Budget 2016/17: Kaye asks “Is that all there is?”

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There are two ways to review Scott Morrison’s first budget.

A top-level, ‘will it balance the books?’ perspective. And a retirement-focused appraisal – will average income retirees be better off? On both counts, it fails.

As Leigh Sale’s hard-hitting interview with Scott Morrison on the ABC’s 7.30 program revealed, the Turnbull Government’s budget deficit is a higher rate (26.2 per cent of GDP) than that of the Rudd or Gillard Governments (It is, in fact, higher than that which was described as a debt and deficit disaster by the Abbott/Hockey combo only two years ago). So the books are more heavily in the red, and forward projections are overly rosy (based on assumed iron ore prices which, at $55 per tonne, are robust to say the least). So as an attempt to reduce debt, with a vague hope we may return to surplus sometime after 2020, this budget has ducked all the difficult decisions to raise revenue, preferring instead to fiddle around the edges.

That is not to say it is all bad. The jobs for youth program has a great deal of merit, spending on infrastructure is a no-brainer and a tougher stance on multi-national companies’ tax avoidance is long overdue. But there are many big-ticket reforms that have simply been shelved. A change to Capital Gains Tax and Negative Gearing would do a lot for housing affordability for hundreds of thousands of ordinary Australians, but these changes have been firmly dumped in the too-hard basket. 

Reviewing what this budget offers retirees is not difficult. It offers very little. Those already in retirement know that living on a fixed income is already tough and with yesterday’s cut by the RBA in the official interest rate, it’s likely to get a lot tougher. Those on a full Age Pension are most probably living below the poverty line. Little has been offered to them. An increase in the rate of the pension is long overdue – this was last increased by Kevin Rudd in 2009 and since then rents and prices have increased while the interest paid by banks has gone down.

The changes to superannuation are a start to making the system fairer for all. They don’t go far enough, but do mean that a signal has been sent that super is not an estate planning system. It’s interesting to note that the change to the superannuation transfer balance cap has not been grandfathered. As YourLifeChoices members have told us time and again, it is difficult to plan and enter retirement when the goal posts keep moving, so changes effective the day after the Budget hardly seem fair to any superannuant, rich or poor. The new contribution rules for those aged 65 to 74 do make a lot of sense – but are only recognition that we are all working harder and longer and retirement is becoming a far-off dream for many. 

For those still working, tax cuts for workers earning between $80,000 and $87,000 are targeting middle income Australians and doing sweet nothing for the majority who simply do not earn this much. There is talk of tax cuts for lower income earners further down the track, but that’s cold comfort. And the re-classification of a ‘small business’ from up to $2 million turnover to $10 million is a very big bonus for the business sector.

It is also worth noting the $13 billion of ‘zombie’ measures which remain on the books from the Abbott Government’s first two budgets, as spelt out by Peter Martin yesterday. These include lifting of the Age Pension qualifying age to 70. In addition, there are some “mystery’ amounts ($1.6 billion and $1.9 billion) which will be revealed – you guessed it – in the lead up to the July election. Did anyone mention pork barrels?

In summary, as an attempt to balance the books, the hard decisions have been avoided and we will remain in the red until at least 2020. In terms of fairness and support for older Australians there is very little in this budget to celebrate.

What do you think? Has Kaye been unnecessarily harsh? Are you better off? Or worse?

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Written by Kaye Fallick

108 Comments

Total Comments: 108
  1. 0
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    Wishy-washy. As the Government have made their top priority winning the election and not people first Vote Them Out.

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      Come on Brian, the vote buying effort was the sub announcement, & I think Turnbull got that one wrong. It turned me off, & I think shot himself in the foot. This is a reasonable effort while dealing with Gillard’s time bombs of the NDIS & Gonski.

      Kaye please, hard hitting, what garbage. I tried watching the Leigh Sales interview. Hard hitting, no. Just a nasty vicious, biased woman big noting herself to her mates. I turned it off as I’m sure many real people did.

      I agree this did nothing like enough to earn my vote, but let’s be a little fair with the comments. Morrison did better than I expected, just not enough of the right things.

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      Guess it depends on your political leaning. The NDIS and Gonski report are both reasonable targets, so to call them “time bombs” is somewhat prejudiced. I think the last thing you could call Leigh Sales is a “nasty, vicious, biased woman” – from what I have seen over the years, she is totally un-biased, does her research very well, and is not daunted by those she interviews. Maybe I am biased – I don’t have any affection for either of the major parties.

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      I agree as I have no time for Leigh Sales as she just gets so many things so very wrong. Her manner is disgusting and all she does is big note herself.

