2014 Australian federal budget

 () Australian federal budget 2014–15
Submitted 13 May 2014
Submitted by Abbott Government
Submitted to House of Representatives
Parliament 44th
Party Liberal/National Coalition
Treasurer Joe Hockey
Total revenue $385.8 billion[1]
Total expenditures $412.5 billion[1]
Deficit $29.8 billion[1]
Website www.budget.gov.au/2014-15/

‡Numbers in italics are projections.

The 2014 Australian federal budget was the federal budget to fund government services and operations for the 2014/15 financial year. The 2014 budget was the first delivered by the Abbott Government, since the Coalition's victory in the 2013 Australian federal election. Treasurer Joe Hockey presented the budget to the House of Representatives on 13 May 2014.[2]

The budget featured significant changes to address a perceived deficit crisis. This included a proposed dramatic downsizing of government bureaucracy, and contained significant changes to welfare, new initiatives for a medical research fund and spending on roads. A budget surplus was not expected until 2023.

The austere budget faced widespread criticism and was overwhelmingly rejected by the Australian public as reflected in all opinion polls after its release.[3][4][5] Opposition to "unfair" budget measures came from the opposition and cross-bench, pensioners, economists, the union movement, students and welfare, community and disability groups with some taking to the streets in protest. The budget included changes which were contrary to pre-election commitments and promises made by the Liberals in opposition.[6] Critics argue that every one of the following pre-election commitments made by Tony Abbott were broken in the first budget: "No cuts to education, no cuts to health, no change to pensions, no change to the GST and no cuts to the ABC or SBS."[7][8] Echos of the "dead and buried" Fightback! policy package from the 1993 election occurred with proposals to defer unemployment benefits for six months for under 30s and the removal of GP bulk billing. Most proposals have since been shelved, dumped or modified.

National Commission of Audit

The Abbott Government commissioned a National Commission of Audit in October 2013 to recommend measures to reduce government spending.[9] The Commission made 86 recommendations, including a slowing of increases in the age pension, an increase in the retirement age to 70 by 2035 and the inclusion of the family home in new means testing from 2027.[10] These Commission's recommendations were adopted in the budget.[11] Other controversial recommendations include copayments of Medicare bulk billing, besides other.

Forecasts

Before the budget's release Treasurer Joe Hockey signaled the budget would contain widespread spending cuts in response to what he described as an unsustainable growth in government expenditure.[12]

Deficit

In August 2013, in a budget update before the forthcoming federal election, the Australian Treasurer under the Second Rudd Government forecast a $30.1 billion deficit for 2013/14. In December 2013, the Australian Treasurer under the Abbott Government forecast a $47 billion deficit for the same period, due to the new government's decision not to implement savings and revenue measures put forward by the Rudd Government before the election, and an unexpected injection of $8 billion into the Reserve Bank.[13] The four-year forward estimates project a difference of $68 billion. More than half of that difference has been attributed to lower government revenue from taxation.[14] A surplus was projected for 2023/24.[15]

The budget forecast a deficit for 2014/15 of $29.8 billion.[1]

Revenue

Taxation

The budget introduced a "deficit levy" of 2% on personal incomes over $180,000,[16] which was expected to raise around $2.5 billion a year over its duration.[17] Legislation to impose the levy, called the Temporary Budget Repair Levy, was assented to on 25 June 2014,[18] and commenced on 1 July 2014 and will apply for three years.[19]

The corporate tax rate will decrease by 1.5% from 1 July 2015 to 28.5%.[16]

The National Commission of Audit recommended that the Family Tax Benefit Part B be abolished. It will now be means tested to a new threshold of $100,000.[20] Families will cease being eligible for the payment when their youngest child turns six.[21]

The indexation of the federal fuel excise was reintroduced.[17] The adjustment will be made twice a year and is expected to raise $3.7 billion in its first four years. Indexation had been abandoned in 2001.[17] The change took effect on 10 November 2014, increasing the base rate to 38.6 from 38.14¢ per litre.

