Budget 2012, travel losers

[Deleted member]

The departure tax increase is less than awesome, but really a bit of a first world problem. Bit worried about them indexing it though. They've already done that with passports and the prices for them were already ridiculous compared with other countries (e.g. my Australian passport costs nearly twice as much as my Irish one). Don't smoke, but it would be nice to still pick up some cheap ones for if I need to go to jail for a while.

The budget predicts surpluses for the next four years, so complaining about the government bringing forward spending to get one isn't a compelling argument really. I'm not particularly convinced that a surplus is especially vital for Australia, but I can see why the ALP did it anyway. Probably could have gone harder with some of the cuts and targeted other areas (e.g. school chaplains program, fuel rebates for miners) but I don't think they did too bad overall.



From a public policy perspective, superannuation is meant to take pressure off the pension system. If someone earning over $300,000/annum can't adequately plan for retirement, I'm not sure how that's the government's fault, especially since they'll still be getting a 15% tax discount with superannuation.



If the voters of Lyne (Oakeshott) and New England (Windsor) wanted a Coalition government, then why didn't they vote for the National party candidates in the 2010 election? Both independents were up against National party candidates and both independents wiped the floor with them. People vote for independents because they don't want another major party cipher representing them, which would distinguish them greatly from the brain dead appendage of the Liberal party that is the National party. If the voters of Lyne and New England think that Oakeshott and Windsor got it wrong, they can vote them out next year. I don't think second guessing the voters of the two electorates is particularly democratic though.



If the Coalition were to vote with the government in both houses of parliament, the legislation would sail through no matter what the Greens and independents thought of it. That would of course require Abbott to actually be cooperative for once, so it's obviously difficult to imagine. But it is actually possible, despite all the "Greens balance of power" doomsday articles in the press would have one believe.

As for business missing out on the 1% cut, stiff excrement. It was known from the moment it was proposed that the (initially 2%!) tax cut was to be funded by the RSPT. Did the BCA and co. come out and support the cut and tell the Minerals Council where to go while the miners were going feral against Rudd? The silence was deafening. If you don't fight, you lose. If I was a business owner, I might enquire as to when such representative bodies were planing to stick up for my interests rather than the Liberal party's.

The budget may predict a surplus, but it is predicated on some ambitious growth and tax take forecasts. If Europe descends into anarchy ( an extreme view I know) then swan can kiss goodbye to his surplus. Bear in mind he will hand on heart say " I didn't see it coming" well he wold be the only person in Australia who doesn't.
The fact is this is a please vote me in budget. Not really designed to do much about the economy. The best thing about it is the fact it does actually give to low and middle income earners. But it is still a fudged budget with spending before the 30th June and cuts after.

As for the independents , they campaigned on a conservative ( just like Katter) platform. Labour is more hated than the lib/nat option. And as I recall at least one of them is a past member.
So at he very least their electorate would expect them to support the LNP. So I disagree . Besides I believe actual polling found this out.

The fact is this government lacks legitimacy , and credibility.

 

[SeatBackForward]

As is the Carbon tax. One thing I did agree with, is that it was a True Labor Budget. Don't reward people for hard work.

I'd disagree. Its name is misleading for a start, its not a tax, its a penalty for polluting. At the moment, what penalty do polluters ppay? And why should we as a society all pay for others pollution?

 

[Deleted member]

