Australian Federal Budget 2014: Treasurer Joe Hockey’s cash grab to be funded by public spending cuts

COMMITMENTS to world-beating health research and giant road networks will be funded by big cuts in public spending under the Federal Budget.

COMMITMENTS to world-beating health research and giant urban road networks will be funded by cash taken from families, and big cuts in public spending under the Federal Budget released last night.

Seeing the doctor for a treatment or check-up — even a blood test — will be more expensive, as will driving the family car to work, the shops or sports.

From 12.30pm, Australia’s most trusted personal finance commentator David Koch will be here to answer questions on how the Budget will affect households.

But huge urban transport projects and other public works calculated to add one per cent to national output, and massive research into killer diseases, will be paid for by the proceeds.

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And the Government promises to bring in tax cuts when the Budget is in balance, but can’t say when.

But it believes it can reduce its spending from 26.5 per cent of national output recorded under the Labor administration to 24.4 per cent by 2023-24.

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These changes will be permanent. Other sacrifices will quickly end.

Some 300,000 people earning more than $180,000 a year will pay a Temporary Budget Repair Levy of two per cent. The tax increase will expire after three years.

Treasurer Joe Hockey last night almost acknowledged the Government was going back on election promises on taxes and the age pension — but pleaded it had no choice.

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“We were not prepared to stand idly by while a fire was starting in the house,” Mr Hockey said of dangerous levels of debt for which the Government blames Labor.

“The former treasurer (Labor’s Wayne Swan) says everything would have been fine, no worry, no problem here,” he told reporters.

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“If we accepted that the pain that we would be inflicting on our children and the generations beyond would be awful. And we weren’t prepared to stand idylly by.”

Mr Hockey said a lot of the changes were structured — meaning they would make programs more sustainable in the longer term.

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From July next year, all Australians will pay extra to see a GP with the imposition of a $7 co-payment. The Medicare rebate will be cut by $5 and doctors are expected to pass this on to both bulk-billed and full paying patients.

The measure will also make it more expense to get blood tests and X-rays.

The public dental scheme has lost $390 million and $5 will be added to the cost of filling out a prescription.

Public hospitals will lose $2 billion as part of a savage pruning set to collect $10 billion from health.

The Budget also reintroduces the indexation of petrol excise, which has been frozen since 2001. This will also increase travel expenses for many families and push up the prices of some goods which arrive by truck.

The income threshold for Family Tax Benefit B will drop from $150,000 a year to $100,000. Households on Family Tax Benefit A will start losing benefits from income $$94,316.

From September 2017 — after the next election — the indexation of the age pension will be based on the inflation rate and not wage rises. This means increases will be lower than under the current system.

From next year, unemployed people aged under 25 will not receive the dole. They will receive the lower Youth Allowance instead as they look for work.

The jobless aged under 30 will have to wait six months before getting benefits and will have to join Work for the Dole projects after that.

Some $845 million in industry assistance will be wiped but 800,000 businesses will benefit from a 1.5 per cent cut in company tax.

However, the biggest businesses will have to pay a levy to cover Prime Minister Tony Abbott’s Paid Parental Leave scheme which gives mothers up to $50,000 to spend six months with their newborns.

The Government wants to establish to massive spending programs from the savings.

The money from the medical co-payment will be used to cream a $20 billion Medical Research Future Fund which Treasurer Joe Hockey believes would be the biggest in the world — bigger than the Bill Gates fund.

“As a result, it may be an Australian who discovers better treatments and even cures for dementia, Alzheimer’s, heart disease or cancer,” the Treasurer told Parliament.

The research fund will have another use. While the Government will not be able to use it for other purposes its money will be taken off the Budget bottom line and thus reduce the deficit figures.

The increased petrol excise revenue will go to road construction. The Government wants to create a Growth Package — intended to help finance some $125 billion in roads and other public works with states and private companies. The fund would be worth $50 billion by the end of the decade.

The objective is to divert Government funds into building things.

“It is about spending on consumption so we can keep making decent, compassionate choices in the future,” said Mr Hockey.

The Government believes it can reach its target without increasing taes. That means widespread spending cuts in areas as diverse as the ABC — to lose $43.5 million over four years — to ending a $2.9 million anti-smoking campaign. The public broadcaster will also lose $197 million when the Government shuts down the Australia Network which the ABC operates overseas.

The biggest single cut is $7.9 billion over four years taken from foreign aid.

Some areas are immune from spending hacks.

The Government will spend close to $300 million on royal commissions over three years — one into child abuse, one into trades unions, and one into the former Labor government’s home insulation scheme.

Originally published as Australian Federal Budget 2014: Treasurer Joe Hockey’s cash grab to be funded by public spending cuts