Expenditure

In April 2014, Joe Hockey made it clear the budget would see a significant tightening of federal government expenditure which would be felt by all sectors of the community.[22] More than three quarters of the savings in the 2014 budget were the result of cuts to government spending.[23]

General government

A number of federal government services and approvals will increase in price and new fees will apply including some provided by Austrade and Geoscience Australia.[24] Funding for foreign aid is being frozen leading to a saving of $7.6 billion over five years.[6]

Federal politicians and public servants will have their salary frozen for one year. Post retirement benefits for federal politicians are being reigned in. This includes limitations on travel expenses, staffing arrangements and working entitlements.[25] 3,000 positions within the Australian Tax Office will be lost with thousands of staff retrenched from other major federal departments.[15] The Australian Workforce and Productivity Agency and the Australian Water Commission are to be abolished.[24] 76 government agencies will be abolished a small number merged or privatised.[26] These cutbacks are expected to save $500 million over four years.[27] The budget for the CSIRO was reduced by $146.8 million over four years.[28]

Social security and welfare

"The age of entitlement is over."

Speech by federal Treasurer Joe Hockey [29]

The Newstart Allowance for those seeking work will not be available to people under the age of 25. The unemployed under the age of 30 would not qualify for any payment for six months, after which the Work for the Dole program would be required. If after another six months there is no employment, the six-month cycle of off/on payment starts again.[16] The Schoolkids bonus is to be abolished. A Paid Parental Leave scheme is being introduced.[16] The Seniors Health Card will not be eligible to retired couples with more than $1.4 million in assets.[30] The indexation for pensions will be lowered from 2017 onwards, after it is linked to inflation rather than male average earnings.[31] New funding for the National Rental Affordability Scheme (NRAS) ceased on 1 July 2014 with funding for tenanted NRAS properties continuing.[32] The First Home Saver Accounts scheme will be abolished leading to savings of $134.3 million.[33]

Infrastructure, transport and energy

The budget allocated significant funding for road infrastructure in western Sydney, including for the WestConnex motorway and for roads to Badgerys Creek Airport [34] as well as significant funding for Melbourne's East West Link. There was also funding for two major road projects in South East Queensland – the final section of the upgrade of the Ipswich Motorway and the Toowoomba Second Range Crossing[35]

The budget slashed government support for renewable energy and climate change-related programs.[36]

Education

The budget proposed to strip $4.7 billion of funding from higher education over four years. On average, the Commonwealth's contribution to the funding of university degrees was to be cut by 20%.[37] From 2016, the interest rate charged on HECS debts, which had been linked to the consumer price index was to be charged at the same rate as government long-term borrowings.[38] HECS debts would have to be repaid once an individual's income reaches $50,638.[39] Universities were to be able to set their own fees for courses under a new deregulated fee system. Modelling conducted by Universities Australia indicates that the fee to study at an Australian university will on average double in cost.[40]

$245.3 million was to be spent on continuing the school chaplaincy program over four years.[41]

Defence

Before the budget was released the Abbott Government announced Australia's biggest ever military purchase of 58 Lockheed Martin F-35 Lightning II which are to be delivered in 2018.[42]

Health

A controversial $7 co-payment to see a bulk billing doctor, receive x-rays and get a blood test was proposed to save $3.4 billion over five years, however $5 of it will go toward medical research.[43] All 61 Medicare Locals—organisations established to plan and fund extra health services—are going to close.[6] The Senate blocked passage of the medical co-payment, but approved the establishment of the Medical Research Future Fund in August 2015, with funding to be found through reduced health spending and the Health and Hospitals Fund, until a balance of $20bn is reached in 2020.[44]

Community services and culture

Funding for the ABC and SBS is being cut by 1% leading to costs savings of $43.5 million.[45] This is despite repeated comments by the Abbott Government that funding to the ABC would not be cut.[45] The ABC's contract to operate the Australia Network was cancelled after its first year of a 10-year contract. The Australia Council for the Arts had its funding cut by around $30 million.[46] Screen Australia is losing $38 million over four years.[47]

