2023 Federal Budget Summary - Your Taxpayer Money at Stake
At the Australian Taxpayers’ Alliance, we believe it is important for all taxpayers to be informed about how their hard-earned money is being spent and in many cases, wasted. Here's our 2023 Budget Round Up.
While there are positive aspects to celebrate in the latest Federal Budget, it’s not all good news. Unsurprising given we have an Albanese Labor Government behind the wheel.
First the good news (at least on paper):
As predicted by the Australian Taxpayers' Alliance, the government is on track to announce a significant improvement in the 2022/23 budget balance, estimating a surplus of $4.2 billion. While a budget surplus will be the main headline for the foreseeable future, it is crucial to understand the full picture.
Much of the budget improvement is attributed to higher tax revenue, which can be expected with increased commodity prices and employment levels. However, what often goes unnoticed is the hidden tax increase known as bracket creep. Bracket creep occurs when wage growth pushes individuals into higher tax brackets, resulting in higher average income taxes. Despite the marginal tax rates remaining unchanged, this effectively leads to tax revenue increasing faster than economic growth.
As our chief Economist Dr John Humphreys points out, “This tax bonanza happens every year, is worth many billions of dollars, and largely goes unnoticed.
To give an example, over the two years from 2021/22 to 2023/24 the most recent budget projected the economy would grow by 7.5%. If income tax revenue matched that growth then it would increase from $259 billion up to $278 billion. Instead, the budget predicted that income tax would actually rise to $304 billion, which includes a whopping $26 billion in bracket creep over those two years”
It is essential to address this issue by indexing tax brackets to wage growth, making our tax system more honest and more efficient. Our efforts to scrap this secretive and downright dodgy tax results in fierce opposition from both of the major parties. The only other solution to this punitive tax is for governments to offer substantial income tax cuts every few years to counteract bracket creep. But once again, there appear to be no real efforts to help the average Taxpayer.
Long term risks:
There is a dire need for substantive improvements to the budget balance in the coming years. While the 2022/23 improvement is a positive step, it will be inconsequential if the government fails to control the budget in 2023/24 and beyond. Responsible decision-making and necessary spending control measures must be implemented to ensure long-term financial stability.
Spending:
Despite the Treasurer’s claims that Labor is working to tackle inflation, he almost immediately went on to announce over $185 BILLION in additional budget spending. You are paying for this. It will drive inflation even further. Labor’s plan of spending to curb inflation goes to show that over the long term, they have no clue about budget management.
Net Zero and a “better future”:
Despite the government's commitment to net zero, a ludicrous policy that will send power bills skyrocketing over the long term, and shut down manufacturing in Australia, Labor think they can pull the wool over your eyes and tell you they are “setting the country up for a better future.” Chalmers then immediately goes on to say he estimates a decrease in economic growth from 3.5% to 1.25%. So while in one sentence he’s assuring us things will get better, we have real world figures to show things are getting worse.
Increased jobseeker…..paid by Aussies with jobs:
An additional $4.9 billion of taxpayer funds will be allocated to welfare, much of it to pay people to go and find a job. This multi-billion dollar initiative will take money from working Australians and hand it over to people who could easily log onto seek and send out resumes.
Final thoughts:
As Ronald Reagan famously quipped, "The government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidise it."
This middle of the road Labor budget seems to follow that mantra. The budget surplus headline is an improvement, however this budget surplus is being delivered off the back of hard working Aussies who are being deliberately hit with the hidden tax known as bracket creep.
It’s better than previous budgets, but that isn’t saying much.
Regards,
Brian Marlow
President - Australian Taxpayers' Alliance