budget’ – NDIS and Gonski
9. Slide 9
Level 1, 462 – 464 Peel Street TAMWORTH NSW 2340
AFSL No. 424658
2013/14 Budget: a general overview
A look at Gonski: where the money will come from.
University
funding cuts
Baby bonus
and FTB
cuts/changes
Business tax
increases
Job losses in
Public
Service
10. Slide 10
Level 1, 462 – 464 Peel Street TAMWORTH NSW 2340
AFSL No. 424658
2013/14 Budget: a general overview
A look at NDIS: where the money will come from.
Medicare
levy increase
Assorted cuts to
entitlements,
health care
rebate…etc.
11. Slide 11
Level 1, 462 – 464 Peel Street TAMWORTH NSW 2340
AFSL No. 424658
Winners & Losers: The Winners
1. Infrastructure: $24 billion over five years to upgrade and expand urban public transport
infrastructure in Sydney, Brisbane, Melbourne and Adelaide.
2. Schools/education: $9.8 billion over six years for a new needs-based funding model for schools
that increases Commonwealth funding for schools to $104.3 billion from 2014 to 2019.
3. Higher education: $97 million to increase the number of Commonwealth-supported university
places and an additional $186 million for research infrastructure.
4. Disability: $14.3 billion in new investment for DisabilityCare Australia, a national disability
insurance scheme that will be paid for with an increase in the Medicare levy.
5. Seniors: $127 million for older Australians, including $112.4 million to support those
downsizing their homes, $9.9 million to extend broadband support and $4.6 million for a new
ageing policy institute.
6. Health: $226 million to fight cancer, including $55.7 million for breast cancer screening, $18.5
million for prostate cancer research and $23.8 million for bone-marrow transplants.
12. Slide 12
Level 1, 462 – 464 Peel Street TAMWORTH NSW 2340
AFSL No. 424658
Winners & Losers: The Losers
1. Individuals: Personal income tax cuts to begin in July 2015 to help with the carbon tax deferred
until carbon price estimates reach $25.40. New estimate for 2015-16 is just $12.10.
2. Environment: Deferral of $370 million of funding for the Australian Renewable Energy Agency,
while $225.4 million will be deferred and $32.3 million redirected from the biodiversity fund.
$58 million in funding for the Clean Technology Program moved to 2017-18.
3. Resources: Tighter rules on exploration deductions for miners that give the government $1.1
billion over four years. $500 million cut from carbon capture and storage programs.
4. Multinational companies: Tightening of the corporate tax system to remove erosion and
loopholes, bringing the government extra revenue of about $4.1 billion and $219.20 million in
savings.
5. Foreign aid: The government will defer an increase in the aid budget to 0.5 per cent of the gross
national income by one year to 2017-18, saving it $1.9 billion.
6. Families: A reduction in the time allowed to claim family tax benefits and child-care assistance
will save the government $562 million over five years, while changes in the eligibility age for
another tax benefit will save $76.6 million over four years.
13. Slide 13
Level 1, 462 – 464 Peel Street TAMWORTH NSW 2340
AFSL No. 424658
2013/14 Budget: a general overview
Bad news for future budgets: reliance (again) on overly optimistic forecasts
LNG exports from Australia Iron ore price
14. Slide 14
Level 1, 462 – 464 Peel Street TAMWORTH NSW 2340
AFSL No. 424658
The impact on you as an individual
Higher
with
franking
credits
15. Slide 15
Level 1, 462 – 464 Peel Street TAMWORTH NSW 2340
AFSL No. 424658
The impact on you as an individual
16. Slide 16
Level 1, 462 – 464 Peel Street TAMWORTH NSW 2340
AFSL No. 424658
The impact on you as an individual
17. Slide 17
Level 1, 462 – 464 Peel Street TAMWORTH NSW 2340
AFSL No. 424658
Impact on Superannuation
Some of these changes were announced last month:
18. Slide 18
Level 1, 462 – 464 Peel Street TAMWORTH NSW 2340
AFSL No. 424658
Impact on Superannuation
19. Slide 19
Level 1, 462 – 464 Peel Street TAMWORTH NSW 2340
AFSL No. 424658
Impact on Superannuation
20. Slide 20
Level 1, 462 – 464 Peel Street TAMWORTH NSW 2340
AFSL No. 424658
Downsizing help & Medicare
21. Slide 21
Level 1, 462 – 464 Peel Street TAMWORTH NSW 2340
AFSL No. 424658
Our Region
The New England electorate received direct funding for a number of projects:
- New England Highway Bolivia Hill realignment - $80 million
- Liverpool Plains Shire Council water strategy - $400k
- Ashford Medical Centre - $280k
- NERAM - $250k
- Acacia Park NBN rollout - $220k
- Inverell Linking Together Centre - $210k
- Inverell RSL Museum - $100k
- Werris Creek Community Shed - $80k
- Gunnedah Shire Band - $20k
22. Slide 22
Level 1, 462 – 464 Peel Street TAMWORTH NSW 2340
AFSL No. 424658
The Opposition’s response
Light on detail, but general key points:
- General support for the budget’s tax increases and spending cuts of $43 billion
(and no commitment to reverse the tax increases and spending cuts in office)
- Delay the scheduled increases in the superannuation contributions guarantee for
two years
- Will support the NDIS, but not Gonski, unless all the states and territories have
committed to it
- Promises a comprehensive taxation review (No intention to raise GST, but GST will
be included in the review)
- Retain the carbon tax compensation package but will abolish the carbon tax
23. Slide 23
Level 1, 462 – 464 Peel Street TAMWORTH NSW 2340
AFSL No. 424658
Summary
• Probably Wayne Swan’s best budget but perhaps too much emphasis on tax
increases instead of spending cuts.
• Budget surplus forecast to return 2016/17 but this assumes revenue growth and
commodity price forecasts which have a high likelihood of not being achieved.
• Given the likely outcome of the Federal election, does the budget matter?
24. Slide 24
Level 1, 462 – 464 Peel Street TAMWORTH NSW 2340
AFSL No. 424658
Thank you
Questions
?
