Well, he’s done it. Treasurer Wayne Swan has kept his political promise to deliver a surplus in 2012-13, with his fifth federal budget set to swing from a deficit of $44.4 billion this year to a tiny surplus of $1.5 billion in 2012-13.
But getting there will not be easy. To reach the surplus, Swan has been forced into one of the biggest programs of spending cuts and cost savings in recent history, with a stunning $32.6 billion cut out of the budget over the four-year forward estimates period.
And the wealthy and larger businesses are firmly in the firing line, through a string of major cuts including:
- Scrapping the 1% cut in company tax due to start for small businesses from July 2012 and for larger businesses a year later. The government says it remains committed to the cuts but blames the Opposition for blocking them. This measure alone will save $4.8 billion over the forward estimates.
- Deferring a plan to introduce standard tax deductions of up to $1,500 in a move that will save $2.1 billion over four years – and please accountants.
- Cracking down further on the living away from home allowance in order to save $1 billion, and tightening termination payment tax breaks to rein in “golden handshakes” for executives.
- Dumping tax breaks for green buildings at a saving of $405.2 million.
- Cutting tax concessions on the super contributions of those earning over $300,000, in a move that will save $946.5 million.
- Deferring plans to introduce a higher concessional contribution cap for those with less than $500,000 in super, generating savings of $1.5 billion.
Swan described the surplus – his first as Treasurer – as a “powerful endorsement of the strength” of the Australian economy and evidence the nation was “walking tall” in a troubled global environment.
“This budget is about discipline and restraint but also about priorities, ensuring precious funds are re-directed to the purposes and people that need them most.
“Across the budget, by saving and redirecting $33.6 billion, we’re balancing the books.”