      NDIS and Gonski are certainly time bombs that this country cannot afford. Education and health need to be a lot more efficient and not have any more money thrown at them.

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      Education and health are two of the most important issues, but they are human based issues which the LNP have never been good at because they can afford private schooling and private health cover (just like Bonny – no understanding of lower socioeconomic issues leading to disadvantage). Govern the country as a whole, ask what you can do for the less able, lead by care-based examples.

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    It’s a vote-buying exercise that ignores the national interest, favours the well-off (again!) and does nothing to improve the living standards of ordinary Australians.

    It won’t buy my vote! This government is inept and unconscionable, and needs to be thrown out.

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      Well throw them out and see what nasties another government can pull out of their hat.

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      Why have the “National Interest” at heart?
      Self Preservation is far more important!

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      They do keep saying ” Jobs and Growth”….their jobs and growth in their bank balance.

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      Actually, Patriot, it’s national interest I’m concerned with. This budget IS NOT in the national interest, any more than Hockey’s previous one was. It’s a total betrayal of the Australian public. It drives debt up and prioritizes increasing the disposal income of the wealthier in our society, at the expense of social services that the society needs.

      I agree, Bonny, that there’s not much by way of appealing alternative, but I think the alternative is less damning than continuing down our current path. We can’t afford Neoliberal thinking if civilized society is to survive. I know that’s not what the greedy privileged want to hear, but it’s a fact.

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    they did nothing and its already been proved their figures are wrong they have the biggest debt in history and are continuing to spend nothing for pensioners and their jobless figures are wrong if someone works 1 day a week for a few hours they consider them as employed this is false too no wonder the budget will not get through again labour the independs and the greens will only support a couple of things and the small business has to make 1 million dollars what a joke and the average wage is not $85.000 as they are saying bring on the election vote them and their crony mates out who benefit from this not ordinary Australians

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      “They have the biggest debt in history and continue to spend nothing for pensioner.” Let’s just make the biggest debt bigger, that is a good idea.

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      No, Sceptic. They continue to make the debt bigger by giving more to those who DO NOT NEED IT. Nearly $17,000 a year extra to folk earning $1 million, but there’s not enough for essential health and education.

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    I’m sad to ask, ” At this moment what is the alternative”?
    Put your rubbish in a plastic bag or a card board box?
    Liberal – Labor- Turnbull – Shorten – ????? I could scream!!

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      I guess the only alternative is to make sure you don’t put a number next to any of the Lib or Labor candidates in the Senate. An upper house with even more independents is the only way to make sure the Govt does what is needed for the good of all, rather than for their vested interests.

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      Vote Aust Liberty alliance, rise up Aust party, Pauline hanson

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      I don’t think we can put up with another Senate wanting to run the country like we have had since the Howard days.

      They are a house of review not a house that disrupts and dictate the running of our country.

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      The only thing the Senate could agree on was to stuff up the plans of over a half a million self funded retirees. Priceless. I’m only glad I’m a total cynic and kept my money out of super where there is less chance of the government mucking with it. I don’t trust any of them. Name me one party that hasn’t lied to gain an advantage.

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      Get Off The Grass ! Howard was a &*%$# !! :-(:-(
      And still Milking the Golden Cow !
      5 Years out and they should ALL go Automatically onto the Ordinary Old Age Pension and NO PERKS !! 🙁 🙁
      Start finding out how an Australian has to live and not an Arabian Sheik !! 🙂

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      Remember the greens can’t be trusted either – check their history.

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      The Greens were the idiots who put forward the senseless proposal to crucify half a million retirees and create an environment that discourages saving for retirement and rewards irresponsible spending and a bigger drain on taxpayers.

      As for the Senate, I agree, Rae, but I’m sure glad they blocked a lot of measures that would have made things far, far worse for the nation. They did their job on many issues, and we should be thanking them for that.

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    The difference between my generation and my parents was they knew they had a super payout that gave them a reasonable income for life indexed with inflation. Every time the reserve bank flutters or there is a budget tornado superannuation gets a gets taken out in the rain without an umbrella. Private superannuation was the worst thing we have done for the individual and the best thing for the hedge fund players. It doesn’t matter how much you have tucked away for that rainy day – “they” are taking the roof off the house. If I could turn the clock back I would have invested in real estate and not super.

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      If you had done, that, you can bet your bottom dollar they would have announced a ban on overseas buyers, and removal of negative gearing, so the property market would have crashed. Either way, it seems they don’t have the interests of the “average” person at heart. Having raised the prospect of changes to negative gearing, their mates can now bale out with good profits, before they announce it next time.

