Child welfare, industry groups slam budget review

22 Oct 2012, 9:04 pm   -   Source: SBS staff with AAP
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Child welfare and industry groups are among the ones who have criticised the federal government's half-yearly budget review, announced today by Treasurer Wayne Swan.

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Child welfare and industry groups are among the ones who have criticised the federal government's half-yearly budget review, announced today by Treasurer Wayne Swan.

Treasurer Swan announced on Monday an extra $16.4 billion of budget savings over the next four years to keep its promised surpluses largely intact, after a troubled global economy took a further toll on tax receipts.

A national body for child welfare says government plans to reduce the baby bonus payment will make life much tougher for some of the most vulnerable groups in Australia.

As part of the mid-year budget review, Treasurer Wayne Swan said the baby bonus will be reduced $5000 to $3000 for second and subsequent children from mid-2013.

The chief executive of the Association of Children's Welfare Agencies, Andrew McCallum, told SBS Radio the government is going too far in trying to achieve a budget surplus.

"Stop trying to bring in a surplus that is not necessary. We can in Australia actually cope with a bit of a deficit.

"Most of the business community is saying we can cope with a bit of a deficit. So just for the sake of saving face, stop attacking some of the most vulnerable families in our community," he said.

Business groups were unhappy about the surprise announcement that companies will progressively shift to remitting taxes to the government each month, instead of quarterly, starting from 2014.

This will deliver a revenue gain of $8.3 billion over four years and make the system "more accurate, more timely and more clear", Mr Swan said. "It's not an increase in tax. It's simply a change in the timing of it."

But the Australian Chamber of Commerce and Industry saw this as business having to do the "heavy lifting" again to get the budget back to surplus.

The chamber's director of economics and industry policy, Greg Evans, told reporters this came as a "double blow", after business missed out on a tax cut in the May budget.

The Tax Institute's tax counsel Deepti Paton said the change would result in an artificial spike in revenue and deliver minimal long-term benefits.

"Such tinkering is a missed opportunity for real, necessary tax reform," Ms Paton said in a statement.

"For some businesses, the measure will increase compliance costs and cause cash-flow difficulties in an already difficult economic environment."

Mr Swan also announced further changes to the private health insurance rebate and increased visa application costs.

Mr Swan's mid-year budget review predicts a $1.1 billion surplus in 2012/13, down from the $1.5 billion surplus forecast in the May budget.

But it would still be a massive turnaround from a final $43.7 billion deficit for 2011/12.

The economic growth forecast for this financial year in the mid-year economic and fiscal outlook (MYEFO) was also marked down to three per cent, from the 3.25 per cent trend pace previously.

"It's pretty obvious to all that ... this mid-year review has been put together amid storm clouds which are hanging over the global economy," Mr Swan told reporters in Canberra.

"This lower global growth outlook has had another very big whack at government tax revenues and has made it harder to deliver a surplus."

"Our savings send a very clear message to the world that we have world-beating public finances," Mr Swan said.

"That is very important given global economic uncertainty."

Economists expect the MYEFO outcome will put a greater onus on the Reserve Bank of Australia (RBA) to lower interest rates to underpin economic growth.

Opposition Leader Tony Abbott said all the "incredible shrinking budget surplus" showed was that Labor's economic management was a failure.

"This is a government that will never, ever deliver an honest budget surplus," Mr Abbott told reporters in Canberra. Institute of Chartered Accountants Australia head of leadership Yasser El-Ansary said the budget forward estimates for revenue collections were probably still too optimistic.

"In early 2013, the government's razor gang is probably going to have to do some more work on spending cuts and tax increases if they want to deliver a budget surplus," Mr El-Ansary said in a statement.

Wayne Swan , Budget Review , Federal Budget

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