A story of opportunities lost

Alas, there was no real bigger news and sadly there was no better news. In fact, the 2013 Budget can be likened to a book of short stories: lots of small anecdotes but no connection to a central plot.

There were a number of revenue measures announced, reflecting both the significant revenue shortfalls compared with the 2013/14 forecast and recently announced Government spending commitments, such as the National Disability Insurance Scheme and the Gonski school funding reforms.

The key revenue measures included:

• A significant package of measures targeting multinational profit-shifting structures – reduced thin cap ratios and changes to rules on controlled foreign companies, foreign exempt income and non-portfolio dividends, and so on.

• Changes to Australia’s foreign resident CGT regime.

• Measures to prevent ‘dividend washing’ and doubling-up of franking credits.

• Consolidation, with loopholes to be closed; new Tax Board recommendations made and Government responses to be implemented.

• Restriction on immediate deduction for mining rights and information.

• Compliance improvements through third-party reporting and data matching.

• Compliance targeting of trusts.

• Phase-out of the medical expense tax offset.

• Abolition and replacement of the Baby Bonus from 1 March 2014.

The promised return to surplus from the 2012/13 Budget did not eventuate – in fact, none of Treasurer Wayne Swan’s six Budgets has produced a surplus.

The IPA once again voiced our concerns on Budget night, with two key media releases and CEO interviews with the media inside Parliament House. In particular, we hammered the need to bolster small business through concessional tax provisions and reduced compliance burdens.

We were also vocal on the need to stop the Government’s meddling with superannuation.

In our pre-Budget submission, the Institute called on the Government to avoid short-term measures and adopt a demographic-centred superannuation policy framework, particularly aimed at older Australians with low superannuation nest eggs.

But again, the Budget failed to deliver support for small business, and it did not pursue meaningful tax reforms that were defined by the Henry Tax Review and the Tax Forum.

Further, it failed to realise opportunities for superannuation reforms that would encourage Australians to increase superannuation savings to secure self-reliant retirement. Instead, we continue to see an erosion of confidence in superannuation and the deferment of the cost of government pensions for future generations.

In short, the Budget can be considered a collection of lost opportunities.