It has been a common practice for many years for various potential measures to be mentioned, often by a backbencher or member of the outer ministry, to gauge the public’s reaction, as interpreted by the press. If the reaction is not too extreme and the relevant interest groups go quiet — or, best case scenario, endorse — then the measure can be slotted into the budget.
To be sure, we have been given a heads-up about the families package — a ramp-up in government spending on childcare and some rejigging of subsidy arrangements — but its announcement is expected before the budget.
Then there will be the jobs and small business package, which will involve the daft policy of reducing the company tax rate for small business by 1.5 percentage points, with the company tax rate left at the present figure of 30 per cent for big business.
But because so many small businesses don’t pay company tax, there will be additional sweeteners in the form of accelerated depreciation allowances and the reinstatement of the loss carry-back provisions.
No doubt, perennial politician and ex-treasurer Wayne Swan will justifiably chuckle to himself that these are his measures, which were ditched by the Coalition in its first budget.
The jobs component is likely to be relatively small beer, with the focus on spending in drought-affected areas using programs known to have very little impact.
It will be a case of seeming rather than doing, in part because the only effective jobs package is higher economic growth and fewer constraints on job creation imposed by regulations — something about which the government has done very little, particularly when it comes to industrial relations.
To accommodate the clamour to make multinational companies pay their “fair” share of tax — and to offset Labor’s loud campaign on this issue — Hockey will announce a diverted profits tax — the so-called Google tax — using the anti-avoidance provisions in the tax code. It is not expected much revenue will be raised from this new tax. It will be another case of seeming rather than doing, even if imposing a go-it-alone tax flies in the face of Australia’s previous commitment to tackle this issue through concerted international action guided by the OECDOrganisation for Economic Co-operation and Development.
There will be some “tax integrity” measures contained in the budget.
These will include working towards imposing the GST on overseas internet purchases of goods and services valued at less than $1000. (There is a view that the compliance costs have fallen significantly.)