BUDGET 2013: Health, ed, infrastructure drive spending

By a staff reporter

Funding plans for the Labor government’s key election platforms featured heavily in the federal budget.

Both the DisabilityCare Australia program, formerly the National Disability Insurance Scheme and the Gonski education reforms were the major beneficiaries of government savings.

Treasurer Wayne Swan the budget paper contained $43 billion of savings over the forward estimates, which would be funneled into “critical investments.”

In total, the Gillard government will invest $14.3 billion over seven years to roll out the scheme.

As previously announced, the Medicare levy is set to be increased to two per cent of taxable income from July 2014. Mr Swan estimates $20.4 billion will be raised from the increase between fiscal 2015 and fiscal 2019, which would be placed in a fund for 10 years and could only be drawn upon to fund the DisabilityCare scheme.

“This budget will fully fund our share of DisabilityCare Australia, beyond the next decade,” the treasurer said.

The federal government has reached funding agreements with all states except Western Australia.

Meanwhile, the government will inject $28.4 billion into education in fiscal 2013 in total, with schools accounting for $12.4 billion. In fiscal 2014, $29.7 billion will be allocated to education in total.

The government also allocated $660 million to continue the National Partnership that will promote universal access to preschool.

“This budget fully funds this investment over the next decade, meaning we can return the budget to surplus without leaving our children an education deficit,” Mr Swan said.

The treasurer said the budget also allocated $97 million to boost the number of Commonwealth-supported university places, as well as an extra $186 million for research infrastructure.

Closing corporate tax holes and better targeting resource sector concessions will go some way to funding the education reforms, as will an extension on the pause on indexation of higher income test thresholds for family payments.

The phasing out of the Baby Bonus will also assist funding. The bonus will be replaced by an increase to the to Family Tax Benefit A, from March 2014. Families not claiming paid parental leave will be entitled to a $2,000 increase to the FTB-A following the birth of the first child, and a $1,000 increase for second and subsequent children.

Falling carbon price hits programs

As well as deferring personal income tax cuts, the fall in estimated returns from the carbon tax prompted further spending revisions.

The budget revised down its carbon price projection in 2015/16 to $12 from $29, due to ongoing weakness in Europe.

The government will defer $370 million of funding from the Australian Renewable Energy Agency (ARENA) over three years, beyond the forward estimates. As a result the program will be extended to 2021/22.

Meanwhile, $500 million in funding will be withdrawn from the Carbon Capture and Storage Flagships Program over three years.

From fiscal 2014 $1 billion in funding will still be allocated to the program, designed to support carbon capture and storage projects.

“This funding will enable at least one project to proceed beyond the feasibility stage with government support,” the budget documents said.

$29 million in funding will also be withdrawn from the Coal Mining Abatement Technology Support package, over two years from 2015/16.

Infrastructure

As negotiations between the states and the federal government continue regarding big-ticket reforms, the budget allocated $95.3 billion to state and territory governments.

A significant section of the spending was dedicated to infrastructure, with an additional $24 billion funneled into nation-building infrastructure, including funds for public rail projects in Brisbane and Melbourne, as well as a link between the F3 and M2 motorways and the upgrade of the M4, in Sydney.

Mr Swan said it was critical to invest in both urban road and rail infrastructure.

“Traffic congestion costs commuters time with their families and is estimated to cost our economy up to $20 billion a year by 2020 if not addressed,” he said.

A further $12.9 million was set aside for advancing the national broadband network, by connecting more local councils.

Tobacco changes

Tobacco excise and excise equivalent customs will be indexed to average weekly ordinary time earnings, rather than the consumer price index (CPI). Mr Swan said the move was designed to ensure tobacco excise keeps pace with income growth.