Monday, November 05, 2012
Commodity prices threaten budget surplus: economist
An independent economic forecaster is predicting this year's promised budget surplus will turn into a $4.2 billion deficit, partly due to a shortfall in mining tax revenue.
In its mid-year budget assessment, Deloitte Access Economics believes the slowdown in China and falling commodity prices will undermine the Government's commitment of a $1.1 billion surplus this financial year.
Instead of delivering $2 billion to the budget bottom line, the mining tax is predicted to contribute just $520 million in 2012-13. "The MRRT (Minerals Resource Rent Tax) will have a dog of a year - when China sneezes, the MRRT was always going to get pneumonia," the Deloitte Access Economics report states.
It emerged after the Government delivered its mid-year budget update, that the mining tax had raised no revenue in its first three months of operation.
Chris Richardson from Deloitte Access Economics says changing Chinese demand will affect growth projections for Australian national income.
"The slowdown in China and its impact on coal and iron ore prices is more important for the average Australian than I think they realise," Mr Richardson told ABC News Breakfast.
"Despite the decisions the other day, which included some genuinely good and tough decisions around the baby bonus and private health insurance, you'd still need to do more to get a surplus."
The Government announced billions of dollars worth of savings and increased charges to get the budget back into surplus, but Mr Richardson has described some of the measures as "fig leaf territory".
Some of the measures included bringing forward the payment dates for company tax and the early collection of unclaimed superannuation and bank accounts.
Speaking from Mexico, Treasurer Wayne Swan rejected suggestions that the Deloitte Access Economics report painted a more realistic picture of the budget situation than Treasury's predictions.
"Access Economics doesn't always get it right," Mr Swan told AM.
"The mid-year review shows that the Government's on track to return the budget to surplus, but of course we know that we had to write down revenues substantially in the mid-year review and we wrote them down by $22 billion."
According to Deloitte Access Economics, the budget is not expected to return to surplus until 2015-16 - well after the next election.
'We would do better'
Opposition Leader Tony Abbott has used the latest economic predictions to attack the Government's handling of the nation's finances.
"This Government is never ever going to deliver even a dishonest surplus, let alone the honest surplus that the Australian public deserve," Mr Abbott told reporters in Canberra.
Asked whether he stood by his promise to deliver a surplus in each of the first three years of a Coalition government, Mr Abbott replied: "Yes, we will do better - significantly better - than the Government".
He says the Coalition would achieve that through spending cuts and productivity growth.
But the Opposition has been forced onto the back foot over Treasury analysis which reportedly shows three of the Coalition's tax policies would cost businesses $4.57 billion dollars in their first full year of operation.
According to reports in Fairfax newspapers, Treasury has considered the Coalition's paid parental leave policy which is funded by a 1.5 per cent levy on big businesses, its decision to axe the instant asset write off for small businesses that was part of the carbon tax package, and its commitment to get rid of the loss "carry back" provisions that were introduced as part of the mining tax.
The Treasury analysis reportedly shows that businesses would lose $17.2 billion over the forward estimates once the changes were introduced.
But Mr Abbott has accused the Government of "misusing" the Treasury work. "This analysis... doesn't take into account the fact that the carbon tax is gone, the mining tax is gone, and there'll be a modest company tax cut," he said.
"I'm saying that taxes on business will be less under the Coalition than under Labor."
Traditional owners (i.e, non-owners) to decide Cape York's fate
This is just a scheme to ban mining in an area the size of Britain
Federal Environment Minister Tony Burke says it will be up to traditional owners to decide whether or not the Government nominates Cape York as a World Heritage Area.
Mr Burke will today travel to Cape York in far north Queensland to discuss the Government's plan for nomination with traditional owners.
He says if they do not give their support the Government will drop the plan.
"If consent's given for something over a particular boundary to go forward in February, then I'll happily sign off the letter and put it forward and advocate to the world heritage committee that it's a good thing to do," he said.
