Brace for the Australian Federal Budget

Posted: April 2, 2014 in Uncategorized
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Soon we will have the budget we have to have. As it is the first year in Government, the Government will “dish out” all the pain – hoping that the electorate will forget by the time we go to the next election.

What is true is that the issue has been the previous Government as the increase in spending was about 7% (4.5% in real term) in a falling revenue scenario (3.6%). Spending has been 1.8%pa more than average and revenues 0.8% less than average. Hence the issue.

Where will be the most likely hit? Please be aware that from July the Government will be in minority in the Senate …so not is all that clear

– Reduce Federal staffing level (5-6% of spend)

-Reduce duplication between Federal and State Government departments (specially in health, education, workplace)

-Tighter mean testing (childcare, Age Care, Disability Support, 

-Increase user pay (specially for high income earner) specially in the health sector

-Online system deliveries (Medicare, Centrelink)

-Pension age gradual push to 70yo

-Broadening the GST base and decreasing the Internet purchases  $1,000 GST free level

-Taxation of product related to alcohol, tobacco and obesity

-Abolition of Mineral Resources Rent Tax (MMRT) and Carbon tax and relative department

-Privatisation (Medibank, but maybe also Australia Post)

What is in it for the share market?

Negative for Healthcare/Pathology 

Positive for Infrastructure 

Positive for Australian Retailers

Negative for Supermarkets and food manufacturers

Positive for miners and energy

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