Opinion: Is Federal Budget 2018 about politics or policy?

The Government seems to be trading votes for a quick income tax cut sugar hit.

Leaks and speculation primed the news cycle a week ahead of Federal Budget 2018, with hints that low to middle-income earners will receive income tax cuts, aged care will receive a funding boost and debate over companies receiving generous tax cuts.

But many economists and even some MPs are asking why the Government is seemingly overlooking Australia’s massive debt – a debt that has seemingly been misted over by the fog of Coalition rhetoric and political sleight of hand.

Sure, there have been significant improvements in tax collection, but that ‘surplus’ we all keep hearing about never seems to materialise. And it won’t if the Coalition starts redirecting the so-called ‘rivers of gold’ claimed by Chris Richardson, a leading economist from Deloitte Access Economics, to flow into the nation’s coffers.

At least some MPs are awake to this. Some Senate powerbrokers are expected to block short-term ‘sweeteners’ such as income tax cuts, if these cuts put the Budget at risk.

“If there are to be personal tax cuts, they should be designed to provide immediate relief for hard-pressed low and middle-income earners, and should not jeopardise the task of bringing the Budget back to balance and our burgeoning debt under control,” said independent MP Tim Storer.

The priority, they say, is to prevent government debt climbing to $365 billion. But no one wants to hear about that. Voters want tax cuts, and this is a Government playing the election game. It seems the Coalition may use this budget to curry favour from voters instead of concentrating on the job at hand. Paying off the national and foreign debt should be a priority.

A recent Newspoll also revealed that Australians believe that paying down the nation’s debt is more important than personal income tax cuts, although more health funding is a little higher on their list.

The poll showed 27 per cent of Australians believed health should be the priority in Federal Budget 2018, with 26 per cent favouring reducing debt and deficit, 15 per cent wanting income tax cuts, 15 per cent preferring increased infrastructure spending and 12 per cent wanting more money for schools.

Turnbull frontbencher Angus Taylor says Australians want leadership and a government creating employment, driving investment, but also living within our means.

“That is absolutely crucial. I think that is where we are absolutely on target, we are working extremely hard every day, and I think over time Australians will reward us for that focus on economic leadership,” said Mr Taylor.

Having lost 30 Newspolls in a row, it’s no surprise that the Government wants to splash a bit of cash around to impress voters. Perhaps though, it should take notice of the fact that Bill Shorten has also lost 30 Newspolls in a row as preferred prime minister.

Malcolm Turnbull has this ace up his sleeve, so is it really necessary to hand money back at a time when, as a nation, we should be saving?

No one is saying that an income tax cut would not be welcomed. It will definitely help some households already struggling to keep up with the increased cost of living. But, the proposed $10 billion of tax cuts would effectively consume any of the savings the Government has made in the past year, so how does that help us as a nation in the long run?

It doesn’t. And once the deficit starts creeping up due to decreased revenue those income tax cuts will be taken away or, worse, turned into increased taxes.

But hey, so long as it gets the Government re-elected next year.

The Coalition would be better served showing the voters that it is a responsible government, with a strong leader and a savvy Treasurer who delivers on promises and won’t trade votes for a quick sugar hit.

What do you think of the direction of Federal Budget 2018? Is it more about politics than economics?

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    COMMENTS

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    Crazy Horse
    7th May 2018
    10:44am
    It's an election budget designed to lull us into feeling good short term about the Liberals and hopefully reelect them. The nastiness will return in the first budget after the election.
    ray @ Bondi
    7th May 2018
    10:54am
    The libs are hoping we are good Orwellian citizens and only believe what we are told that second all hail big brother who has increased our rations by -50% OH! Glorious big brother our half of what we used to have is so huge!!!!
    rover
    7th May 2018
    11:06am
    Crazy Horse is on the money. It is an election budget. Today the pollies sole purpose seems to be to get elected and once in power do what is necessary to stay in power. Oh how I long for some common sense. If you have to borrow to pay recurrent expenditure, then you are on the wrong tram. We need the likes of a Bob Hawke to take the people with him/her irrespective of political colour as commonsense policies are implemented even though they unpalatable to voters. Are there any heirs apparent, I'm not aware of any.
    Rae
    8th May 2018
    9:07am
    Australians seem not to realise the danger of borrowing to pay off prior debts. Or that the debts are falling due very rapidly.

