Topic 3: Fiscal Policy

2013-14 Federal Budget

Expenditure Measures + Changes
-

In 2013-14 budget, Australian government committed additional funds to

support number of priority areas such as infrastructure, education, health
+ welfare:
o Investment of $24b in infrastructure under Nation Building Program
on roads, rail + ports, increasing nations transport capacity,
included new spending on key infrastructure projects in urban and
regional areas (Bruce Highway QLD, M4 + M5 Motorways extension
+ duplication, NSW)
o $9.8b over 6 years from 2014-15 for new needs based school
funding arrangement based on new Schooling Resource Standard
(SRS) + new National Plan for Improvement, based on findings +
recommendations of Gonski Report, important measure to lift long
term productivity, deliver greater consistency in distribution of
funding, providing more support for disadvantaged and improve
educational outcomes.
o $14.3b over 7 years from 2012-13 to move to full implementation of
Disability Care Australia, national disability insurance scheme,
jointly funded by Commonwealth, state + territory governments,
providing disabled with greater choice + control over support
services + enhance opportunities for participation in economy +
society
o Through Industry + innovation Statement, government investing
$1b in A Plan for Australian Jobs, involves measures to support
Australian industry to increase exports + support employment
growth in small businesses
o $68.8m over 4 years to strengthen vocational education + training
system, including apprenticeship + workforce development
programmes
o Australia in the Asian Century White paper recommendations,
$113.2b over 4 years in priority areas such as ADF (in efforts to
confront global security challenges) and $149.9m package for
community safety)
o National health reform package $16.4b in additional funding
between 2014-15 and 2019-20 for public hospital services
Since the Budget, policy decisions have decreased the underlying cash
balance by $373m in 2013-14 but increased the underlying cash balance
by $8.2b over the next 4 years
Major policy decisions that have increased cash payments to 2016-17
include:
o The bring forward of the start of the Emissions Trading Scheme;
o The Australian and Papua New Guinea Regional Resettlement
Arrangement
o Additional Official Development Assistance to PNG

New and amended listings on the Pharmaceutical Benefits Scheme

and Repatriation Pharmaceutical Benefits Scheme, which are
expected to increase payments by $276m in 2013-14 ($1.5b to
2016-17)

Topic 3: Fiscal Policy

2013-14 Federal Budget
Expenditure Measures + Changes
-

The impact of these policy decisions on payments has been more than
offset over the four years to 2016-17 by a number of other decisions that
have reduced cash payments, including:
o Increasing the public service efficiency dividend to 2 % for 3
years from 01/07/2014, which is expected to decrease payments by
$262m in 2014-15 ($1.8b over 3 years from 2014-15 to 2016-17)
o Slowing the growth rate of Australias aid budget whilst still meeting
the target of 0.5% of GNI by 2017-18. This measure is expected to
decrease payments by $879m over the 4 years. Aid spending will
still increase by around 26% over this period.

Revenue Measures + Changes

-

Government introduced savings of $44.1b in accrual terms in 2013-14

budget to help with process of fiscal consolidation + to fund new
programmes:
o Medicare levy increase from 1.5% to 2% of taxable income to fund
Disability Care Australia projected $11.5b over 4 years
o Deferral of income tax cuts in 2015-16 to compensate households
for impact of carbon price reduction to $12/tonne + increase in
Family Tax Benefit Part A as part of Household Assistance Package
not proceed, saving $1.5b
o The Baby Bonus replaced with increase in Family Tax Benefit Part A,
estimating saving of $4.3b over 4 years
o Protecting corporate tax base through closure of loopholes,
estimated to net $4.1b in revenue
o Reduction in funding to higher education through use of efficiency
dividends of 2% (2014), 1.25% (2013) on most grants programmes,
savings of $2.6b over 4 years
o Requirement that large entities in PAYG tax system make monthly
instead of quarterly payments, $1.4b extra revenue
o Excise-equivalent customs duty on tobacco and tobacco-related
products will be increased under staged process, with 12.5%
increase to occur on 01/12/2013 + further 12.5% increases on

01/09/2014, 2015 + 2016. Increases in addition to the increases in

the duty that occur under indexation arrangements and are
expected to increase tax receipts by $5.8b over the forward
estimates period (including payments to the states and territories of
$490m).
Government is also providing the ATO with additional $99m over 4
years to address the levels of unpaid tax and superannuation,
returning $45m in superannuation to Australian workers + ensure a
level playing field for Australian businesses, improve the underlying
cash balance by $827m