"If traditional owners decide they don't want to do it, they don't want to do it yet or they want to do it over some different boundary and meet a different timeline - that's going to be their call."
Mr Burke says traditional owners will also determine the boundaries of any area nominated for world heritage listing.
"Exactly what areas people want in or out I've got to tell you I don't know the answer to that yet," he said. "That answer is only known by traditional owners who'll make their own decisions on consent and what they decide will be exactly replicated in what I put forward."
Last month, Queensland Environment Minister Andrew Powell announced the State Government would no longer take part in negotiations on the nomination.
"I'll offer the support where we can, but as I said it's in the Federal Government's hands now as to who they will negotiate with and what outcomes they look to achieve on the cape," he said.
"We certainly will continue to keep an eye on it and represent the interests of the state."
Elective surgery waiting lists to blow out after $107 million cut to Federal Government funding
ELECTIVE surgery waiting lists in Victoria will blow out further following the slashing of more than $100 million in federal funding for hospitals.
The impact will be most felt in Melbourne's biggest hospitals, which will lose $77 million - money that had been earmarked for vital surgery and outpatient appointments.
A recalculation of health funding, based on data showing Victoria's population has declined, prompted Canberra to claw back $107 million.
Midway through the financial year hospitals are being told to rewrite their budgets and slash up to $13 million each.
Victorian Health Minister David Davis has written to hospital chiefs warning they need to hand back the money and adjust services.
He accused Canberra of manipulating population figures to boost its budget. "The Federal Government plans to rip more than $100 million out of Victoria's public hospitals this year to prop up its own budget with a scam based on dodgy population figures," Mr Davis said.
"This is part of an outrageous $475 million Commonwealth reduction in the Health Agreement. "The loss of $100 million this year is the equivalent of the closure of many hospital wards, thousands of elective surgery procedures, or the closure of a medium-sized hospital."
Paul Perry, a spokesman for federal Health Minister Tanya Plibersek, said federal funding for Victoria had grown 26 per cent to $4.5 billon, and that Mr Davis was trying to create a "smokescreen" to divert attention from State Government cuts.
Based on the proportional funding formula, Southern Health is the biggest loser in the recalculation: it stands to lose $13.7 million.
Eastern Health and Melbourne Health will have to give back $8.5 million each, The Alfred faces a $7.9 million cut, and Austin Health misses out on $6.8 million. It is up to individual hospitals to decide which services they cut.
But the most likely option will be delays to elective surgery, which have already seen 7000 people added to waiting lists in the past year. Now, 46,131 Victorians are awaiting an operation.
Eastern Health chief executive Alan Lilly said all services would be reviewed in light of the funding cut.
A miscalculation in the 2006 Census resulted in Victoria's population appearing to have declined by 11,000 in 2011 - which the Federal Government based its funding allocation on.
As a result, Canberra has asked for the return of $40 million from the 2011-12 budget and $67 million from the 2012-13 budget.
Rudd wants jobs quota for Asian speakers
Since Kevvy's only skill is Chinese, this is predictable
Former prime minister Kevin Rudd says the business community should set aside a quota of jobs for Australian students who can speak an Asian language.
Mr Rudd has praised the Federal Government's white paper on Asia, which outlines how Australia can deepen its engagement with the region.
The white paper calls for more students to be taught at least one of four Asian languages - Mandarin, Japanese, Hindi and Indonesian - in every school in Australia.
Mr Rudd told Sky News that businesses also need to provide incentives for students. "They need to know there's a career path for them," he said.
"So if the 100 businesses which make up the Business Council of Australia were simply to say each of us will provide 10 graduate jobs for first class Chinese speakers, Japanese speakers or whatever, each year, that's 1,000 jobs on the Australian market.
"Kids will respond to that and they will master these languages and become as they were, the army of the future in our economic engagement with the neighbourhood."
He says the roadmap to 2025 set out in the white paper is comprehensive and a "wake-up call" to Australia.
"It draws together the various arms of what both government, corporates and others in Australia are doing in their engagement with Asia and charts a framework for the future," he said.