This from Peter Costello in he SMH

As stand-up comedy it was a pretty good line: ''The four years of surpluses I announce tonight …'' And Wayne Swan got the predictable guffaws and laughter with the opening line of his budget speech.
One of the luxuries of making promises on the never-never is that you can't be held accountable. As Mr Swan will not be around to deliver a budget in four years' time, he can claim what he likes. By the time we get to 2016 no one is going to care two hoots about what Wayne Swan said on May 8, 2012.
Over his first four budgets, Mr Swan has averaged deficits of a little over $43 billion per year. He tells us that his next four budgets, if he were to deliver them, would average surpluses of $4 billion per year.
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At that rate do you know how long it would take to pay back the money he has borrowed to finance those four deficits? It would take 43 years. The longest journey begins with the first step, but this is such tiny progress.
And here's the worry. That projected surplus is so small: 0.1 per cent of gross domestic profit or 0.4 per cent of revenue that the slightest variation to revenue or expenses will blow it out. And then for all the hoopla the budget will be in deficit anyway.
What will be the 2012 budget outcome? The truth is we won't know until September 30, 2013. And the chances of Mr Swan making that announcement are very slim.
The government has been foolish to claim that its forecast outcome will make all the difference on interest rates. If that is true - if a $1.5 billion surplus means interest rates can be cut - then the converse must also be true that all those $40 billion deficits kept interest rates higher over the past four years than they needed to be and we have been struggling with the dead weight inflicted by this government.
It is quite possible that the Reserve Bank will cut interest rates further - if the economy weakens further - and if that happens the fragile ''surplus'' will disappear as well. This ''surplus'' is highly contingent and captive to developments in the economy, not the driver of them.
In any event, the best indicator of whether the government is taking money out of the economy (a surplus) or putting it in (a deficit) is whether net debt is rising or falling. If it is truly in surplus, then a government will be saving and net debt will be falling.
But as this budget makes clear, net debt will increase in the forthcoming year. After bringing all those off-balance items to account the government is not in surplus at all. The rest relies on a bunch of accounting tricks.
On May 2, 2010, when Mr Swan announced the Resource Super Profits Tax, he said it would share the benefits of the mining boom by, among other things, funding company tax cuts from July 1, 2012, and allowing Australians over 50 to contribute more to superannuation. That company tax cut was abandoned on Tuesday night - before it applied to one company for one day. The concessional cap was delayed to July 1, 2014, after the next election. And that gives plenty of time to announce further delays.
In the 2010 budget Mr Swan said people would get a 50 per cent tax cut on their earned interest income from July 1, 2011. Later that year in the mid-year review he pushed the start date back to July 2012. Last year's mid-year review pushed the start back another year to 2013. On Tuesday it got abolished altogether. It has never taken effect and it never will.
Or take the standard tax deduction heralded in the 2010 budget speech as easing the cost of living for 6.4 million Australians and freeing them from the need to fill in a tax return. It was due to start on July 1. In the mid-year review last year the start date was pushed back to 2013. On Tuesday night the start date was abolished.
Or take the 2009 Defence White Paper that committed the government to increase defence spending 3 per cent per annum in real terms. In fact over four years to 2015 it will barely increase 1.5 per cent.
Or take aid spending, which Labor has been promising to lift to 0.5 per cent of gross national income by 2015. For the first time it had to include estimates for that year in the current budget. So have a guess what happened? The target was deferred to 2016 - a year that is not in the budget - at a saving of $2.9 billion.
And have a guess what will happen to the target next year? Anyone familiar with politics has always known that the closer we got to the year of the target, the further Labor would push the promise out.
Such a large part of this budget consists of reversing decisions of previous budgets: one step forward, two steps back. My point here is that the government didn't have to make these promises. As it had no idea how to deliver them it should not have made them. Once it made them, however, it was obliged to keep them.
The government has developed the habit of over-promising and under-delivering. It is always looking for the next big headline - the ''greatest'' this and the ''biggest'' that. It is the yawning gap between promise and delivery that has killed this government. The chasm shows no sign of closing.
The best this government can hope for is to be off the scene before reality catches up with the latest set of expectations it has inflated.


Read more: http://www.smh.com.au/opinion/polit...nd-delivery-20120509-1ycxl.html#ixzz1uOxovMnW

 

[medhead]

well it has done except for just a little sleight of hand.first at least 1.5 billion of spending has been brought forward until June.

Took me a while to realise what this was about. But you're talking about the child payments? I'm pretty sure that is just a timing issue. These are existing payments that have been paid in the following financial year in relation to the current financial year. They are just changing the timing so while the 2011/12 payment will now be paid in 2011/12 instead of the 2012/13, and I see that seems like a sleight of hand, the 2012/13 payment will be paid at the end of 2012/13. So the amount of that payment must still be charged against the budget for 2012/13.

