Chairman’s
Report:
The Budget we had to have?
It never pays to get too political in articles as you immediately turn off 50% of the readers, however, as a swinging voter without allegiance to any party, I trust you will see my views as a-political.
Fortunately Australia went in to the Global Financial Crisis (GFC) in a very strong financial position. The Howard government likes to take credit for that but I have always believed that Paul Keating (ignoring his arrogance) was the architect of our good times, along with the Chinese - resources boom.
When the GFC hit, the Rudd government took early decisive action (“cash splashes”) to try and keep domestic consumption and jobs going. The wisdom of this will be debated for years to come. It is interesting to note the relatively new New Zealand government didn’t do this and has much lower unemployment!
We have had the handouts and no one can begrudge the increased payments for pensioners, but how will these “cash splashes” impact you going forward?
Large budget deficits for the next few years will mean
the government has to borrow the funds to finance the deficits.
This means as soon as the economy does pick up interest
rates will rise rapidly. The government has also predicted
above average growth when we come out of recession. If
correct, this
is another reason why interest rates will rise.
In summary a price will be paid by all Australians for the “cash splashes” and the massive budget deficits. Many will therefore ask did we really have to have this budget? Like the recession we had to have, that will be debated for years to come.
Budget changes that will impact readers
include:
| - | Pensions up; |
| - | “Elections” tax cuts honoured from 1 July 2009; |
| - | First Home Owners Grant extended then reduced; |
| - | Annual carer supplement introduced. |
| - | Those on Superannuation pensions have had the minimum pension amount reduced for another year. |
| - | Small businesses investment allowance increased to 50% until the 31st of December 2009. |
These changes all increase the deficit and have to be paid for. The question is how and when. Unless the economy, employment and business taxes increase rapidly, you can expect a horror budget after the next election. Or will it be increased GST?
Changes were also made to Superannuation, yet again. If
you have been or are intending to contribute more than
the compulsory 9% you should speak with your Count Adviser
as to whether or not these changes will impact you. The
good news on Superannuation is the non-tax deductible amount
has not been changed, so if you don’t have enough
in super and you have the money, you can still put relatively
large amounts into tax advantaged Superannuation.
They say
you get the government you deserve. I guess I will have
to take some responsibility for this government
and the next one!
Barry Lambert
Executive Chairman and Founder
Count Financial Limited
 |
As at 10 June, 2009 |
