Good night and good luck
I think that might be a wrap for this evening. Thank you so much for your fine company on a night such as this.
It’s been a busy day, top to tail, and tomorrow will be even more hectic.
I’ll summarise by saying this was a budget that was largely about undoing the political damage from 2014. Don’t expect it to tell a coherent story, because it doesn’t. It just says please like me.
We’ll be back, bright and early. Do join us then.
Updated
More voices from the sidelines. Thanks to Shalailah Medhora.
Chief executive of National Seniors Australia, Michael O’Neill was wondering: where is the reform?
There is no substantive effort for reform elsewhere in this budget [aside from changes to aged care pension]. Superannuation hasn’t been touched. Older Australians, the low hanging fruit, have been picked by the government.
National president of United Voice, Jo Schofield, is wondering the same thing.
There’s very little in the budget for families... We are concerned in particular that measures designed for young people [to get jobs] will not achieve what it is supposed to achieve, we are concerned childcare measures will be funded by cuts to other areas.
Australian Conservation Council, chief executive officer Kelly O’Shanassy says environment initiatives are missing in action.
Not surprised that there is not much in the budget for nature and climate change. [The government] continues cuts to important programs. The government had the choice to invest in air, soil, water, instead it cut funding to those area including to the Murray Darling Basin, Landcare and Green Army. $100m for the Great Barrier Reef is not enough, but it’s a start.
John Kelly, of Aged Community Services Australia says the changes to Fringe Benefits Tax which places a cap on salary sacrificing will cut into recruitment of aged care workers.
Every week 1,000 Australians turn 85, the demographic is growing at a rate where we can’t recruit enough people fast enough to look after them. The no cap on FTB on meals and entertainment had been an effective recruitment tool.
Sally Sinclair, chief executive officer of National Employment Service Association, gives the budget a tick.
It’s a very good budget for employment opportunities, particularly for people who are disadvantaged in the workplace. The proposals for job creation in the budget is something we’ve been calling for, for a number of years.
Some terrific stuff now from our economics crew. Click through the links to read in full.
Greg Jericho: So, about that austerity
Pretty much everything in this year’s budget is an attempt to hit the voting public with a Men in Black-style amnesia ray.
Stephen Koukoulas: Hey big spender
Despite an improving global economy, Joe Hockey is spending money in a manner that suggests the Australian economy is being confronted by something as severe as the 2008-2010 global financial crisis. Given the absence of a crisis, this is not sound economic policy.
This one, everyone will understand it.
That’s Peter Strong, who runs the small business council. That has to go down as one of the most ‘to the point’ third party reactions, ever.
I’d go get myself a ute. I’d probably go for the smaller ute.
This is about the depreciation for purchases under $20,000. Didn’t I tell you? No Australian ute will live in poverty by 2017.
A little more of the third party voices. Industry super, and refugee advocates. neither delighted it must be said.
David Whiteley, chief executive of Industry Super Australia, said changes to the pension eligibility rules meant that workers would be worse off by the time they retired.
Our projections would show that for a 45-year-old worker they could be retiring with $6000 less in pension payments when they come to retirement. If you change the pension eligibility rules what you also need to do is look at how people can make up any losses.
Misha Coleman, of the Australian Churches Refugee Taskforce, said the Abbott government had a “play school understanding of refugee flows” and said foreign aid rewarded countries for refugee deals.
Tonight has been a budget bonanza for corrupt countries that are prepared to lock up Australia’s asylum seekers. This government really seems to have a playschool understanding of refugee flows...We’ve got boat people coming from Vietnam now. Cambodia [which has agreed to take refugees] is the real winner in this, with many other Pacific nations facing cuts to their aid budget.
While we are stocktaking, a little sprinkle of Mike Bowers wonderful. The treasurer after his post budget speech.
And could these men stiffen their arms anymore? Just hug it out, people. When Joe met Scott.
Tonight's story thus far
In case you are just jumping on board tonight’s live coverage, let me bring you up to speed with a very short summary.
- The Abbott government has delivered a budget which delivers generous new tax breaks to small business and farmers; cuts foreign aid – particularly to Indonesia; delivers the much telegraphed families package; and chases a bunch of revenue measures, from taxing backpackers, to reducing opportunities for work related car expenses.
- There’s no surplus until 2019-20. The budget emergency appears to be over.
A taste of the first run commentary now from political and economics editors.
I’ll start with Guardian Australia’s own Lenore Taylor.