Then there is Wayne's track record-last May he announced that this financial year there would be a deficit of 22 billion.At the moment it stands at 44 billion.Fantastic forecasting record.

Has any Australian treasurer, ever, had a forecast that matched the outcome?

 

[Pushka]

I'd disagree. Its name is misleading for a start, its not a tax, its a penalty for polluting. At the moment, what penalty do polluters ppay? And why should we as a society all pay for others pollution?

Only Labors definition of rich people have to pay it The poor working class are going to get supplemented with cash which means that in effect they pollute the same as we do especially if they have a swarm of kids but we will pay the effects of tax and they wont. So I am paying a higher carbon tax rate than we need to in order to offset them not (which is really cash in lieu)

It is widely recognised thst carbon tax does not reduce the impact of climate change. Mother nature changes the climate at her whim but we humans seem to want to take credit for it. If we were serious about carbon emission we would be using nuclear power.

 

[drron]

Took me a while to realise what this was about. But you're talking about the child payments? I'm pretty sure that is just a timing issue. These are existing payments that have been paid in the following financial year in relation to the current financial year. They are just changing the timing so while the 2011/12 payment will now be paid in 2011/12 instead of the 2012/13, and I see that seems like a sleight of hand, the 2012/13 payment will be paid at the end of 2012/13. So the amount of that payment must still be charged against the budget for 2012/13.

Sure it was done as sleight of hand.The new paymenyts are scheduled to come into effect not in June 2013 as you think but July 2013 so once again out of this budget.And conveniently just before the next election.
A true Swan budget.

 

[serfty]

Circles, circles circle ...

May I remind you of this explanatory article that I referred to in an earlier post.

The speech you didn't get to hear from Swan

Note, it was not a Murdoch article, but Fairfax.

 

[rechoboam]

There will be a surplus next year -probably- because hell and high water will be moved to shift expenses into the future or off balance sheet eg the NBN.

When corporate standards of accounting don't apply, you bear no legal responsibility for misleading or lying, I am surprised they had a deficit this year either.

Anyway what sort of budgeting process forecasts your net position in four years? I have never budgeted in June for profits 4 years hence. The projections are performed eg projected profit for a listed company but the budget is primarily about expenses and income for the period being budgeted for.

 

[serfty]

...
When corporate standards of accounting don't apply, you bear no legal responsibility for misleading or lying, I am surprised they had a deficit this year either. ...

Last year they budgeted a $22B deficit for 2011/2012 - it's now up to $44B, and more with the payments being sent out in the next few weeks (Before July).

A bit hard to hide ...

 

[rechoboam]

Last year they budgeted a $22B deficit for 2011/2012 - it's now up to $44B, and more with the payments being sent out in the next few weeks (Before July).

A bit hard to hide ...

Why not call $20 billion a "social justice human capital" asset and stick in on the asset side just like has been done with the NBN? Think of the great things more handouts will do to welfare dependents. "Sharing the wealth"- now we can all be wealthy!

 

[eastwest101]

Why not call $20 billion a "social justice human capital" asset and stick in on the asset side just like has been done with the NBN? Think of the great things more handouts will do to welfare dependents. "Sharing the wealth"- now we can all be wealthy!

Now you get it rechoboam! Conroynomics.

 

[medhead]

I see that John Howard has gone off message. Quoted in the AFR as saying the budget is fiscally responsible but a surplus was not needed. Double disagreement with his successors.

Sure it was done as sleight of hand.The new paymenyts are scheduled to come into effect not in June 2013 as you think but July 2013 so once again out of this budget.And conveniently just before the next election.
A true Swan budget.

To tell the truth family payments are a bit of a mystery to me. I get money during the year, then I do my tax return and I either get an extra payment or I owe money. So I'll bow to your superior knowledge.


Sent from the Throne

 

[burrco]

Re: Budget 2012

Quite surprised at the estimated savings from the tobacco changes, I had no idea duty free tobacco was still so popular.

Also haven't noticed any mention in the thread that the AFP will be partially recovering costs (approx 40mil) for some services provided to airports. I doubt these costs will be absorbed so some new charges/increases in fees etc will probably be forthcoming.