More than 150 programs, grants and activities designed to assist Indigenous Australians are being replaced by five broad-based programs with cuts to funding of $534 million aimed at reducing duplication and waste.[48] The next three years of funding to the National Congress of Australia's First Peoples has been cancelled.[48] Money was allocated to a school truancy officer program, extra police in remote communities and Indigenous teenage sexual health programs.[49]

Rural communities are expected to benefit from the introduction of the Green Army. The Green Army aims to provide training and experience in the environmental and heritage conservation fields for the unemployed aged 17–24 years.[28] Funding for community Landcare grants has been reduced and replaced by the establishment of the National Landcare Program.[50]

Science

Commonwealth Scientific and Industrial Research Organisation is to see its budget cut by $AU114 million, forcing the closure of two historic radio telescopes.[51]

Opposition and crossbench response

Opposition leader Bill Shorten has expressed fierce opposition to the doctor co-payments, changes to the pension age and unemployment benefits as well as cuts to state funding and the fuel excise.[52] Both the ALP and the Australian Greens opposed the move to a deregulated fee structure for university degrees on the basis that the quality of education will likely shift towards a person's capacity to pay.[37] Jenny Macklin criticised changes to welfare for the unemployed saying that "The Prime Minister has completely deserted young Australians looking for work".[53] Clive Palmer dismissed the government's stated concern over sovereign debt claiming the budget was "based on lies".[54] Senator Nick Xenophon described the budget as "mean, nasty and dumb".[55] Independent MP Andrew Wilkie implored the opposition and crossbench MPs to go so far as to block supply in his opposition to the budget.[56]

Following the second rejection of the budget measures by the Senate, Abbott has been challenged by Opposition Leader Bill Shorten and Clive Palmer to act upon a double dissolution trigger and request Governor-General Peter Cosgrove to dissolve both houses of Parliament or bring in a mini-budget.[57]

Critical reception

Protestors at the 18 May 2014 anti-budget march in Melbourne.[58]

Even before the budget was delivered the Reserve Bank of Australia warned that a tightening of fiscal policy combined with a decline in resources construction projects would lead to an increase in the unemployment rate.[59] Economist Ben Phillips described the budget as "very regressive overall".[23] Economist Chris Richardson described the budget as the toughest since 1997. Welfare, community and disability groups rallied heavily against the budget.[60] It was criticised because it places a higher burden on low income earners compared to the more wealthy.[61] Analysis by ACOSS revealed the budget will hit low and middle-income households the hardest.[31] Further analysis by the Treasury indicated that the budget would have disproportionately negative impact on low income households compared to wealthier ones.[62] Chief Executive of the Council on the Ageing Ian Yates criticised changes to pension index arrangements claiming they would result in more pensioners falling below the poverty line.[63] ACOSS was also highly critical of the ceasation of payments for the first six months to unemployed people under 30. David Gonski criticised plans to limit school funding to CPI increases rather than a needs based funding model after 2017.[64] The Australian Education Union criticised funding for chaplains in school saying the money could be spent on students with disabilities.[41]

One of the strongest criticisms of the budget is that it breaks numerous pre-election promises.[6] In response to a loss in funding for hospitals and schools, premiers and chief ministers attended an emergency meeting in Sydney to discuss their response.[65] Post-budget polls revealed a large decline in support for the government, with the opposition opening up various leads on the primary and two-party vote, better prime minister, and net satisfaction ratings. It was recorded as the worst-received Australian federal budget in polling history.[4][5]

Following the March in March protests two months earlier, on 18 May 2014 "tens of thousands" marched in capital cities protesting against the budget.[66][67] A protest march organised by the Victorian Trades Hall Council attracted around 10,000 union members nearly a month after the budget was delivered.[68]

In July, 20,000 people were estimated to have marched in the "Bust the Budget" rally in Melbourne against the unfairness and inequity of the 2014 budget.[69] Concurrent marches were held in Sydney, Canberra and Newcastle and many other centres across the country.

