May 10: Overview: Surplus still on track in tough budget, Lawyers Weekly
Treasurer Wayne Swan has uncovered $22 billion worth of savings in a "tough" budget that aims to extend the opportunity of the mining boom to all Australians.
The savings mean the 2011-12 Budget is still on track to reach surplus by 2012-13, with the Treasurer noting the $22 billion cuts were "structural" in nature and would assist in reining in spending over the long-term.
Swan said Australians are currently facing an economy that's in transition. "How we manage the transition will determine whether we succeed or fail," he said.
Much of that transition will centre around workforce policy, with Swan labelling this the "centrepiece" of his budget that will enable the spread of opportunities from the mining boom.
These measures include a $3 billion investment in skills initiatives.
Swan said inevitable price pressure will result from the mining boom, but that he had made produced some "tough" measures in this year's budget that will see the Gillard Government ultimately "pay a political price".
Swan also highlight the impact of the floods and Cyclone Yasi on the Budget's bottom line, noting that recent natural disasters have cost the economy $9 billion in lost output and reduced GDP by half a percentage point over the last fiscal year.
When questioned how his Fourth Budget compares to that of his predecessor, former Treasurer Peter Costello, Swan said noted, "I've done a lot of things that Peter Costello has never done".
Industry experts share their thoughts on the implications for business
Peter Anderson, CEO, Australian Chamber of Commerce and Industry (ACCI)
"It’s a budget that will do the job in the short term, but in the medium-to-long term it relies too much on the good fortune of North Asia to boost Government revenues.The Government has not cut deeply enough into its spending to bring the budget back to surplus. The Government is still relying on China, Japan and Korea in particular purchasing our goods and commodities at high prices.
"On human resource issues the Government has excellent initiatives on workforce skills and there is a significant new investment in skills and training. For example their mentoring program for apprenticeships to help apprenticeship completions is good. There is also a new structure being established to allocate skills funding and that structure will be heavily driven by industry rather than education bureaucrats. That is a positive initiative because past experience tells us that Government has spent a lot of money on training over the last two decades, much of which has gone into the training system rather than into meeting actual skills deficit.
"Human resource practitioners know best where the skills gaps are in their businesses, and if they are closer to funding allocation then the likelihood is they will fix the skills shortage more quickly. This is a more industry driven approach to funding the skills shortages of Australia and that is a welcome move. For HR, it’s good on the skills side but there’s not much else to support business activity."
Heather Ridout, Chief Executive, Australian Industry Group
"This year's Federal Budget is solid on the fundamentals of skills, infrastructure and fiscal responsibility. These investments will ease capacity constraints in these tight economic times. However, more could have been done to reduce the risks associated with the lopsided economy by investing in innovation, business capabilities and exporting.
"The establishment of a National Workforce and Productivity Agency creates a new framework for national investment in skills based on a strengthened partnership between Government and business. Industry will have a major voice in this training system while being expected to shoulder its share of the responsibility. This new platform will better match economic needs to skills development in order to maximise return on investment in terms of skills enhancement, productivity and jobs. The Budget also lifts investment in workforce skills, literacy and apprenticeships.
"All up, this substantial package, which delivers a significant new investment over a sustained period, will stand Australia in good stead in the years ahead. Ai Group argued hard for this [1], and we are delighted to see the proposals included in the Budget.
The Budget is strong on infrastructure and delivers a significant boost despite the tight bottom line.
"The new investments in transport infrastructure, together with the improved resourcing and additional responsibilities for Infrastructure Australia, are big ticket items which will build capacity and productivity and improve governance. In addition, the improved tax treatment of losses for private infrastructure investors recognises that an ambitious vision for infrastructure for Australia depends on increased private sector involvement."
REVIEW: Key initiatives of the 2011 Federal Budget include:
- Getting the budget back in the black by 2012-2013
- $22 billion in savings outlined
- $558 million to deliver tailored, quality training places through the National Workforce Development Fund
- Ambitious reform of the vocational education and training system, with a further $1.75 billion on offer to partner with the States and Territories
- A range of measures to boost participation, by rewarding work, providing new opportunities through training, education and services, and introducing new requirements for some groups Infrastructure
$36 billion in investment in roads, rail and ports, including $1 billion in funding for the duplication of the Pacific Highway
- Removing tax impediments to infrastructure investment Better hospitals and health care
- Delivering on the commitment to provide at least $16.4 billion in additional hospital growth funding guaranteed to the states from 2014¬15
- $2.2 billion over five years delivering on national mental health reform
- $717 million to expand access to diagnostic imaging services and make medicines more affordable
- $53 million to improve access to public dental services, particularly for people on low incomes Making every school a great school
- $425 million to reward Top performing teachers
- $200 million to support school students with disability
- $222 million to extend the National School Chaplaincy program Helping families and low income earners
- Bringing forward up to $300 per year of the Low Income Tax Offset into pay packets
- Increasing the Family Tax Benefit Part A for teenagers by up to $4,208 per year, with more flexible access arrangements
- Maximum pensions are $128 per fortnight higher for singles and $116 for couples since pension reforms began in September 2009
- Investing in our regions and our businesses
- Delivering for our regions, with $4.3 billion in investments in regional hospitals, health care, universities and roads
- Supporting small businesses, through tax relief and simplification
- Linking Australian suppliers and manufacturers to opportunities in the resources sector through the Buy Australian at Home and Abroad package
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