By Judith Ugwumadu | 13 May 2014
The Australian government today published an austerity Budget, which it hopes will slash the underlying cash deficit by $27bn by 2017/18 through a combination of welfare spending cuts and tax hikes on high earners.
The Australian Treasury said it wanted to rein in ‘the age of entitlement’ and was taking steps to ensure the government was living within its means.
Treasurer Joe Hockey said: ‘The Budget will redirect taxpayers' dollars from unaffordable consumption today to productive investment for tomorrow. It will do this while supporting the most vulnerable, and taking significant steps towards ensuring that the government can live within its means.
‘It creates a path back to surplus and slashes projections for debt, which means the money that would be wasted on interest payments can now help build the future.
‘These efforts to repair the budget have been carefully balanced with the shorter-term impacts on the economy.
The government said that family welfare payments would be changed to ensure public spending was targeted on those who needed it most.
The Age Pension [state pension] is also to be reformed to make it sustainable. These include gradually raising the pension age to 70 by July 1 2035 and linking pension increases to the consumer price index from September 2017.
From July this year, the government will introduce a three-year Temporary Budget Repair Levy, payable by individuals with taxable incomes above $180,000 at a rate of 2%. The new tax would raise an estimated $3.1bn.
And the government said it would also secure funding for additional road infrastructure by reintroducing twice-yearly fuel excise with inflation from August 1, this year.
Hockey said: ‘This Budget is part of the [Prime Minister Tony Abbott’s] government's Economic Action Strategy that will build a strong, prosperous economy and a safe, secure Australia. It is a Budget that calls on every Australian to make a contribution now to build the workforce, economy and opportunities we need for the future.
‘These reforms will create jobs and the specialist careers of the future, build communities, and improve our standard of living and prosperity.’
