2015 Federal Budget: Deficits less important, apparently
The 2015 Federal Budget provides expectations (better than ‘expected’!) of another $76 billion in deficits over the two tax years 2015 and 2016, and we haven’t had a recession for 20+ years.
Despite bracket creep (higher tax on your growing income over time including with ‘inflation’) and greatly diminished negative gearing (given record-low interest rates) and still no surplus seems to be a remarkable position to be in.
You would think as tax deductions have fallen for investors, especially property investors who intended to have a strategy of negative gearing but have positive gearing because interest costs are so low, that all these ‘compromised’ gearing strategies would mean higher tax revenue for the government, guaranteeing a surplus. But it not to be! And at the same time the benefit to the Budget of people earning higher incomes and paying higher proportions of their income at higher marginal rates of tax, is being handed back in welfare, double-dipped parental leave, and other generous hand-outs to people who don’t need it as well as those who do. At some point, welfare should be given only to those who need it.
There are decisions in this Budget, delayed decisions and non-decisions which pro-actively cause the deficit to be higher than it needs to be, apparently for political posturing. Double-dipping on Parental Leave Pay, for example, continues unabated until 30 June 2016 (where people getting employer support, can also still qualify for government support, amazingly). Welfare goes unevenly to people who do and don’t need it, and taxpayers via our Governments are going further into debt to fund this madness, and the children bred of this welfare might need to pay it back in future in a Greece-style bail-out of a debt-laden Australia.