Legacy

In September 2015, Hockey stated that the 2014 budget had resulted in a $3 billion windfall.[70] This was disputed by the ABC.[71]

See also

References

  1. 1 2 3 4 "Appendix A – Budget aggregates". 2014–15 Commonwealth Budget – Budget Overview. Commonwealth of Australia. Retrieved 15 May 2014.
  2. ↑ BUDGET SPEECH 2014‑15
  3. ↑ "Australians think Federal Budget 2014 is the worst in a very, very long time, according to this graphic". news.com.au (News Limited). 19 May 2014. Retrieved 6 July 2014.
  4. 1 2 John Howard 'took a big hit in the polls too' after first budget? Er, no Mr Abbott: SMH 19 May 2014
  5. 1 2 Daniel Piotrowski (19 May 2014). "Australians think Federal Budget 2014 is the worst in a very, very long time, according to this graphic". Herald Sun (News Ltd). Retrieved 19 May 2014.
  6. 1 2 3 4 "Then and now: the Abbott government's broken promises". The Sydney Morning Herald (Fairfax Media). 14 May 2014. Retrieved 14 May 2014.
  7. ↑ Tony Abbott promises no cuts to education, health and other areas on the eve of the 2013 federal election: ABC 12 August 2014
  8. ↑ David Uren (10 July 2014). "Senate kills all savings in budget". The Australian (News Limited). Retrieved 6 July 2014.
  9. ↑
  10. ↑ Emma Griffiths (2 May 2014). "Commission of Audit recommends cradle-to-grave cuts in report released by Federal Government". ABC News (Australian Broadcasting Corporation). Retrieved 9 May 2014.
  11. ↑ ABC news:
  12. ↑ Emma Griffiths (1 April 2014). "Federal budget: Joe Hockey warns of wide-ranging cuts, says all must do 'heavy lifting'". ABC News (Australian Broadcasting Corporation). Retrieved 9 May 2014.
  13. ↑ Tom Allard (26 October 2013). "Hockey has promises to keep in budget battle". Sydney Morning Herald. Retrieved 14 May 2014.
  14. ↑ "Has the Government doubled the budget deficit?". ABC News: FactCheck (Australian Broadcasting Corporation). 6 May 2014. Retrieved 10 May 2014.
  15. 1 2 David Crowe & David Uren (9 May 2014). "Joe Hockey to swing axe on public sector". The Australian (News Limited). Retrieved 9 May 2014.
  16. 1 2 3 4 "What we know so far about the Abbott government's 2014 federal budget". The Sydney Morning Herald (Fairfax Media). 12 May 2014. Retrieved 13 May 2014.
  17. 1 2 3 Mark Kenny (8 May 2014). "Budget's petrol shock will leave voters fuming". Brisbane Times (Fairfax Media). Retrieved 9 May 2014.
  18. ↑
  19. ↑ ATO: Temporary Budget Repair Levy
  20. ↑ Patricia Karvelas (13 May 2014). "PM spares family tax benefits". The Australian (News Limited). Retrieved 18 May 2014.
  21. ↑ Penny McLintock (14 May 2014). "Budget 2014: Family Tax Benefit cuts worth billions to hit families". ABC News (Australian Broadcasting Corporation). Retrieved 18 May 2014.
  22. ↑ Mark Kenny (23 April 2014). "'Nothing is free': Joe Hockey warns of budget pain, with pensions in the firing line". The Sydney Morning Herald (Fairfax Media). Retrieved 11 May 2014.
  23. 1 2 Gareth Hutchens (14 May 2014). "Abbott government budget will hurt the poor". Brisbane Times (Fairfax Media). Retrieved 19 May 2014.
  24. 1 2 David Crowe & David Uren (10 May 2014). "Cuts to $10bn business welfare". The Australian (News Limited). Retrieved 10 May 2014.
  25. ↑ Lisa Cornish (14 May 2014). "Entitlements for politicians on the budget chopping block". news.com.au (News Limited). Retrieved 23 May 2014.
  26. ↑ James Glenday (12 May 2014). "Budget 2014: Axe to fall on government agencies in search for savings". ABC News (Australian Broadcasting Corporation). Retrieved 12 May 2014.
