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Budget in a nutshell

THE biggest surprise in the Budget document released by Treasurer Peter Costello was probably in the size of the surplus.

It had been widely tipped that the surplus was going to come in around $500 million. This is the fifth surplus in a row and is predicated on the growth in the economy being 3.25 per cent. This is a somewhat heroic assumption given the state of the economy at present. This is also based upon the US and Japan delivering more growth than has been forecast elsewhere.

Inflation in Australia is expected to be around 2 per cent, a figure that seems highly achievable. Unemployment is expected to be around 7 per cent. This figure is being tested even now. The key features of the budget that impacts on Business are as follows:

p Full input tax credits for vehicles bought after May 23 2001 to be brought forward.

p State Financial Institutions Duty and stamp duty on most share transactions to be abolished.

p Fuel excise reduced 1.5 cents per litre

p Abolition of fuel excise indexation.

Company Tax rates to drop further from 34 per cent to 30per cent.

The key features of the budget for individuals and particularly for the aged sector are as follows:

p Payment of $300 for people of age pension age who receive income support or are outside the taxation and social security system. This is a generous handout to all pensioners in Australia.

p Retrospective increases in the effective tax-free thresholds for people of age pension age.

p Increases in the income thresholds for Commonwealth Seniors Health Card and extension of the telephone allowance to all holders of a Common-wealth Seniors Health Card.

p The exemption of Superannuation assets from Social Security means tests for people aged between 55 and Age Pension age.

p Payment of $25,000 to Prisoners of War of the Japanese, civilian internees and detainees of the Japanese or their surviving spouses.

p Increase in the Departure Tax from $30 to $38. This will be used to fund the management of the Foot and Mouth outbreaks.

There are a host of minor measures that are geared towards the electorate that had been drifting away from the Coalition in droves in recent years. The budget has to be seen as being one that is very much a social dividend. After five years of fairly tough economic measures the Treasurer appears to have delivered a budget that will regain a lot of the votes lost from regional Australia and from the aged.

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