Budget season

Victoria and the ACT sorry.

http://www.theaustralian.news.com.au/story/0,25197,23654414-2702,00.html


ACT to spend $1.5bn on infrastructure
Sid Marris | May 06, 2008

A $1.5 billion infrastructure spend on upgrading health services, roads, parks and forests and water supplies is the centrepiece of ACT Labor's pre-election budget.

Two years after a controversial restructure of the territory’s finances raised taxes and cut costs, Chief Minister Jon Stanhope today outlined a mixof big capital spending and modest tax relief.

New hospitals, clinics and specialist services are the biggest part of the spending.

On the tax side, pensioners who sell their family home to move into a smaller one will no longer have to pay stamp duty.

The capital injection is primarily funded out of savings from past surpluses and the ACT will remain in the black over the coming four years, starting with an $84.9 million surplus in 2008-9.

Net debt will rise, but the ACT Government is banking that the capital injection will help the territory stave off a "presumed significant contraction" from Commonwealth budget cuts and the effects of rising interest rates.

Mr Stanhope also said planned federal budget cuts would inject $300 million to-$400 million of extra money into the pockets of a population that was "reasonably well paid and well off" by national standards.

Canberrans go to the polls in October but Mr Stanhope denied that the budget was pork-barrelling for the election.

"This is a budget that equips this community for the future – from a government that is ready for the future; a government that is experienced, that is equipped to deliver. That has delivered and will continue to do so," the chief minister said.

"Budgets often deal with the year ahead – at most with the few years of an electoral cycle. That’s not how this government thinks. It is not how this government acts."

Overall the ACT government has committed $1 billion under its Building the Future Program, along with $500 million in water infrastructure already announced as well as other programs adding up to $2.3 billion in capital spending.

A women and childrens’ hospital, new mental health facilities and nurse driven community health centres will take up $300 million of money. Another $700 million over 10 years, not included in today’s figures, is also under consideration.

There will be multiple road duplications around Canberra’s bottlenecks, along with bus and parking interchanges in a $250 million strategy that the ACT government says will cut greenhouse gas emissions by relieving congestion.

An additional $100 million, bringing to a total of $250 million, will be spent on climate change strategies, including $30 million of tree plantings, which Mr Stanhope insists still offers the best value for money in carbon abatement at $12 a tonne.

The budget also includes $50 million for attracting skilled workers and training locals with the chief minister nomination the shortage of labour as "the greatest constraint to economic growth in the territory".

Tax relief includes lifting the threshold for payroll tax by 20 per cent, removing stamp duty on house purchases by pensioners who are looking to move into a smaller home, a lift in the threshold for the first home-owners grants.

Most of the past tax increases, chiefly property rates and fire levy on commercial properties, remain.

Mr Stanhope said that without that past pain, the budget would have been in deficit even without the spending outlined today.

"It would have been reckless for us not to position the territory to restructure the health system," he said.

The $1 billion "building the future" program is funded by savings from previous budgets, $700 million, and future revenue, $300 million.

The heightening of Canberra’s main dam wall by the local utility, ACTEW, will be funded by $500 worth of borrowing.

The borrowing takes ACT debt to $1.23 billion, or 36 per cent of annual revenue.

Talking about budgets... here is an excerpt from last years (2007-2008) federal budget;

State general government sector fiscal balance
http://www.budget.gov.au/2007-08/bp3/html/bp3_main-06.htm

The aggregate state fiscal balance for the general government sector is estimated to be in deficit by 0.4 per cent of GDP in 2007-08 (Chart 8). Given the aggregate state operating balance is expected to be a small surplus in 2007-08, the aggregate state fiscal deficit arises from the funding of capital expenditure. The aggregate fiscal balance is expected to be in deficit over the forward years. Western Australia is the only State expected to have a fiscal surplus in 2007-08 and in the forward years, reflecting its large operating surpluses.

Chart 8: Individual state general government sector fiscal balance(a)



(a) States' net operating balances are expressed as a percentage of Gross State Product (GSP) (left hand axis) and the States' aggregate net operating balance is expressed as a percentage of Gross Domestic Product (GDP) (right hand axis).
Sources: ABS cat. no. 5512.0, State 2006-07 mid-year reports, Northern Territory and Victoria 2007-08 Budgets and Treasury estimates.


The fiscal balance measures, in accrual terms, the gap between government savings plus net capital transfers, and investment in non-financial assets. A fiscal surplus indicates that a government is lending to other sectors. A fiscal deficit indicates that a government is borrowing.

Trends in the aggregate fiscal balance for the State/local general government, public non-financial corporations and non-financial public sectors are presented in Tables 1, 2 and 3 of Statement 12 in Budget Paper No. 1.


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I guess WA really is benifitting greatly from the resources boom. I can see why the GST share for WA has been reduced.

Building WA
The 2008-09 State Budget is about building WA, with a massive investment in economic and social infrastructure.