    I agree. A leader who could tell the very nasty truth and get the nation to stop spending like rabid beasts, pay down debt and start saving would be handy right about now.

    7th May 2018
    12:14pm
    So, when debt and deficit is a major problem, aged pensioners suffer loss, but when things improve marginally, handouts go to people who were NOT deprived. Surely the losses some suffered should be restored before others get handouts?
    Anonymous
    8th May 2018
    2:49pm
    Exactly, OGR. They broke Tony Abbott's promise (among many promises) of "No Change to Pensions" by bring in the nasty change to Assets Test from Jan 2017 justifying it by claiming they can't afford it. It turns out it was a complete lie as they were having only a temporary decline in corporate taxes from the losses companies claimed since the GFC. That should never happen again if they simply implemented a Minimum Tax system without allowing Deductions.

    Right now, they should first of all reverse their nasty changes, in particular the change to Assets Test, now that they have "rivers of gold" flowing in, before they consider even nonsensical tiny sugar hits for targeted voters.
    Chris B T
    9th May 2018
    4:14pm
    Change Deeming Rates to what you can actually achieve form term deposits.
    Instead of ASX Casino of highs and lows.
    You chose term deposits for certainty as well as safety.

    Not A Big ASK but would help Those relying on this income to LIVE.
    No, like you said Vote Buying by this token TAX cut.
    Anonymous
    9th May 2018
    5:23pm
    Changing deeming rates won't help SFRs who are struggling on WAY LESS than the pension, Chris. But then, who cares about people who worked hard and saved well. Just take it all off them, and then wonder why the cost of the pension blows out. The same fools who are saying we have to cut taxes so there's an incentive to work are stealing retirement savings so there's NO incentive. Or perhaps they want people to work so they have savings that the government can steal?
    Not a Bludger
    7th May 2018
    12:17pm
    Rover - I, for one, (and in common with about half of the nation) were never taken in by Bob Hawke, just another union thug, boss.
    And, what would the #meto crowd have made of Hawke who was wont to greet guests in his hotel room entirely in the nude.
    Adrianus
    9th May 2018
    12:23pm
    They could say that he wanted to show he had nothing to hide?
    Jim
    7th May 2018
    12:54pm
    The budget is both an election strategy and an economic strategy, but isn't that always the case in a budget when an election is looming, it wouldn't matter which party was in power, the outcome would be the same, I guess you have to look at who is likely to do a better job in the current climate, everyone criticising Trump who I think is a total idiot, but you need to examine what has happened since his election, the unemployment rate in the US is at its lowest in 17 years according to latest reports, the US Stockmarket is thriving, I don't know how they have done this in the short time he has been in power, but you can't argue with the results, only time will tell if the situation is sustainable, I don't believe Bill Shorten is the right man for the job, he seems to be short on ideas but big on rhetoric, only time will tell.
    Anonymous
    7th May 2018
    5:55pm
    I agree Shorten is short on ideas. Both parties are a disaster. How to get rid of the two-party system is the dilemma, because until we do there is no hope for this country.
    Eddy
    7th May 2018
    1:10pm
    Shades of 2004, an incumbent government (successfully) trying to buy an election win with our money. The financial recklessness of the 2004 election is now being felt by us all, except for the Self Funded Retirees with their tax-free superannuation and reimbursement of the tax paid on their franked shares. The 2004 budget measures have cost this country billions of dollars in foregone revenue, seem like the 2018 budget will do the same. All this from the party that claims to be superior economic managers.
    Anonymous
    7th May 2018
    5:59pm
    Um... check your facts on SFRs, Eddy. The very wealthy are fine. Many are doing it VERY VERY TOUGH indeed. At least 100,000 would be better off with half the savings and getting a part pension. And vast numbers never had tax free superannuation. Their savings are PERSONAL SAVINGS from extensive sacrifices earlier in life.

    They do get franking credits - as they SHOULD if they are below the income tax threshold. If Shorten succeeds in taking those away, many will be broke in no time. They are already drawing on savings just to match pension income.