Joe Hockey’s second budget feels confused and contradictory because it is. Its rhetoric is out of kilter with its real purpose – political survival. The Coalition still has to mouth the words about all the things it says it believes in – remember small government, reduced deficits and paying down debt so as not to steal the economic future of our kiddies? But really, all that is on hold. What it really wants to do with budget 2015 is erase the memory of last year’s budget and inject some confidence into the sluggish economy and a little jolt of optimism into disillusioned voters’ minds.
Alan Mitchell, economics editor, Australian Financial Review
Obviously this budget is designed to be more popular than the last one, but there is still a question of whether it will be more successful. The budget and the forward estimates include the proceeds of bracket creep, which could be politically very difficult to collect and even more difficult to replace with spending cuts. At the same time, capital gains tax revenue could be seriously dented in the event of an equities price shock eminating from the US. But of greater concern is the question mark over the government’s ability to achieve the spending cuts needed for its medium-term fiscal consolidation strategy.
Dennis Shanahan, The Australian
Joe Hockey has redeemed the political failures of the last year in his 2015 Budget by reversing unpopular measures and clawing back some savings. But the redemption of the Treasurer’s economic credibility still rests on some optimistic forecasts globally and domestically.
Business now. Given the goodies for small business, it’s hard to see how business could be anything other than delighted.
Kate Carnell, chief executive officer of the Australian Chamber of Commerce and Industry (ACCI), said the budget proves the Coalition understands that business drives the economy.
She called for the senate to pass the budget.
Carnell:
This really turbo-charges two million small businesses in Australia... This is a real positive for small business. The budget proves that the government understands that it is business that will get the economy moving, not government. What we’re asking the Senate to do is get on with passing the budget. Business needs certainty.
A bit more reaction now, thanks muchly to the wonderful Gabrielle Chan.
Greens leader, Richard Di Natale, said there were many losers in the budget, including single mums, new parents, aged care workers and nurses.
He said the business tax breaks did not bring in a cent.
It’s just another disappointing, small-minded, visionless budget from this government. It continues to take money from those people who can’t afford it...it’s silent on the issues of climate change and the environment.
In response to questions about support payments: “We shouldn’t be punishing young kids who are struggling to find work. We should be assisting them by supporting them.”
Stephen Healy, president of the Tax Institute, meanwhile welcomed the tax cuts for small business, including the capital gains tax concessions. But he cautioned against Australia moving ahead of the OECD countries on multinational tax avoidance issues. (The government announced they would be signing up to ensure Australia received information on multinationals.)
Labor says yes to small business measures, and maybe on other things
Down to tin tacks. Bowen says Labor will support the small business measures.
We support that. We support the lower corporate tax rate. We tried to introduce a lower corporate tax rate in office and it was blocked by the Liberals and Greens voting together.
But the shadow treasurer wants to look closer at the various revenue measures. ‘Maybe’ on taxing backpackers.
There are measures which we need to work through as well separately to those small business measures. There are revenue measures which we are hope open to considering. We will need to do consultation.
There is a proposal to change the tax treatment of backpackers. We want to talk to regional businesses about the impact of that on their work force. We are open to consider that. We have seen this document tonight. There is things we need to work through and consultation to do.
Sales to Chris Bowen.
Q: Isn’t it fair to say Labor has little credibility when it comes to economic management or assessment given you had to constantly revise your own projections for surplusses downwards?
The international economy and iron ore prices have had an impact on the budget. I don’t blame Joe Hockey for the iron ore price.
What I hold him responsible for is the impact of his own decisions: the impact of his own decisions on the budget. We see spending and tax up. Tax rising every year under him and importantly, the impact of his words on confidence, economic confidence, lower now than at the election because of his actions and his words and that has an impact on the budget.
Joe Hockey has been replaced in the 7.30 report chair by the shadow treasurer, Chris Bowen.
This budget sees debt and deficits up, spending up and tax up as well as unemployment..
This is the tail end of Sales on 7.30.
Q: After last year’s missteps, do you accept that this budget is make or break for you as treasurer?
Hockey:
It is not about me. It is about my country. I came into this job to make Australia better. I came into parliament to make Australia better.
Q: I don’t doubt that. But your backbench was very unhappy with how it went last year, it was part of the reason ..
Hockey:
You can run on about the gossip of Canberra.
Q: That occurred, it is not gossip.
You can go through the commentary and gossip. I am focused on building a stronger and more prosperous Australia.
That is my only motivation and this budget delivers that.
Hockey: We are not passing the buck because the buck stops here
Sales points out the government has dropped the ball on fiscal repair.
