Economics forecasters endorse debt levy
AS TREASURER Joe Hockey puts his final touches on his first budget in Canberra, the somewhat controversial debt levy on wealthy Australians has been endorsed by economics forecasters at Deloitte Access Economics.
Mr Hockey will next Tuesday release the Abbott government's first budget, with a series of leaks in recent days showing the debt levy is all but certain, a potential $10 billion infrastructure package could be on the table and fuel taxes may rise.
While the government has not confirmed changes to fuel excise, paid by all motorists, senior ministers were reported on Thursday as having alluded to it, while the promised infrastructure injection will likely be funded through Mr Hockey's "asset recycling" program.
But the fears of potential cuts to family tax benefits shared by many middle income Australians, mooted changes to a raft of government pensions and a new co-payments system on Medicare have not been alleviated.
Mr Hockey has promised Australians that everyone will do the "heavy-lifting", a sentiment echoed by Finance Minister Senator Mathias Cormann this week, who said Australians should "trust us to do the right thing".
Key to ensure the brunt of the likely cuts was the debt levy proposal, which Sen Cormann all but confirmed on Wednesday, but it is a proposal backed by the numbers, Deloitte economist Chris Richardson said on Thursday.
A former Treasury official, Mr Richardson's latest budget monitor update said the debt levy was "not a bad idea", but that it should be a temporary measure, rather than remain as a recurring tax.
It also reported the bottom line was that the budget "needs repair", that it did not need to be rushed, but that work should start now.
He wrote that tax receipts were looking up for the next two years, and but company tax shortfalls were likely to eat up the progress made through income tax and other revenue.
"After all, that tried and trusted model - the gasp and hand over the mouth on discovery of the Budget black hole - is once again the story of the moment," he wrote.
"Yet that doesn't mean it is wrong. Rather, what the MYEFO did do was to spell out a much more realistic picture of where the Budget was headed in the medium term.
While voters will be left to wait until Tuesday to see the budget, the Commission of Audit has laid the groundwork for a raft of expected cuts, with the mooted debt levy an effort to make up for the expected impacts on lower and middle income Australia.