The Abbott Government has made some inroads into Australia’s Budget deficit, with the non-partisan Parliamentary Budget Office (PBO) revealing that the decision to re-index fuel excise and cutting the seniors’ supplement has closed the Budget gap by some $28 billion. From The Canberra Times:
When the office released its previous update in May, it found the government was facing a $102 billion shortfall between now and 2025-26.
But the Abbott government has since closed that gap by $28.1 billion after striking a deal with Labor to reintroduce fuel excise indexation, and by striking a deal with Labor and Greens to cut the seniors supplement.
The reintroduction of fuel excise indexation is expected to swell government coffers by $22.8 billion over the next 10 years, though lower-than-expected inflation could see that figure reduced.
The seniors supplement deal will save the government $3.5 billion over 10 years.
Re-indexing fuel excise was strongly supported by MB, as was paring-back entitlements for wealthier retirees. On both counts, the Government should be commended.
That said, the Budget repair job would be much easier if Tony Abbott had not made the “captain’s call” ruling-out reform to Australia’s inequitable and costly tax concessions.
Almost everyone agrees that Australia’s superannuation system is overly generous to higher income earners and the wealthy, and deprives the Budget of many billions in foregone tax revenue.
The PBO has also advised that removing both the capital gains tax discount and negative gearing could save the Budget $22.3 billion over four years, whereas grandfathering negative gearing while cutting the capital gains tax discount to 25% could save $14.5 billion over the same period.
If the Abbott Government is truly interested in restoring the Budget back to health, reforming Australia’s inefficient and inequitable tax concessions would be a good place to start.