Q: Treasury makes statements in the budget papers such as that the level of spending highlights the need to do more to bring spending down over the medium term. It says the task of budget repair remains ongoing and more work needs to be done in future budgets to continue to build a sustainable fiscal trajectory. You have warned about taking the easier path and leaving it to future generations. Why are you giving yourselves a leave pass in this budget?
Hockey:
We’re not.
Q: You are not cutting spending.
Compared to the mid-year update in December, every year of the forward estimates we are spending less than we were going to six months ago. Most importantly, we are reducing spending as a percentage of GDP. We are reducing the deficits of a percentage of GDP and reducing the size of government as a percentage of GDP. The Australian government now has fewer employees than any other time back to 2006. We have made decisions, I am not suggesting for a second, not for a second that it is job finished. There is more work to be done. We are trying to ensure the Australian economy grows and grows fast as a result of our initiatives in the budget.
Q: Are you leaving it to a future government to deliver the type of budget you tried to deliver last year?
We are not passing the buck because the buck stops here.
Updated
The grilling continues.
Q: You have back flipped on numerous plans and dropped talk of a debt and deficit emergency and you have relied on excuses from which you had a go at Wayne Swan. Do you think that the voters are confused about what your government stands for and about your competence?
Hockey:
No, they are probably confused about what you are saying. We laid the foundations at the last budget and we have started to implement it. The plan is well under way. We have faced incredible head winds. The iron ore price has more than halved ..
Q: When Wayne Swan used to say things like that you jumped on him.
Yes, I did because the problem was Labor locked in future growth and spending that was unsustainable.
Our trajectory on spending is it keeps coming down. That is hugely important. A big difference is they kept building in new spending and they put time bombs in the budget.
Updated
Hockey is interviewed on ABC 7.30: is this what political retreat looks like?
Hockey smiles at Leigh Sales. Not for long though.
Q: Is this what political retreat looks like?
Joe Hockey:
No, not at all. It is part of our economic plan to strengthen the foundation for our future prosperity and it is working. We are getting the budget deficit down. We are getting back to surplus, importantly, the economy will continue to grow and it will improve.
Q: Last year you were telling Australians that everybody had to make sacrifices because you had no choices but to make painful decisions – the state of the budget was parlous and to do anything else would constitute intergenerational theft. This year it is time for hand outs and new spending. How do you explain the about turn?
There are no hand-outs ..
Q: A tax break is a form of hand-out?
No, it is actually giving Australian small businesses some of their own money back to invest in new plant and equipment that is going to create jobs.
Q: At a time when revenue is going down?
What we are trying to do Leigh, is strengthen the Australian economy, to give people a chance, to innovate, have a go.
Updated
The treasurer right now is making his way from the chamber to various television studios down the corridor from me.
In the interim, if you want something which covers a bit more ground than my 7.30pm post, here’s the news wrap from my colleague Lenore Taylor.
I’ll also start bringing you the first run reaction.
Welfare groups are pleased with the reversal of various punitive measures. ACOSS CEO Cassandra Goldie says the pensions changes, youth employment strategy and higher investment in child care are a welcome change in direction.
Goldie:
The budget should be assessed as a whole – not just the changes announced tonight - and last year’s budget still casts a shadow over this one. Welcome measures in 2015 - like investing in child care - are linked to unfair measures like 2014’s family payment cuts; and the government has yet to find alternatives to cutting health, education, community services and family and youth payments for its savings measures. On the whole people on low incomes are still left to do most of the heavy lifting.
Lin Hatfield Dodds from UnitingCare says the budget has been a “huge loss of opportunity” and “fails to deliver genuine stimulus” for job creation.
Aid groups are also unhappy. Indonesia has lost a good chunk of development assistance from Australia.
Archie Law from ActionAid
This budget is one of the great acts of isolationism... and makes us a second-rate aid donor.
It portrays us as a nasty, self-interested country.
Updated
Or is it have-a-go Joe?
Whether you buy this budget depends on whether or not you buy the government’s dramatic change of tone in just 12 months. I find the lurch confusing. But perhaps voters at more of a distance from the circus will be more forgiving.
Updated
Have-a-go Hockey
Hockey works through the remaining measures, pensions, security, avoidance.
Hockey ends thus:
Madam Speaker, this budget is responsible, measured and fair. We are creating opportunities for jobseekers, young and old. We are caring for our most vulnerable. We are keeping the country safe and secure. This is a budget for small business people who want to innovate and grow. This is a budget for young people wanting to get a foot in the door. This is a budget for parents juggling the complexities of modern life. This is a budget as much for the miners of the Pilbara as it is for the farmers in the Mallee. It is as much for a family in Brisbane as it is for a start-up business in Adelaide.