• Record Capital Works Program for 2008-09 of $7.6 billion, including:
  - $1.2 billion on electricity infrastructure to meet the needs of our rapidly growing economy, including commencement of over 500km of new transmission lines;
  - $1.1 billion on water infrastructure, including commencement of the $955 million Southern Seawater Desalination Plant;
  - $810 million on roads;
  - $502 million on hospitals and other health facilities;
  - $377 million on ports to expand export capacity; and
  - $347 million on schools and TAFE colleges.
• Massive $26.1 billion Capital Works Program over the next four years, including:
  - New major stadium at Kitchener Park;
  - New museum on the former East Perth power station site; and
  - Perth Waterfront development.

Priority Services

• Health up $247 million (5.8%), with increased spending on mental health, better pay for nurses, and initiatives to address emergency department demand.
• Law and order up $138 million (8.3%), with improved pay for police officers, and Crime Regional Response Teams to investigate serious cases of child abuse and other issues facing Indigenous communities.
• Education and training up $135 million (3.9%), with improved wages and conditions for teachers, and additional places for apprentices and trainees.
• Child protection up $48 million (16.5%), with additional caseworkers and implementation of mandatory reporting of child sexual abuse.

Tax Cuts – Fifth Year In A Row

• Building on previous rounds of tax relief, the 2008 09 State Budget provides tax cuts of $1.2 billion over the next four years.
• Stamp duty on the purchase of a median-priced house cut by 15% or nearly $3,000 from 1 July 2008, to assist housing affordability.
• Further land tax relief and payroll tax reform, and a bring-forward of the motor vehicle stamp duty cut announced in last year’s budget (to 1 July 2008).

Responsible Management

• Eighth consecutive balanced budget.
• Using the surplus to provide infrastructure such as the new $1.76 billion Fiona Stanley Hospital, which will be built debt-free.
• No increase in household electricity charges in 2008 09, with the overall increase in household fees and charges (2.4%) below inflation.
• Economy to continue growing strongly, with a third consecutive year of above 6% growth forecast for 2008-09.

http://www.dtf.wa.gov.au/cms/bud_index.asp

Stamp duty cuts, $2b surplus in WA Budget
http://www.news.com.au/perthnow/story/0,21598,23665553-2761,00.html
By chief political reporter JOE SPAGNOLO
May 08, 2008 12:15pm


REVENUE from the mining boom has allowed the State Government to bring relief to home buyers while announcing a $2 billion surplus in yesterday's Budget.

Treasurer Eric Ripper announced that people buying an average priced home of $457,000 will save $3000 in stamp duty charges – a fall of 15 per cent.

In his eighth Budget, Treasurer Eric Ripper also delivered on his promise to spend big on infrastructure, although most of the big projects have already been announced or are well underway.

The Opposition reacted by accusing Mr Ripper of squandering the State's golden years, pointing out that Budget surpluses would dwindle to a mere $200 million over the next four years, while State debt grew by $8 billion.

Stamp duty cut

The cuts to stamp duty on housing are estimated to be worth $487 million to home buyers collectively over four years.

For a median Perth home priced at $457,000, the transfer duty payable will fall by 15.2 per cent from $18,550 to $15,722.

The existing first homebuyer concessions - exempting buys under $500,000 - will remain.

From July 1 the land exemption threshold will be increased from $50,000 to $300,000.

Mr Ripper said the measures made an important contribution in the battle to make housing more affordable.

However, someone buying an average priced home in WA will still fork out more than $15,000 in stamp duty - as the table at right shows.

The Property Council of WA immediately applauded the changes, saying the Budget was a "seven out of 10'' for the property market. But it added that the changes were long overdue.

The executive director of the property council of Australia, Joe Lenzo, said the tax savings would improve housing affordability and provide incentives for much needed investment in rental properties.

"The 15 per cent stamp duty savings for owner occupiers will help households who are struggling to buy a home," he said.

"Property investors will also recognise the reduction in stamp duty and land tax contained in the budget."

Record infrastructure spend

There will be a record infrastructure programme of $7.6 billion in 2008-09 and $26.1 billion will be spent over four years.

The biggest capital works project is the Fiona Stanley Hospital which the government says will cost $1.76 billion.

Other major projects include the previously announced $1.07 billion outdoor stadium at Subiaco and the $506 million new museum at East Perth and $319 million for the first stage of the Esplanade foreshore redevelopment.

As announced a few weeks ago, household charges will on average go up 2.4 per cent – below the inflation rate of 3.4 per cent.

And the government has committed more than $700 million in its forward estimates to bail out Verve Energy – a bill that could reach $1 billion.

Premier Alan Carpenter said WA’s record building and infrastructure programme would help sustain the State’s economic growth while continuing to contain debt.

"By re-investing every cent of the $1.855 billion surplus from the Budget to build our State, we are ensuring that everyone is benefiting from our strong economy and that we sustain growth for as long as possible while helping contain our debt,’’ Mr Carpenter said.

Business unhappy

The government announced that commonly owned family businesses that operate independently of each other will be able to claim an exemption threshold on payroll tax, but it did not cut payroll taxes across the board.

The WA Chamber of Commerce and Industry savaged the Budget, saying State Government spending was out of control.

The chamber reacted angrily to figures released by Mr Ripper which showed the State’s net debt was projected to reach $11.4 billion by 2012, up from $3 billion in 2007.