  27. ↑ Simon Benson (12 May 2014). "Bloated bureaucracy faces Tony Abbott’s razor in this week’s Budget". news.com.au (News Limited). Retrieved 12 May 2014.
  28. 1 2 Tony Allan (13 May 2014). "Landcare and research cuts in Budget". ABC Rural (Australian Broadcasting Corporation). Retrieved 18 May 2014.
  29. ↑ "The End Of The Age Of Entitlement" (PDF). Address To The Institute Of Economic Affairs London. Joe Hockey. 17 April 2012. Retrieved 11 May 2014.
  30. ↑ "Retirees rush to beat budget sting". The Australian Financial Review (Fairfax Media Publications). 18 May 2014. Retrieved 19 May 2014.
  31. 1 2 Emma Griffiths (23 May 2014). "Billions in budget cuts may 'destroy' social safety net, ACOSS warns". ABC News (Australian Broadcasting Corporation). Retrieved 23 May 2014.
  32. ↑ "National Rental Affordability Scheme". Australian Taxation Office. 20 June 2014. Retrieved 5 July 2014.
  33. ↑ Lexi Metherell (15 May 2014). "Budget 2014: First home buyers savings scheme axed, funds released to account holders". ABC News (Australian Broadcasting Corporation). Retrieved 5 July 2014.
  34. ↑ Andrew Clennell (14 May 2014). "Western Sydney: The Budget paves the road to progress". news.com.au (News Limited). Retrieved 24 May 2014.
  35. ↑ Tony Moore (9 May 2014). "Budget provides $280 million for final section of Ipswich Motorway". Brisbane Times (Fairfax Media). Retrieved 10 May 2014.
  36. ↑ Peter Hannam & Lisa Cox (14 May 2014). "Tony Abbott's 'extreme' climate stance sets back policy decades, critics say". The Sydney Morning Herald (Fairfax Media). Retrieved 14 May 2014.
  37. 1 2 Daniel Hurst (16 May 2014). "Massive uni fees: higher interest rate will hit poorer students, Greens say". theguardian.com (Guardian News and Media). Retrieved 24 May 2014.
  38. ↑ "Uni fee hikes a hard sell for Pyne". Australian Financial Review (Fairfax Media Publications). 17 May 2014. Retrieved 17 May 2014.
  39. ↑ Matthew Knott (16 May 2014). "Environmental studies fees to rise 112 per cent". Brisbane Times (Fairfax Media). Retrieved 17 May 2014.
  40. ↑ Emma Alberici (4 June 2014). "Universities Australia modelling warns of fee increase under proposed higher education reforms". ABC News (Australian Broadcasting Corporation). Retrieved 4 June 2014.
  41. 1 2 Daniella Miletic (14 May 2014). "Education union blasts $245m budget funding for school chaplains". The Sydney Morning Herald (Fairfax Media). Retrieved 24 May 2014.
  42. ↑ David Wroe & Mark Kenny (22 April 2014). "Australia to buy 58 Joint Strike Fighters". The Sydney Morning Herald (Fairfax Media). Retrieved 18 May 2014.
  43. ↑ Allyson Horn (14 May 2014). "Budget 2014: GP co-payment, family tax benefit changes to hit Townsville family hard". ABC News (Australian Broadcasting Corporation). Retrieved 14 May 2014.
  44. ↑ Medical Research Future Fund finally gets Senate approval; The Australian; August 13, 2015
  45. 1 2 Lexi Metherell and staff (14 May 2014). "Budget 2014: ABC, SBS funding cut, Australia Network contract cancelled". ABC News (Australian Broadcasting Corporation). Retrieved 23 May 2014.
  46. ↑ "Arts funding narrowly escaped further budget cuts, Prime Minister Tony Abbott says". ABC News (Australian Broadcasting Corporation). 24 May 2014. Retrieved 24 May 2014.
  47. ↑ Michael Bodey (13 May 2014). "Everything under review as Screen Australia hit by $38 million in cuts". The Australian (News Limited). Retrieved 24 May 2014.
