Thumbs up for budget

WA business leaders and academics have given this Federal Budget the big thumbs up.

In Perth, more than 130 business leaders and academics were treated to an analysis of the Budget at a Committee for Economic Development of Australia briefing.

The Budget, which will have a surplus of more than $5 billion, is on the high side of forecasts, pre-election, of between $3 billion to $6 billion.

For the fourth budget in a row, the government will be spending within its means. It also aims to totally eliminate government debt.

In his speech to parliament, Federal Treasurer Peter Costello said the government began the century debt free and hopes to end the century in the same way.

However, this is reliant on the full sale of Telstra, something Shadow Finance Minister Lindsay Tanner sees as a break from the government’s previous promise not to sell more than 49 percent of Telstra without an independent inquiry.

WA political analyst David Black said privatisation was becoming increasingly unpopular among the electorate particularly in regional Australia.

“The government will have to deal with the political problem in regional Australia,” Professor Black said.

Financial columnist and political commentator Terry McCrann said: “This Budget is not attractive to the bush. It doesn’t mute the Pauline Hanson dynamic.”

Rural Australia will benefit, though, via funding of $70 million over five years through the provision of 500 new rural transaction centres providing financial, banking, medi-care and other facilities.

An additional 30 health centres in country areas are earmarked for the next four years. Over the same period, $43 million will be allocated to pay ‘retention money’ to general practitioners to keep them in the bush.

The government’s ‘Supermarket to Asia strategy’ will also continue in the hope of opening up new markets to our commodities.

JB Were & Sons director, Richard Alder said becoming debt free might not necessarily be a good thing if it meant a reduction on investment in infrastructure.

“Building 30 year assets and paying for these assets over the life of the asset is sound economic management” Mr Alder said.

The Budget figures also hinge on the passing of the GST before the new senate on 30 June.

Mr Costello has made it clear he does not want to blow away the surplus on increased compensation to the underprivileged.

Mr McCrann said the surplus gave the government flexibility to negotiate with Senator Brian Harradine in order to pass the GST.

If the tax package is not passed, the surplus will increase by more than $5 billion because compensation measures built into the Budget will not be needed.

The work for the dole scheme will be expanded to include school leavers and those between 25 and 34 years. By 2001 the number of unemployed on the program is expected to double to 50,000.

Mr McCrann said the Budget contained no specific unemployment policy – apart from the work for the dole.

“The government is reliant on economic growth to decrease unemployment” he said.

Mr Tanner said the Budget indicated the government was giving up on its previous target of reducing unemployment to 5 per cent.

The Budget also does not improve the incentive for companies to engage in research and development programs as it does not include provision for greater tax breaks.

The government has also removed the savings rebate.

The Financial Planning Association and The Australian Taxpayers’ Association both expressed disappointment that the Budget no longer provided an incentive for private savings.

In a statement released post-Budget the Australian Taxpayers’ Association said the government had robbed taxpayers of $800 million.