A spokesman for the chamber called for an urgent review of public sector spending.


Surplus more than $2 billion

Mr Ripper has warned that the days of multi-billion dollar surpluses will soon be over.

The surplus of this year is projected to be $2.093 billion but that is expected to fall to $1.855 billion next year as the economy slows.

The surplus is expected to fall to $203 million in four years time.

Recurrent spending will grow by 7.7 per cent next financial year – up from $16.7 billion in 2007-08 to $18 billion in 2008-09.

The State Government will reap a 5.5 per cent increase in revenue next financial year.

It is expected that revenue will go up from $18.8 billion in 2007-8 to $19.9 billion next financial year.
Mining revenue is forecast to grow at 34 per cent in 2008-09.

Opposition slams 'wasted opportunity'

The Opposition has accused the State Government of squandering WA’s golden years, saying future projects will now have to be paid for by borrowngs instead of from money in the bank.

Shadow treasurer Steve Thomas has jumped on figures which show WA’s run of $2 billion plus surpluses would be a thing of the past in five years time, dwindling to $203 million.

He also jumped on figures which showed debt levels would rise from $3 billion in 2007 to $11 billion by 2012.

Mr Thomas said massive projects like the $1 billion outdoor stadium would now be built during years when the boom was all but over.

"You are going to have massive reductions in spare money to build some of these projects,’’ Mr Thomas said.

"Obviously you are going to have to pay for that out of debt which will increase significantly and obviously the next generation will have to pay that debt.’’

Mr Thomas said stamp duty charges were still too high.

The fact that West Australians would pay $17,000 in stamp duty for an average home instead of $20,000 was little solace for home buyers, he said.

"You have to realise that the average price of a house when the Gallop Government came to power was $187,000 and stamp duty on that was $5,500,’’ Mr Thomas said.

"The current stamp duty on the average house is now $20,000.

"And he (Treasurer Eric Ripper) has dropped that back to just $17,000.

"It is still a massive amount.

"It is certainly not a budget that has delivered great tax cuts.’’

Minnesota Twin said:

You predicting a return to the 1980s (Cain/Kirner, Bannon, Burke/Lawrence, etc.) type debacles, Mr Tall?

Click to expand...

Indeed.

More "pull the wool over everyone's eyes" antics form Krudd and Co. Make it seem like you are doing something, even if you're not actually doing anything.

This is what happens when you promote a sound-bite professional to PM.

From The Australian:

Pledges slice razor gang savings

David Uren, Economics correspondent | May 09, 2008
A RUSH of new spending commitments since the Rudd Government came to power will consume all the savings made by the budget razor gang, according to Access Economics.

New commitments in health, social services, transport and water will strip $3.5 billion from the budget bottom line in 2008-09 and $11.8 billion over the next four years. "For a Government that's only been in for six months, that's a motza and represents a continuation of the Howard government's big-spending ways," Access Economics director Chris Richardson said.

Access estimates that even without the promised additional $3billion to $4billion in spending cuts, the Government will amass a record budget surplus over the next year of $20.2billion, or 1.7per cent of GDP.

It expects next Tuesday's budget to unveil yet another massive upgrade in government tax revenue owing to the continuing resources boom. Company tax revenue will soar to just under $80 billion, or 22 per cent more than Treasury's last estimate for the amount raised this year.

Personal income tax receipts are also tipped to grow by about $4.4 billion, despite the delivery of $7 billion in tax cuts.

Access expects the big surprise in the budget, however, will be the impact of the continuing spending by the Rudd Government. "On the measures announced to date, the Government has been spending significantly more than it has been saving," Access says in its report on the budget calculations.

Although Labor emphasised its $10 billion in savings in the run-up to the election, Access notes that spending cuts announced before the election totalled only $4.6 billion. Since then, Finance Minister Lindsay Tanner has unveiled a further $640 million in spending cuts, but has backed down on a plan to strip $111 million from ASIC.

The Government has made some savings by axing the contract to buy Seasprite helicopters, on which $1 billion had been spent, and cancelling the regional broadband network sponsored by the previous government.

However, Mr Richardson said the Government was snookered by the controversy over the carers' bonus, which had been paid on a one-off basis by the previous government but never included in the budget's formal forward estimates. The Government has promised to include this in this year's budget and to ensure carers are no worse off over the longer term.

Access says the Government's spending has been blown out by the March announcement by Families Minister Jenny Macklin of a $4.1 billion increase in the utilities, seniors and telephone allowances. Although this was an election commitment, it was costed at only $178 million during the election. "The Government has committed to throw billions more into social security and welfare rather than paring it back," the report says.

Placating the Victorian Government over the commonwealth takeover of the Murray-Darling Basin cost $1 billion, while there has been a range of health measures that add up to $1.1billion over the next four years. These include additional support for elective surgery, the national binge-drinking strategy, another $124 million on health researchers and more funding through the Council of Australian Governments for hospitals.

Transport and Infrastructure Minister Anthony Albanese has also announced the Government will help fund the first stage of the Ipswich motorway in Queensland at a cost of $770 million.