 

[rechoboam]

Quite surprised at the estimated savings from the tobacco changes, I had no idea duty free tobacco was still so popular.

Also haven't noticed any mention in the thread that the AFP will be partially recovering costs (approx 40mil) for some services provided to airports. I doubt these costs will be absorbed so some new charges/increases in fees etc will probably be forthcoming.

Well the savings are a mirage like so much else. Just like how my voluntary super contributions will earn them a whole lot more with a 30% tax, but in reality as far as I understand it there won't be any point in my doing it and they won't get anything as people pile into negatively geared investments instead.

I'm not sure how AFP activities are seen as some kind of favor to airport either. I would have thought it represented part of normal law enforcement, mostly b

 

[Moopere]

Well the savings are a mirage like so much else. Just like how my voluntary super contributions will earn them a whole lot more with a 30% tax, but in reality as far as I understand it there won't be any point in my doing it and they won't get anything as people pile into negatively geared investments instead.

Yep, this boggles my tiny mind as well. You can only tax people and businesses so much, then they just stop accepting the parasite and you make nothing.

I wonder how long this super thing will last? There is already much moaning about the entry level cost of rental housing and how basic housing is unaffordable for large, very large, parts of the community. With a potentially huge influx of money into the neg gear housing market, residential predominantly as this is mostly where neg gearing lives, watch residential pricing soar and asking rent along with it.

Talk about the law of unintended consequences.

 

[wafliron]

There will be a surplus next year -probably- because hell and high water will be moved to shift expenses into the future or off balance sheet eg the NBN.

When corporate standards of accounting don't apply, you bear no legal responsibility for misleading or lying, I am surprised they had a deficit this year either.

Why not call $20 billion a "social justice human capital" asset and stick in on the asset side just like has been done with the NBN? Think of the great things more handouts will do to welfare dependents. "Sharing the wealth"- now we can all be wealthy!

Completely irrespective of what you might think about the NBN, this government, this budget, or whatever, can you please stop repeating this line about the NBN - it's flat-out wrong.

By any reasonable definition - including "corporate standards of accounting" - the spending on the NBN is a capital investment in an asset, and belongs on the balance sheet. It would be exactly the same if it was being built privately.

I know that your justification for saying it should be a budget expense is that you think it will fail and lose money, but even if that proves to be true that doesn't mean it's an expense. If it fails commercially then it will make losses for however many years it operates, and then when it is retired whatever value is still attributed to it on the government's balance sheet will be written off (with a commensurate expense to the budget in that year). If any losses mean it requires additional capitalisation from the government then that money will also be a balance sheet item when paid - in the form of a further balance sheet asset (loan) - which would also be written off if the NBN is shut down without repaying the money.

That's how it works - be you a government or a private enterprise.

 

[drron]

Completely irrespective of what you might think about the NBN, this government, this budget, or whatever, can you please stop repeating this line about the NBN - it's flat-out wrong.

By any reasonable definition - including "corporate standards of accounting" - the spending on the NBN is a capital investment in an asset, and belongs on the balance sheet. It would be exactly the same if it was being built privately.

I know that your justification for saying it should be a budget expense is that you think it will fail and lose money, but even if that proves to be true that doesn't mean it's an expense. If it fails commercially then it will make losses for however many years it operates, and then when it is retired whatever value is still attributed to it on the government's balance sheet will be written off (with a commensurate expense to the budget in that year). If any losses mean it requires additional capitalisation from the government then that money will also be a balance sheet item when paid - in the form of a further balance sheet asset (loan) - which would also be written off if the NBN is shut down without repaying the money.

That's how it works - be you a government or a private enterprise.

Sorry it is a budget expense because it is earning revenue,raising debt and expending money on roll out.There is profit and loss and it should be incorporated in the budget.There is no difference whether it ends up as a profit or loss when sold by the government-that amount will be brought to account at that time.
I have not seen any accountant,economist or business leader say it should be off balance sheet but many who say it should be taken into account in the budget.

