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Five things you should know about the 2013-14 Federal Budget

Release Date

27 May 2013

Here are the top five things you should know about this year's budget - the direct impacts are limited, but the lack of attention to boosting growth shows why small business needs to stand up if it wants to be heard.
The NSW Business Chamber's media response can be viewed here. If you would like to know more information on specific changes, you can view the ACCI Budget Summary (linked below).
 
NSW to get dudded on infrastructure funding
 
Although Australia wide infrastructure spending increased by $20 billion, NSW will only get around $2 billion in extra infrastructure funding. That means NSW is getting less than 10% of the funding despite representing more than 30% of the population.
$1.4 billion of this is for the Westconnex project but is dependent on unrealistic funding conditions that have been attached by the Federal Government on the road's design.
           
No surplus, no surprise
 
Despite the higher taxes and spending cuts, the budget is projected to record an $18 billion deficit in 2013-14. A small $800 million surplus is predicted in 2015-16, but there's no reason to believe this prediction is any more credible than it has been over the past few years.
The budget forecasts economic growth of 2.75% and CPI of 2.25% in 2013-14.
           
Long-term, Australia must choose between spending and taxes
 
The current predicament is a legacy of past decisions. Even if the Government claims that it will get back to surplus in 2015-16, a surplus position won't be sustainable once the full cost of the national disability insurance scheme comes on line in 2018-19.
There are structural issues with the current budgetary settings. A failure to rein in spending and bring back revenues will inevitably result in deficit budgets and Australia living beyond its means. 
 
Budget won't boost the economy
 
This is a budget that is targeted at boosting welfare spending. It's failed to focus on what needs to be done to grow the economy.
Fees and taxes are up by $25 billion over the forward estimates and even though small business owners will only pay some of this directly, higher taxes mean less consumer spending and lower revenue. The 0.5% increase in the Medicare levy from July 1 2014 will hit taxpayers across the board and will have a consequential impact on demand.
Businesses will also have the added burden of paying their employees 0.25% in extra super from 1 July this year. Increased fees for 457 visas, caps to self-education deductions and a raft of tax measures aimed at larger businesses will also impact on growth across the economy.
                                                    
Some money for improving skills
 
Several initiatives will assist business owners' engagement in the training system. These include increased support for skills with $68.8 million over four years to provide more flexible pathways for apprentices through the Alternative Pathways Program, $45 million to help streamline the delivery of government assistance through the Skills Connect Fund and $127 million to help vulnerable young people stay engaged with the workforce. The cuts to higher education funding remain a concern for business.
 
Find out more by reading the full budget summary or simply contact us on 1800 505 529 or via email to find how we can support your business through these uncertain times. 

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