This is a budget that helps build a stronger, safer and more prosperous Australia. Madam Speaker, I truly believe in my heart that our nation’s best days are ahead of us so now is the time for all Australians to get out there and have a go.
The colleagues rise in applause. There is clapping and cheering and hooraying and so on.
Updated
No new taxes on superannuation
Last budget was about sticks. This budget is more about carrots. You’ll remember young people were denied benefits if they didn’t work? In 2015, there’s a helping hand.
Madam Speaker, this government knows there are many Australians who want a job and just can’t get one. As part of our economic plan, we are doing more to help. The level of youth unemployment in Australia is too high. So tonight I announce this government will invest more than $330m to help young and disadvantaged Australians get their start. This will include a new $212m youth transition to work program that will fund community workers who are on the ground in high youth unemployment areas. Furthermore, there will be an additional $106m of intensive support trials for job seekers of all ages who are facing the most significant barriers to employment. We are also improving the national work experience program so that 6,000 people can get genuine work experience in a real workplace.
Whether you are young or old and no matter where you live, we want all Australians to have the opportunity to get a job and to stay in a job. This budget will have a $1.2bn national wage subsidy pool to target long-term unemployment following consultations across the community, we are reshaping the pool, including the Restart program, for older workers to ensure the subsidies are available when and where they are most needed.
Hockey offers this formulation on superannuation, which leaves him a little bit of wriggle room. It is silly though, this – silly to sound like you want to do nothing about generous superannuation concessions when the government’s own tax review has made the case to act.
Madam Speaker, I want to reassure all Australian workers that they can have confidence in their retirement plans under this government.
There will be no new taxes on superannuation under this government.
Updated
There's no "I" in ScoMo
Hockey has worked through the assistance to farmers that I flagged in the main points post a few moments ago. And a spend up north.
And the families and childcare package.
I do love the “I” in this sentence, just a little assertion of ownership from Joe Hockey.
Scott who?
Just weeks after coming to government in 2013, I initiated a Productivity Commission inquiry into childcare. Since that time, we have consulted widely and, as a result, we are allocating an additional $3.5bn to reform the childcare system.
We want to give parents a choice about work. By investing this money we are responding to the demands of 165,000 parents who want to work more but are prevented from doing so by the current costly and complex scheme. Our reforms will make the system simpler and ensure childcare is more affordable, more accessible and more flexible.
Updated
By 2017, no ute will live in poverty
The treasurer Joe Hockey is currently addressing the House of Representatives chamber, outlining the key measures of the budget.
I’ve indicated already that small businesses are the big winners from tonight.
Hockey:
Tonight I am announcing a package of measures that will make a genuine and permanent difference to small business in Australia.
(Except the measures that aren’t permanent, including the one he’s talking about now, the razzle-dazzle number of tonight’s budget.)
So I announce that, from 7:30pm tonight, small business can claim an immediate tax deduction for each and every item they purchase up to $20,000.
From tonight, it can be instantly written off to reduce your tax liability. This will benefit the 96% of Australian businesses, more than 2 million of them, that have a turnover of less than $2m a year.
This will be of enormous benefit to their bottom line and help business with their cash flow. It means innovation. It means jobs. It means more money to invest and grow your business.
If you run a cafe, it might mean new kitchen equipment or new tables and chairs. If you are a tradie, it might be new tools or a computer for the home office. Cars and vans, kitchens or machinery, anything under $20,000 is immediately 100% tax deductible from tonight.
That deduction runs out in mid 2017 – just after the next federal election.
Updated
Budget 2015 in a post
Hello, I’m back, and we are live.
You will be deluged with breaking views over the next few hours. Here’s one very simple overarching impression to kick off proceedings. Last year’s budget was about ideology. This year’s budget is about politics, and the transactional business of appealing directly to groups of people you’d like to vote for you.
If there’s a high-minded economic or fiscal story to tell in this budget, it doesn’t make a huge amount of sense – to me at least. Here’s one indicator that brings the point home – a budget surplus is now two elections away, in 2019-20.
Here’s what you need to know at a glance from tonight’s budget. I’ll link you to detailed news reports over the course of the evening.
Small business and farmers
If you are a small business – get buying. In addition to the tax cut for incorporated folks to 28.5% we already knew about, the government will allow small businesses with annual turnovers of less than $2m to deduct every new asset providing it costs less than $20,000.
