Workers set to be hit by a debt tax and families could lose benefits as the Abbott government struggles to reduce the nation’s deficit
- The Sunday Telegraph
- April 26, 2014
TONY Abbott has refused to rule out tax hikes in his first budget under a new deficit levy to fix Labor’s debt mess.
The Prime Minister today said he would not “squib the challenge” of repairing the budget.
Asked to respond to reports in News Corp Sunday papers today that he was considering a deficit levy Mr Abbott said he would not comment on specific measures but said any changes would be “fair”.
“This was probably the most disastrous government in our history. It’s important the mess be tackled,” he said.
“I do want reassure the people of Australia that we will tackle the fiscal disaster that we inherited. Now we are going to do it in ways that are faithful to the commitments we made.
“But we are not going to squib the challenge. We will do it in a way that is fair and equitable.”
Any deficit levy would be temporary and would hit high income earners the hardest.
Today, we revealed that workers will be forced to dig into their own pockets to pay off the country’s debt and families could face losing benefits as the Abbott government struggles to reduce the nation’s deficit.
Any decision to impose a new deficit levy in the Abbott government’s first term is politically risky and will be seized upon by Labor leader Bill Shorten as a breach of faith after the Prime Minister’s pledge to be a government of “no surprises, no excuses’’. But it would likely be dumped before the next election.
|WHAT WE KNOW SO FAR:1. $6 co-payment for “free” bulk billed GP visits2. Budget razor gang considering tightening income rules for family welfare
3. Pension age to be raised to 70 but will not come into effect until 2029
4. No change to asset test that allows retirees to have million dollar homes and claim the aged pension
5. Paid parental leave scheme to be introduced in 2015 with mutual obligation requirements asking mums to return to work
Warning all Australians will be asked to bear short-term pain, the budget razor gang has now signed off on most major spending decisions with federal cabinet to hold a marathon budget meeting on Monday.
A final decision on tax thresholds for the proposed new deficit levy will become clearer when final revenue figures are in with the budget deficit likely to be finalised only in the week before the May 13 budget.
Any temporary levy will be targeted at high-income earners. For example, wealthy workers earning $200,000 a year contributed nearly half the $1.8 billion raised by Julia Gillard’s flood levy; those earning less than $50,000 paid nothing under Labor’s levy.
There is also a push to tighten means tests or scrap Family Tax Benefit B aimed at traditional families with a stay-at-home parent.
The Sunday Telegraph can reveal the long-awaited Audit Commision, to be released on Thursday, suggested that FTB B aimed at sole breadwinners with stay-at- home wives should be scrapped in favour of a single payment that combined Family Tax Benefit A and B.
The existing scheme offers a form of de facto income splitting for traditional families with a stay-at-home parent and a main breadwinner with a combined family income of up to $176,000. It also offers benefits for single parents earning less than $150,000.
By comparison, the means test for families where two parents work is much tougher. Family Tax Benefit A cuts out at as low as $101,000 for one child under 12 or up to $129,959 in combined income for three children.
But stung by a growing public backlash last week over plans to raise the pension age to 70, the Abbott government wants to proceed cautiously.
In a statement, Mr Abbott will vow to keep his election promises with a caveat that his biggest pledge was to repair the budget: “The government will make a range of decisions which are important for Australia’s long-term economic strength, because the most fundamental commitment that we gave at the election was to build a strong and prosperous economy.’’
Treasurer Joe Hockey has also warned that those who have the most capacity will be asked to carry the greatest burden, suggesting tax hikes for high-income earners.
Commission of Audit Chairman Tony Shepherd stressed the final report would not target vulnerable families including single parents in any changes to family benefits.
|FUTURE FUNDS PARTY ON YOUR CASH:|
FORMER treasurer Peter Costello’s Future Fund spent $8000 of taxpayers’ money on a Christmas party at a venue called La Di Da that offers burlesque evenings; but it insists there were “absolutely not’’ any strippers.
A catalogue of extraordinary spending at the fund reveals the end-of-year bacchanalia was small change compared to the $8 million in cash bonuses last year to some of the organisation’s 92 staff.
There were also 88 credit cards issued for 92 staff with spending limits of between $2000 and $15,000.
Mr Costello, Australia’s longest-serving treasurer, established the sovereign wealth fund in 2006 and was appointed as chairman by Joe Hockey in February.
No other candidates were considered for the $198,000-a-year part-time job. According to documents tabled in Parliament, a second Christmas party was then organised for the fund’s seven board members and 75 staff at an extra catering cost of $4000.
Since Tony Abbott was elected the Future Fund has spent nearly $5000 a day on airfares, $900,000 on recruitment costs and $15,500 for “human chemistry” consultancies.
Future Fund spokesman Will Hetherton said the $8 million performance bonuses were justified and reflected the strong man-agement of the $107 billion in investments.
The fund said the La Di Da Christmas Party package included “venue hire, food and drink as well as music from a DJ but there was “absolutely not” any burlesque dancing.
La Di DA’s website boasts of all male strip revenues and burlesque routines and features dozens of photographs of a woman’s bottom clad in a G-string.