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      That’s why the rich do not invest in super like the ordinary Australian does.

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      The old way of paying off the house and then buying another fixer upper in a holiday/ retirement destination was far better for that generation. The 7.5% tax paid an aged pension unless you were very well off. Politicians seemed to care about what they were doing and the media had actual reporters rather than 5 minute commentators. The rise in poverty today is alarming and inequality of income, debt and superannuation/investment scams is often to blame for the lose of capital ordinary people experience.

      Name one person that really understands CDOs or synthetic bonds and yet your compulsory super is going into that dodgy fixed interest market while they smile nicely and mumble about bonds being safe as houses. Sure right!

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    The lack of grandfathering the superannuation limit changes is more than annoying, it is wrong. The rules under which I retired have turned out to be like walking on quicksand – they can give way any time. While the current changes might not affect me or most others who have retired at this point in time, what now will stop them from continuing to lower the limit or impose more and more taxation? The answer is nothing. By refusing to grandfather they have signalled that war has begun on self-funded pensioners who are an easy target because we have been portrayed as ‘rich’.

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      I agree with not grandfathering the super limit. It is a much better idea than limiting the amount you can earn within a super fund before it is taxed like the Labor policy.

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      By not grandfathering changes the government has declared war on superannuants. Best not to rely completely on the one system then.

      If the changes have not effected you yet then do some homework. The whole idea of relying on super for retirement is fraught with the danger of sovereign risk and market failure.

      The government has made it perfectly legitimate to betray them also come election day. No such thing as trust any more.

      The age of one term wonders and leadership battles replacing sensible policy is upon us.

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      Nayday, Bonny

      However don’t you find it strange that they Grandfathered the Clean Energy Supplement so that it DIDNT get eliminated for EXISTING pensioners and only eliminated it for NEW pensioners after July.

      Given the Govts expressed views about NOT grandfathering the Assets test changes due Jan 2017, – because they would be to hard to manage, why have the accepted Grandfathering now? can only be the numbers or Dollars are small. I predicted on this forum earlier in the year the Clean Energy Supplemented would be eliminated for ALL pensioners, I think for political reasons its a bit like “eat elephants slowly, they are hard to digest!! , therefore clearly it will happen

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      Clean energy supplement will go for all in the next budget.

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      Damned if I could ever figure out how to get the energy supplement as a self funded retiree. There must be a heap of us that were never compensated.It would be the same if GST was increased I suspect.
      No compensation for the self reliant.

      I notice I’m paying the Chinese government as much now for power as I paid the NSW state government and there has been no drop in prices for the tax being done with.

      At least the Chinese government thinks it is a good investment.

      I’m saving for solar and batteries to go off grid.

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      The lack of grandfathering merely justified people’s distrust in government and sent a strong message to ”cheat if you can” because you are being cheated at every turn.

      If there was fairness and honesty in the system, a lot more people would play honestly and we’d have a far lower welfare bill. It’s no wonder people are out to do anything they can to get all they can when they have what they worked hard for and planned for taken from them without warning and in such an unfair manner – for no gain to anyone except the lying blowhard who announces the measure and makes false statements about the reasons for it.

  7. 0
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    This is a “fiddle with the edges of the economy Budget”.
    Most ordinary Australians gets nothing from this Budget.
    The Defence Dept and the military suppliers are clinking champagne glasses, though.
    We are following America slavishly – build your economy on making war equipment at mind-boggling cost, so it can be blown up in half a second to become total scrap.
    There’s no major Govt support for research and innovation in this Budget – no energy or water infrastructure security improvements – no future food security plans.
    Nothing for innovation for improved methods of travel to combat congestion – nothing for the likes of the CSIRO who have produced hundreds of innovations that have earned the nation billions on royalties.
    It’s a do-nothing-to-upset-the-voters, Election Budget.
    It’s the most pathetic Budget delivered in the last 25 years.
    The problem is whether Labor can produce ideas and plans, pre-election, that show some statesmanship and long-term planning.
    With Shorten in charge, I seriously doubt that.

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      I agree Aaron. There is a total absence of long term planning. There has been a complete absence of planning for retirement by recent past Governments. They could estimate pretty accurately how many people would be retiring in this period but instead of tailoring government budgets to prepare for this they took the money that was being contributed by people to the National Fund for their retirement and spent it saying they would work out what to do when the time arrived. What they have done is pretend this fund never existed, the numbers retiring have taken them by surprise and people who contributed for their retirement all their lives have not actually saved as they should. Disgraceful.

