Federal Budget 2015: David Koch examines the pros and cons

AFTER last year’s disaster, this Budget was solely designed to get you thinking glass half full rather than half empty. Has it delivered? David Koch takes a look.

AFTER the disaster of last year, this current budget was solely designed to get you and your boss out of the bunker.

To think glass half full rather than half empty … to get Australians spending and their boss investing.

So, has it delivered?

Is there enough to change you from being scared of the future to being optimistic enough to lash out and spend to stimulate the economy?

Here’s both sides of the argument to help you make your mind up.

Company tax cuts ... Steve Sondergeld is pleased with the proposed savings for his business. Picture: Brendan Radke

GLASS HALF FULL

— This is a boss’ budget. It is arguably the best Federal Budget in a generation for small business (with revenue under $2 million a year). A 1.5 per cent company tax cut (and 5 per cent tax discount for unincorporated businesses) plus the ability to immediately deduct any purchase worth less than $20,000 is an absolute bonanza. Bosses should be happy and more inclined to invest, grow and hire more staff.

— No recession anytime soon. The economy is entering its 25th consecutive year of positive economic growth which is now the second longest continuous period of growth of any advanced economy in the world … and will keep growing for the next 3 years at least.

— Your job is looking more secure. Unemployment will peak at 6.5 per cent in the next financial year and then start to drop to 5.75 per cent in 2018.

— Inflation remains low so your household budget will stay under control. Retailers will find it hard to lift prices so the almost continuous “sales” campaigns at the shop will stay and you should never pay retail … always bargain.

— Extra help for childcare costs plus better aged pension conditions for those who still qualify will make a significant difference to average Australian households.

— I know it’s hard to believe but the Federal Budget cuts from previous years are reaping bigger gains than previously expected. As a result the Budget Deficit will keep falling by about $10 billion a year.

Helping hand ... Extra help for childcare costs will make a significant difference to average Australian households. Pic: Thinkstock

GLASS HALF EMPTY

— Big business gets nothing and that’s where the big investment dollars come from. The incentives for small business are great but big business building big mines is where the big dollars are generated. Those big miners are suffering from lower commodity prices and cutting costs … that isn’t going to change for a while.

— China is still our economic dark cloud. As our biggest trading partner, China underpins our economy. The Chinese economy is slowing despite the US and Europe looking a bit healthier. The Budget forecast doesn’t expect this to change.

Gloomy forecast ... China is still our economic dark cloud.

— No recession but economic growth will be below the long term average … staying under 3 per cent this year and next year.

— Unemployment still has a little further rise in the next year before reaching its peak. So still keep in the boss’ good books.

— There will be no big pay rises. Wages are expected to rise in line with inflation over the next year, only slightly above CPI for the following 2 years and it’s only in 2018 where we can expect a decent pay rise.

— The Budget assumes this year’s policies, and last year’s, will all get through the Senate.

Bottom line is that this Government was elected based on a fear campaign around claims of a “budget crisis” and “economic emergency”. Neither was accurate. We’re still one of the few countries in the world with a Triple-A credit rating from all major international ratings agencies.

This Government drove us into our bunker mentality and now they’re trying to pull us out of it. In the overall scheme of things there really isn’t a lot to fear for most Aussies, we are living through a privileged era.

Hopefully this Budget can pull us out of our funk.

Originally published as Federal Budget 2015: David Koch examines the pros and cons