 

[wafliron]

Sorry it is a budget expense because it is earning revenue,raising debt and expending money on roll out.There is profit and loss and it should be incorporated in the budget.There is no difference whether it ends up as a profit or loss when sold by the government-that amount will be brought to account at that time.

With respect, I think you need to read up on the differences between a capital investment (asset) vs an expense. What you said just isn't true by any accepted accounting standard, irrespective of whether the entity spending the money is government or private. If a private entity built the NBN (or anything akin to it) and tried to claim the build costs as a expense the ATO would be all over them.

I have not seen any accountant,economist or business leader say it should be off balance sheet but many who say it should be taken into account in the budget.

Again with respect, if this is the case then you're not looking hard enough. There are plenty of knowledgeable folks who say that the NBN is correctly treated as a balance sheet item. As just one comprehensive example, I refer you to the research note on the topic prepared by the Parlimentary Library of Australia, specifically this section: The national broadband network and the federal government budget statements – Parliament of Australia and the following conclusion. To quote (emphasis mine):

In the budget statement, the NBN is accounted for as a financial asset (equity investment) under the ‘investments in other public sector entities’ line item of the balance sheet. The NBN is not accounted for on the operating statement as an expense item, because it cannot be defined as such under accepted accounting standards.

The Statement of Accounting Concepts (SAC) as produced by the Public Sector Accounting Standards Board of the Australian Accounting Research Foundation and the Australian Accounting Standards Board defines expenses as:

...

In relation to equity injections in NBN Co, whether funds are obtained through the issuing of debt (an increase in liabilities) or existing cash balances (a reduction of cash assets), money transferred to NBN Co does not reduce balance sheet equity (assets minus liabilities) and will not be consumed or expire, during the current reporting period. Therefore, cash transfers to NBN Co cannot be accounted for as an expense item in the operating statement.

However, as previously explained, a future reduction in the book value of that equity investment (financial asset) in NBN Co is accounted for as an expense in the operating statement. [wafliron: as per my OP - if the NBN fails the and it's balance sheet value is written down as a result, that will result in an expense in the same budget period]

...

Conclusion

In sum, money transferred to NBN Co cannot be classified as an expense under currently accepted accounting standards. It is accounted for as a financial asset on the balance sheet (an ‘investment in other public sector entities’), as opposed to an expense item on the operating statement. An eventual gain or loss on the government’s equity investment in NBN Co is accounted for in the operating statement as an expense, but this does not affect the fiscal balance measure.

I'll shuddup now though, this is OT and I've made my point

 

[rechoboam]

Completely irrespective of what you might think about the NBN, this government, this budget, or whatever, can you please stop repeating this line about the NBN - it's flat-out wrong.

By any reasonable definition - including "corporate standards of accounting" - the spending on the NBN is a capital investment in an asset, and belongs on the balance sheet. It would be exactly the same if it was being built privately.

I know that your justification for saying it should be a budget expense is that you think it will fail and lose money, but even if that proves to be true that doesn't mean it's an expense. If it fails commercially then it will make losses for however many years it operates, and then when it is retired whatever value is still attributed to it on the government's balance sheet will be written off (with a commensurate expense to the budget in that year). If any losses mean it requires additional capitalisation from the government then that money will also be a balance sheet item when paid - in the form of a further balance sheet asset (loan) - which would also be written off if the NBN is shut down without repaying the money.

That's how it works - be you a government or a private enterprise.

Wouldnt it have to appear under depreciation from next year on? That would represent 10 billion or so per year wouldn't it?? Does the government have to account like this?

 

[wafliron]

Wouldnt it have to appear under depreciation from next year on? That would represent 10 billion or so per year wouldn't it?? Does the government have to account like this?

You are stretching the limits of my accounting knowledge now, but from what I know yes it seems logical that its value should be depreciated over time. It wouldn't be anything like $10 billion/year though I would think - rather it would be capital cost (current estimate $27.5 billion from the government) depreciated in some form over the expected lifespan (50 years IIRC).

Perhaps one of the accountants on this forum can step in and clarify, at least from the perspective of normal accounting guidelines for this type of investment?