    Please don't make inaccurate divisive comments. Seniors need to be united, and SFRs who are struggling don't deserve the abuse and nastiness they cop regularly here from people who are living off the taxpayer, while they get NOTHING after a lifetime of contributing.
    Eddy
    7th May 2018
    8:23pm
    OGR, we have locked horns before on similar questions. The right to express my opinion is no less valid than yours.
    My opinion is that people drawing superannuation payments should pay tax and Medicare levy on the same basis as everyone else, although they may receive specific rebates relative to superannuation payments. Similarly people receiving franking credits can validly offset them against their taxable income, if you have no taxable income then my opinion is that you should not receive those franking credits as a refund.
    You do not have to agree with me OGR, but don't suggest I am being abusive or nasty because we disagree.
    Jim
    7th May 2018
    9:43pm
    Again we get this argument that retirees shouldn't get the tax back that has validly been paid on their behalf, I still cannot understand why so many people do not understand why investors get back the tax that they have paid on their investments if their income falls below the tax free threshold , this just doesn't apply to pensioners it applies to every tax payer whose income falls below the tax free threshold, if you are working and pay tax, at the end of the year if your income falls below the tax free threshold you get back all of the tax back that you have paid, how is this any different to a pensioner who has invested in shares and gets a dividend ( income ) and pays tax on that dividend in the form of franking which is just another word for the tax you have paid on your income from dividends, if your income is less than the tax free threshold, which also includes any pension payments you have recieved then you are entitled to a return of that tax you have paid, if you total income including your pension is above the tax free threshold you don't get the tax refunded. The whole argument was introduced by labor to create envy amongst pensioners and looking at the comments here and in past discussions they have been successful, thats the labor way, no ideas but divide the nation and try to conquer!
    MB100D
    8th May 2018
    8:43am
    "if you total income including your pension is above the tax free threshold you don't get the tax refunded."
    Wrong Jim, my income is well above the Tax Free Threshold and I get all my franking credits.
    Rae
    8th May 2018
    9:11am
    The Aged Pension is also tax free and levy free. Be careful what you wish for. Welfare is low enough now without taxing it.
    Adrianus
    9th May 2018
    8:32am
    Eddy, your opinion is so wrong on a number of fronts. For a start it is very unfair to ask a retiree to pay tax twice on a franked dividend.
    Secondly I know of not a single rebate which is issued to a super fund?
    Anonymous
    9th May 2018
    9:13am
    Eddy, you ARE being divisive, and seriously mean and unfair. Pensioners get handouts valued at over $40,000 a year (for a couple on a full pension). Part pensioners can have very substantial incomes and still get handouts. Yet YOU claim that a self-funded retiree should be forced to live on their savings, get NOTHING from the taxpayer, AND PAY UNFAIR TAX ON THEIR INCOME AS WELL.

    You ARE being abusive. How would you like to save your whole life and then be spat on and told to live on your savings while those who didn't save get handouts - and THEN abused for claiming a FAIR refund of tax that had been taken from your income before it was paid to you?

    Those franking credits are UNFAIR TAX TAKEN WRONGLY FROM PEOPLE WITH TOO LITTLE TO BE LIABLE FOR TAX. And you are saying they should ONLY be refunded to those wealthy enough to not need the extra income, while battlers who try to save the government money by not claiming pensions should be denied fair dealing. Either you are totally ignorant and uncomprehending, or a bully causing social division and unfair hurt, Eddy. Sorry, but that's how it is.