This applies from tonight, budget night, until June 2017 – just after the next federal election. Spend for Australia, people. Work-related portable devices will also be FBT-free for small business, and there’s capital gains tax rollover relief when legal structures change.
If you are a farmer – even happier days. There’s additional tax deductions to assist with drought proofing. There’s an immediate deduction for water facilities, and new more favourable depreciation rules for capital investments for fodder storage facilities. There’s also deductions for expenditure on fencing from July 2016.
Families
For families – there’s the childcare package we already know about. But in addition to the family tax benefit savings we also already know about, the government also intends to abolish the large family supplement of family tax benefit part A, saving $177m over four years.
Which leads us to savings, crackdowns and various fineprints
The big savings from budget 2014 are the new pensions asset test ($2.4bn) which was telegraphed pre-budget; various welfare crackdowns and integrity measures worth $1.6bn – and the government has also moved $3bn for the East West Link out of the infrastructure and regional development budget and into the contingent liability column – while arguing it remains committed to the project anytime that Victorian government wants to proceed.
Indonesia is also a budget loser. It will lose 40% of its current development assistance from Australia. Current expenditure is $542m. Next year, the spend will be $323m.
There’s some other “nasties” that didn’t feature in the pre-budget drops. A bunch of smallish (in budget terms) revenue measures will hit various folks. Here’s a sample.
- Fly-in-fly out workers won’t be able to claim zonal tax offsets if they don’t genuinely live in a remote region. That saves $325m over the forward estimates.
- British backpackers and gap year kids – bad luck. Working holidaymakers will be taxed at 32.5% from their first dollar of income, raising $540m over four years.
- There’s also a crackdown on work-related car expense deductions, which will bring $845m to the budget (and sounds a lot like something Labor tried to do before the 2013 election, only to be howled down by Joe Hockey) – and a new cap will be introduced for salary sacrificed meal entertainment and entertainment facility leasing expenses, raising $295m.
As they say in our business – more to come.
Updated
Very close to kick off now. The key events of budget night in Canberra are fairly straightforward. The treasurer Joe Hockey will deliver a speech after the embargo is lifted where he outlines all the major measures of the annual economic statement. He then presents himself for a round of television interviews – this year he’ll do the ABC and Sky News.
After that, major interest groups line up to give back-to-back press conferences. Sometimes interest groups come to praise. Sometimes, they come in anger. The first up reaction is an important part of the night, giving a separate reality check from the breaking feelings of political commentators, and the spin from the politicians.
I hope you’ve got your TV dinner and a nice glass of something. I’ll be back very shortly with facts.
So, let’s set the scene. This is, of course, the Abbott government’s second budget. The first budget, as we all know, wasn’t a great success.
For some weeks, the government has been at pains to let voters know it’s learned from the events of last year. The economic statement in 2014 tanked primarily because voters believed the measures were unfair. Any simple analysis of the budget told us a stark story: budget repair would be shouldered predominately by Australia’s low and middle income earners. The senate wouldn’t cop that. Many measures from the Abbott government’s first budget will never see the light of day.
The government has been setting voters up for a different budget story in 2015. We’ve gone from an austerity budget to a budget of jobs, growth and opportunity. The government has managed the pre-budget period more effectively than last year, and the Coalition has improved its standing steadily in major opinion polls after Tony Abbott’s “near death experience” with the leadership spill motion earlier in the year.
But this budget needs to tell a story where the substance matches the pre-budget framing. Voters will need to be convinced that the Coalition has learned some lessons. From my point of view, the government needs to be prepared to act in the national interest even if this hurts its own core constituency. This is a key test. It marks out reformist prime ministers from do nothing prime ministers. The government has thus far been reluctant to do anything much which troubles business or higher income earners. We’ll see if there are any surprises tonight.
Updated
Good evening and welcome to tonight’s live, rolling coverage of the 2015 budget. I’m actually still bound and gagged in the budget lockup, but through various magical processes, namely the oldest and most reliable magic trick of all – preparing something a little earlier – I’m here with you too.
I thought it might be prudent for us to gather round the Politics Live campfire while things are still peaceful, and think through a couple of things. It’s going to get very loud at 7.30, when all the coverage we’ve been working on for the past several hours goes from dark to live.
If you are just tuning in and need to review the story of Tuesday thus far, you can find the live coverage from the parliamentary day here.
This evening’s live blog will give you the key budget measures at a glance, and then I’ll take you through the reaction to the various spending and savings proposals.
Please hop in with characteristic enthusiasm in the thread, and get in touch on Twitter if that’s your thing. You can find me @murpharoo and the man with the camera @mpbowers
