Australian treasurer Joe Hockey's second budget will see a $35 billion deficit for 2015-16, with a fall to $7 billion by 2018-19.
Australian Treasurer Joe Hockey. Photo: RNZ / Diego Opatowski
The Government will cut $1.6 billion out of the welfare budget over four years in an aggressive pursuit of claims fraud and historical debtors.
In the budget's second-biggest projected savings measure, compliance officers in the Department of Human Services will be pursuing outstanding debts from 2010-2013, and investigating cases of fraud.
The measure is one of many in the budget which seeks to achieve savings not by increasing taxes or cutting specific schemes, but by varying the application of existing schemes or extending "integrity measures" in the name of fairness.
A GST compliance scheme will be extended for three years, harvesting an extra $445 million.
And the decision to bar "double dipping" parents from the existing paid parental leave scheme will yield $968 million over four years.
Meanwhile, Treasurer Joe Hockey has announced new legislation - the Multinational Anti-Avoidance Law - to stop multinational corporations from using tax minimisation schemes to escape paying tax in Australia.
"Under this new law, when we catch companies cheating, they will have to pay back double what they owe, plus interest," he told Parliament.
The Budget papers were silent on how much the initiative is likely to raise, saying only that there would be "an unquantifiable gain to revenue".
But the extension of the GST to offshore providers of digital content - the so-called "Netflix tax" - is expected to contribute an extra $350 million to GST revenue over the forward estimates period.
The GST is intended to apply to all digital goods and services imported by Australians from July 2015, though the budget papers note that agreement from all the states and territories would be required before legislation could be enacted.
Other Budget twiddles to the personal tax regime provide some considerable proceeds.
A redesign of the work-related car expense deduction, for example, changes the method by which car expenses are calculated.
Where the old system involved three different per-kilometre rates depending on the car's engine size, the new system sets a flat rate of 66c per kilometre in what the budget describes as "a modernisation" of the system.
It will also raise an extra $845 million over four years.
The Zone Tax Offset, a deduction originally conceived to compensate workers obliged to live in isolated or incommodious climes, will be more strictly interpreted to exclude fly-in-fly-out workers.
"For example, someone who lives with their family in Perth but has a FIFO job in the Pilbara will no longer be eligible to claim the ZTO," budget documents explain.
This measure will save the Government $325 over four years.
And fringe benefits tax exemptions for workers in the public health and not-for-profit sectors are to be trimmed.
To date, workers in these sectors have been able to salary-package "meal entertainment" benefits including, according to the budget papers, "holidays, cruises, weddings, meals and alcohol in restaurants."
These benefits will now be capped at $5000, in a decision anticipated to save the budget $295 million over four years.
The key points:
- Joe Hockey pledges $5.5 billion for small businesses in second budget
- No more tax-free working holidays for foreigners
- Small businesses get immediate 100pc tax write off for assets costing less than $20,000
- Budget deficit doubles to $35 billion in 2015-16
- Deficit to fall to $7 billion by 2018-19
- Mining sector's contribution to economy slumps from 45 per cent to 16 per cent over next three years
- Crackdown on welfare fraud claws back $1.7 billion over forward estimates
- $1.2 billion for national security, including fight against Islamic State
- $300 million put aside for farmers battling drought
- ABC