    Why should people who saved be punished while those who didn't are rewarded? Or are you so blinded by envy that you think superannuation savings fell out of the sky and anyone who benefited deserves to be punished for having some kind of ''win''?
    Anonymous
    9th May 2018
    9:17am
    BTW. Eddy, in case you still haven't woken up to the facts, despite them being repeated here often - SFRs with less than $2 million (for a couple) are likely to be way worse off in income terms than part pensioners with only $500,000. Yet you want to increase the incentive to divest assets or buy a bigger home and claim a pension by ripping off someone whose income is already low and making it totally impossible to survive self-funded. Like Shorten's rubbish, that's economically destructive, socially unacceptable, and PATENTLY IDIOTIC. Will the greedy be satisfied when EVERYONE who wasn't born rich is struggling to survive on a pension and there is no incentive whatever to save because it's all stolen back in retirement?
    Tib
    7th May 2018
    1:26pm
    The Budget is all about a short attention span. The Liberal party hopes you have one, so if they give you a tax cut of $5 you will vote for them again. It certainly won't be about a budget emergency or at least not the one they caused, after all they would never be able to give their mates in big business a tax cut if there was a budget emergency, would they. I'm losing confidence in the Australian public I expect they will take their $5 tax cut and vote for this lot again, I can hear big business laughing from here!
    Jim
    7th May 2018
    2:25pm
    Fortunately the general public don't have a short attention span, they can remember the disaster of the last Rudd,Gillard,Rudd government, the only problem I see is the current LNP are intent on destroying themselves, and give the drovers dog a go, who knows they might make a better go of it this time around, I am trying to find somewhere I can invest in a few rickety boats, should be able to make a killing in the import buisness.
    Adrianus
    9th May 2018
    8:21am
    Tib, the election is a year away.

    7th May 2018
    2:09pm
    The tax cuts help the low and middle income the most.
    The coalition is doing a splendid job in helping the battlers and boosting the economy
    Means more jobs and more money on the pockets of the average Australian
    Anonymous
    7th May 2018
    5:53pm
    Oh yes, splendid job of helping battlers! 1/3rd of aged pensioners living in poverty. Record homelessness. And don't dare save for old age because if you make it above $500,000 but less than $2 million you will be worse off than a pensioner and taking hits at every turn.

    And now, suddenly, money has magically appeared that allows tax cuts when just weeks ago we couldn't afford to improve health care and aged pensions were sending us broke.

    What a bigoted BS rant, Raphael. Not a shred of fact anywhere.
    Anonymous
    8th May 2018
    2:50pm
    Complete rubbish, Raphael.
    Adrianus
    9th May 2018
    8:05am
    Rainey money hasn't suddenly and magically appeared. It has been a hard battle to win but this government is not about to rest on its success.
    Don't know if you realise but the introduction of targeted skills in the ATO is producing results. January 2017 the ATO announced new measures in targeting cashflows between operating tax entities and asset trusts.
    The 400,000 jobs created mostly by the PRIVATE sector will produce additional revenue of approximately $6B.
    Do you recall Tony Abbott's promise to the Australian people?
    one million jobs in the first 5 years of a coalition government.
    Yes they did it!!! We did it!!!
    The 5 years passed recently and the results are on the board!
    I know it seemed like an impossible task because of the previous governments poor record.
    Anonymous
    9th May 2018
    9:03am
    I repeat - 1/3 aged pensioners living in poverty, record numbers of homeless, retirees who saved ripped off and ground into hardship with a STUPID means test that makes you WORSE OFF FOR SAVING unless you are rich (what can you expect from the rich and privileged moronic SCUM?)

    Why is the money being spent to remedy the problems these bastards have caused with their unfairness and meanness? Oh no, just rip retirees off with exorbitant interest rates on loans against their house when they have had so much STOLEN from them that they can't afford essentials in retirement.

    This BS about the previous government has worn very thin. The previous government got us through the GFC in better economic health than any other developed nation, DESPITE having to deal with absurd obligations to hand out to the rich because Howard and Costello blew the profits of the mining boom handing out to their buddies. This government has done nothing but persecute the have nots, and continues to do so - with its primary target being those battlers who worked their guts out for decades to try to be as self-sufficient as possible in old age. DISGUSTING.
    Adrianus
    9th May 2018
    12:33pm
    Seeing you raised the issue of previous government. They did make a valuable contribution to the welfare congo line. Unfortunately it blew out disproportionately and had to be brought back into balance.
    There are now far less on welfare because of the jobs being created by an industrious private sector operating in a stronger economy.

    BTW, has bill shorten sacked those 4 ministers yet?
    Anonymous
    9th May 2018
    5:20pm
    There are far less on welfare because people with genuine disabilities - even terminal cancer - are being denied benefits. But there will be far more on welfare in the next few years because the IDIOTS in the LNP have made sure that battling SFR's have such low incomes that they have no choice but to divest assets and go on the pension. The mattress bank is now the best investment there is, thanks to stupid government policy that pays nearly 3% more to people who have LESS assets than savers can achieve.