  48. 1 2 Michael Coggan (16 May 2014). "Budget 2014: $534 million cut to Indigenous programs". ABC News (Australian Broadcasting Corporation). Retrieved 24 May 2014.
  49. ↑ Joanne Shoebridge (22 May 2014). "Budget: Indigenous Australians among hardest hit". ABC North Coast NSW (Australian Broadcasting Corporation). Retrieved 24 May 2014.
  50. ↑ Anna Vidot (13 May 2014). "Questions still to be answered on Landcare's future". ABC Rural (Australian Broadcasting Corporation). Retrieved 18 May 2014.
  51. ↑ Chirgwin, Richard (28 July 2014). "Famous 'Dish' radio telescope to be emptied in budget crisis: CSIRO". www.theregister.co.uk (The Register). Retrieved 27 July 2014.
  52. ↑ "Federal Budget gives Labor backs its voice says Bill Shorten". news.com.au (News Limited). 18 May 2014. Retrieved 18 May 2014.
  53. ↑ Patricia Karvelas (15 May 2014). "Needy spared dole blitz, others must earn or learn". The Australian (News Limited). Retrieved 18 May 2014.
  54. ↑ Tony Jones (14 May 2014). "PUP concerned about pensioners, public servants and ABC". Lateline (Australian Broadcasting Corporation). Retrieved 17 May 2014.
  55. ↑ Lenore Taylor (29 May 2014). "Tony Abbott begins meeting crossbench senators but not Clive Palmer". theguardian.com (Guardian News and Media). Retrieved 30 May 2014.
  56. ↑ Lisa Cox (4 June 2014). "Independent MP Andrew Wilkie calls on fellow members to block supply over 'miserable' budget". Brisbane Times (Fairfax Media). Retrieved 4 June 2014.
  57. ↑ James Massoula (31 July 2014). "Clive Palmer hits out at "failed" budget, calls for double dissolution". Sydney Morning Herald. Retrieved July 31, 2014.
  58. ↑ Zielinski, Caroline: "10,000 gather in the CBD to protest budget cuts", in The Age, 19 May 2014
  59. ↑ Michael Pascoe (9 May 2014). "Budget threatens to increase unemployment". BusinessDay (Fairfax Media). Retrieved 11 May 2014.
  60. ↑ Fair go gone with welfare budget cuts: SBS 13 May 2014
  61. ↑ Peter Martin (19 May 2014). "'Missing' figures show poor are hit". The Sydney Morning Herald (Fairfax Media). Retrieved 19 May 2014.
  62. ↑ Tom Allard, Peter Martin (3 August 2014). "Budget cuts hit lowest-income earners hardest, says Treasury". Goulburn Post (Fairfax Media). Retrieved 3 August 2014.
  63. ↑ James Massola, Marija Taflaga (13 May 2014). "Federal budget 2014: Labor says budget built on Tony Abbott's 'act of mass deceit at last election'". The Sydney Morning Herald (Fairfax Media). Retrieved 12 June 2014.
  64. ↑ Tim Dodd (21 May 2014). "Gonski attacks budget education cuts". The Australian Financial Review (Fairfax Media Publications). Retrieved 23 May 2014.
  65. ↑ "Baird to host crisis budget talks". skynews.com.au (Australian News Channel). 17 May 2014. Retrieved 17 May 2014.
  66. ↑ McCallum, N. and Cherebedova, M.: "Tens of thousands demonstrate for March in May", 9 News, 18 May 2014
  67. ↑ "March in May rallies: Thousands gather to protest against federal budget", ABC, 19 May 2014
  68. ↑ "Union members protest against 'unjust' budget cuts in Melbourne CBD march". ABC News (Australian Broadcasting Corporation). 12 June 2014. Retrieved 12 June 2014.
  69. ↑ "Bust the Budget Rally",Sydney Morning Herald 07 Jul 2014 retrieved 17 Sep 2014 http://www.smh.com.au/photogallery/federal-politics/bust-the-budget-rally-20140706-3bgd3.html
  70. ↑ http://www.theguardian.com/business/2015/sep/17/joe-hockey-says-bottom-line-of-first-budget-3bn-better-than-expected
  71. ↑ http://www.abc.net.au/news/2015-09-23/jericho-inequality-will-cast-a-shadow-over-hockeys-legacy/6797136

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