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      I think they believed their own lies about Superannuation and how it would fund retirement. You must remember these are people who have never been low income earners. They have no idea how 75% of the people live.

      The crash of 2009 took them by complete surprise. Trillions of dollars disappeared and the chaos of instability is still with us.

      The Central Banks can postpone the market correction by printing more trillions of debt but it is only a postponement.

      Perhaps government is well aware and so make no long term plans. They can’t because they are as at risk as the other 99% of us.

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      Still believing their own lies,Rae. Too thick to think past ”Duh, take thousands off half a million people and we’ll have more to waste”. They aren’t smart enough to realize that they offer a reward for being irresponsible, and that will drive more people onto bigger pensions. That logic is way beyond the capacity of their pathetic little brain cells.

  8. 0
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    How about putting a positive spin on everything? The society has become negative, so negative, and is always looking at how something can’t work. Get people out of their armchairs and make something happen. Support the govt. and be proud of our country. When you live in and travel to other countries Aust. is so far ahead. Even the no name invisible people, non participants, there is support. The media, reporters, be positive, come up with solutions. It is not easy but get out there and get all sides, see how good it really is. Glass definitely half full. ????

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      Good post Nads.

      Got me thinking earlier when the first of these “budget” articles commenced, just how much we seem to have adopted the ‘woe is me’ attitude. I’m guessing most on this site are retirees (in it’s many forms) – pre/present/well advanced. Over the years and associated budgets we have persevered: indeed most (dare I suggest) have prospered! Yes, we’ve all had our battles & hardships in varying degrees and here we are at a time in our lives when instead of being thankful & enjoying life, far too many lament their lot , want more, whinge and bellyache about how they feel utopia should be run and expect a cabal of clowns to undertake it, to satisfy only themselves. If that’s the case then maybe the pollies see us as a mirror image of themselves ? Whats-more, maybe said pollies see us now getting our just desserts.

      Amazing no less, is the claim by a few ‘regulars’ herein that self confess to “trips overseas”, “investment properties”, “investment earnings” and the like. Now let me be perfectly clear, I DO NOT begrudge anyone their good fortune, the more-so because they have made the grade and rightly proud, regardless of (or for) others’ envy .

      By comparison, the parents of MOST current retirees realized considerably more hardship & in a good many instances they , having ‘spun off the mortal coil’ have left beneficiaries’ a windfall.
      Even were we to set this privileged number aside, the remainder today are still a long way better situated. How much would it take to satisfy some ?

      Nobody should criticize me indulging myself for repetition – the same said regulars do so ad nauseam. No elected pollie, be they independent or party liner is going to right the wrongs; as apparently manifest within this blog, to satisfy everyone within this demographic. Boy ! Haven’t we had some clowns try ? A fish n chip shop proprietor gave it a shot & recall what happened then.

      In summary, we should do as Nads suggests – “get out of (our) armchairs”, show some restraint in preaching to the converted and be happy with our lot. My glass is half empty , a good cheap quaffing plonk (being within my budgetary parameters) sufficient unto the day therein. Cheers !!

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      Maybe it will take some bad times for people to realise how good they have it and stop whinging and make things happen.

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      Would you like your Glass topped up ? I have a Nice Grange here, I found it at Parliament House a few years back now ! Nice Nose with a Cheeky Palate !! 🙂 🙂

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      No it’s the wrong vintage for me.

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      I also have a Labor Sauvignon ! 🙂 But that would be Unpalatable to you I think 🙂 🙂

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    The question Nads is what is in the glass?

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    Last year’s severe cuts for self funded retirees with low to average incomes were designed to fund these tax cuts for higher income earners and business. The Media have no trouble with this. They are not trying to live off retirement savings. They are in the income bracket that gets tax cuts. They have some money put aside for a final vote buying exercise maybe pensioners will get something trivial in that. Nothing can compensate for the waste-field they have made of retirement.

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      FM, you might be right about the intent, FM. But I’m pretty sure there won’t be any savings from the pension changes. A financial manager remarked to me that he’s now telling soon-to-retire clients that there’s a new exciting investment opportunity available. Put your money under the mattress. Our generous taxpayers will give you a 7.8% return, indexed to inflation, with a heap of fringe benefits. None of the risks of the stock market or real estate markets, and over triple bank interest rates, with virtually no risk. How good is that?

      Well maybe choose a fireproof safe rather than under the mattress?

      I think anyone predicting savings from taper rate changes lives in fairly land.

      But there will no doubt be savings from cutting family benefits to struggling single parent families. I just hope all the million dollar a year earners appreciate their generous $16,000+ tax cut. I’m sure they need it badly.

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