This is the budget that brings home the smoked bacon. And cheaper cholesterol pills.
Because it turns out that the ol’ CIGS UP! budget headline tax trick accounts for the biggest single “savings” measure in Wayne Swan’s third budget.
The only disappointment was that the Treasurer didn’t conduct his press conference while lounging half-naked in a bed of fragrant, fresh discount tobacco. S’pose that’s Tony Abbott’s area.
Of course, removing the emissions trading scheme from the budget unlocked a lazy extra $3 billion.
But a perusal of the major savings measures in the budget tells the story. Out of $30bn in new savings, $5bn is from a bigger slug on cigarettes.
The big new mining tax will raise $12bn. But as a result of some fiscal sleight of hand beyond Despatch Box’s Year 10 maths education, the boffins declare that’s “revenue neutral” because it will be sucked straight out of mining giants’ pockets and sprayed right back out in new spending on superannuation reform and a reduction in company tax. And if they never legislate the tax, the spending won’t happen.
The Treasurer says the new tax is simply being used to “renovate” the way we tax mining, it’s not there to fill a budget hole. Although at $9bn a year, it’s kind of a money pit. No, it is the $5bn fags tax increase that is the smoky-eyed hero of this budget. It effectively pays for the Rudd government’s new $5bn spending on health and hospitals to cut waiting times for emergency treatment and elective surgery.
By comparison, the next-biggest savings measure – to slash the cost of the Pharmaceutical Benefits Scheme that subsidises prescription medicine – will deliver $1.2bn.
That’s actually good news for patients, because it will reduce the cost of some prescription medicine. Nicotine patches, anyone?
Marvellously, some new arithmetic by Australia’s chief statistician has also found a lazy $1bn savings out of Overseas Development Assistance by changing the way he calculates gross national income. That must have been one great day at the razor gang office.
What we weren’t seeing in all these savings measures, the Treasurer explained, was what they didn’t spend.
The “no frills” story was the government’s commitment to peg back new spending growth to 2 per cent – a tough ask when Defence and Health spending growth is running much faster.
Swan says he was telling ministers to “go away” when they turned up with their begging bowls before adding “and by the way, here’s a haircut”.
So confident was the Treasurer that he offered to go toe to toe with anyone who said otherwise. For a moment, it even looked like it was going to be a Bring Back the Biff budget when he challenged The Australian’s editor-at-large Paul Kelly’s analysis of the stimulus spending by suggesting, “We can go outside”!
Just to explain the figures, of course.
Or maybe for a ciggie?
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