    7th May 2018
    3:05pm
    Firstly, let's clarify the polls, the government has lost 61 in a row, not 30. Abbott lost 30 which prompted Turnbull to please his wife by taking on the big job. He has lost 31 in a row. Now to the question and all I can say is "are the Kennedy's gun-shy?" Of course it's a budget to attract votes, all sides of government on all levels do this. We, the voters, get a short term benefit until after an election when promises are set aside because "we weren't told the full extent of the budget problem".
    GrayComputing
    7th May 2018
    3:42pm
    Dear PM MPs and senators

    It is time for the government (and for all of us to rant at your MP a lot) to take action for human decency and a huge stress reduction for pensioners

    NO ASSET TEST FOR A PENSION EVERV AGAIN!
    A pension is not welfare.

    Most economist say we will save taxpayers money by dropping asset testing because of the massive overheads cost in running Centrelink and the 10,000 conflicting rules
    Even poorer New Zealand has a NO ASSET pension so it is cheaper and user friendly,

    For the retired and retiring people in your electorate do you think they really look forward and want 100++ visits to/from Centrelink and be part of 3 million waiting queues and lost calls?

    As an MP do you really like being part of the system that allows this indirect abuse of the elderly?

    This abuse is actually sponsored by our government and forced down to Centrelink and borders on a criminal act.

    Why do MPs normally compassionate persons let this Centrelink abuse happen at taxpayers’ expense?

    As a MP you even stand to lose your chance at being part of the government unless all these criminal asset tests for a pension are dropped now.

    NO ASSET TEST FOR A PENSION EVER AGAIN!
    Anonymous
    8th May 2018
    2:54pm
    Agree! At least, reverse the nasty changes from Jan 2017 implemented on a lie about a Budget Emergency, now that they have "rivers of gold" flowing in.

    Better still, implement Universal Pension for all from Age 65 and Residence of say 15 years, and scrap all other tests thereby also getting rid of Centrelink admin / abuse / costs.

    All MUST press their MPs, and votes AGAINST them (putting them LAST in preferences) if they don't agree.

    7th May 2018
    4:50pm
    Politics! (yawn)
    MD
    7th May 2018
    9:01pm
    Politics vs economics ?

    Economics (pluses or minuses) as viewed from contributing commentators perspectives: and that relative to how it affects them individually.
    Politics from the gubbermints take - that is, at least till the election. I imagine the pollies see it as buying time and earning a few brownie points whilst they play pied piper to hordes of rats thereby (hopefully) keeping em in their conga line.
    Adrianus
    9th May 2018
    7:44am
    Are these Senate power brokers who are planning to block tax cuts for low paid workers, the same ones who were recently demanding wage increases?
    What's the difference between a tax cut and a wage increase?
    Anonymous
    9th May 2018
    9:05am
    The biggest difference is tax cuts are nothing more than vote buying. We had a debt crisis that meant battlers had to be robbed of all they worked for. Are they giving that back? NO. Just buying votes with a token handout to con the gullible.
    Adrianus
    9th May 2018
    12:47pm
    By your analogy a wage rise would buy votes too? If given by the employer? Or forced by layba bovver boys.
    A lot of projects were shelved when it looked like Kevin 007 was headed for the lodge. More still when Fannie Mae and Freddie Mac started treading water. Then even more when it was evident that Rudd didn't have a clue. Then even more when the ALP government lost control of our boarders. Then more still when Kevin Rudd refused to honour his pre-election promise and hand over to Julia Gillard. By that time the only jobs being created were in the Public Sector. I will never forgive them for their incompetence and stupidity, which cost me dearly.
    Anonymous
    9th May 2018
    5:17pm
    And the LNP has cost the nation dearly by - among other things - making it futile to save for old age and ensuring that hundreds of thousands more will claim pensions or higher pensions because they were screwed by a fraudulent government. I will never forgive the bastards for that. Sadly, Labor is intent on finishing the job. Apparently, people who save for old age are on the nose and must be beaten, bullied, and have their savings stolen.


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