- POSTED: 13 May 2014 19:20
Treasurer Joe Hockey called on all Australians to help mend the country's finances on Tuesday, declaring the "age of entitlement" over as he announced a temporary tax on high income earners and plans to lift the pension age to 70.
CANBERRA: Treasurer Joe Hockey called on all Australians to help mend the country's finances on Tuesday, declaring the "age of entitlement" over as he announced a temporary tax on high income earners and plans to lift the pension age to 70.
The first budget from the conservative government of Prime Minister Tony Abbott since its September election aims to bring the deficit down from its current A$49.9 billion (US$46.6 billion) to A$29.8 billion next year.
Hockey said the days of "borrow and spend" must end if the deficit is to be further reduced to A$2.8 billion by 2017-18.
"It is time, for all of us, to contribute and build," he said.
"The age of entitlement is over. It has to be replaced, not with an age of austerity, but with an age of opportunity."
After more than 20 years of growth, the Australian economy is in the midst of a major transformation as an Asian-driven mining investment boom winds down, with real GDP expected to remain below trend at 2.5 per cent in 2014/15.
Hockey said mining and resources had done much of the heavy lifting but, it was time to "fire up" the rest of the economy.
He said money would be spent to help build roads, railways, ports and airports, with the government's total investment expected to reach A$50 billion by the end of the decade.
In his budget address, Hockey unveiled a new levy to reduce the deficit and a tightening of welfare payments.
"There is no easy way to repair the budget," he said. "We have been at pains to reduce government expenditure without hurting the economy.
"I want to emphasise that the budget we announce tonight is the first word and not the last word on budget repair. There is much work that still needs to be done."
The measures will see those earning more than A$180,000 a year paying a tax over the next three years, while there will be a one-year freeze on the salaries of members of parliament.
Government spending will be cut, with 16,500 public servant jobs lost over the next three years, while more than 70 government agencies face being abolished.
Growth in the foreign aid budget will also be reduced, with the government saving A$7.9 billion over five years, while family welfare payments and unemployment benefits will be tightened.
Hockey said the government would build on the former Labor government's decision to lift the pension age from 65 to 67 by 2023, by gradually increasing the age of eligibility to 70 by 2035.
Structural changes announced to cope with Australia's ageing population included a modest A$7 payment for visits to the doctor, with the revenue raised directed towards a A$20 billion Medical Research Future Fund.
"This fund will, within six years, be the biggest medical research endowment fund in the world," Hockey said.
Defence was quarantined from the cuts, with the budget committing to building spending up to two per cent of GDP within a decade, while the government's successful measures to deter asylum-seekers arriving by boats had delivered savings of A$2.5 billion.
The government went into the September election vowing no new taxes and could face a voter backlash over the budget, with the Labor opposition blasting it as full of broken promises and unfair hikes to the cost of living.
"It is a budget built on Tony Abbott's act of mass deceit at the last election," Labor treasury spokesman Chris Bowen said.
"Every family in Australia would be hit by new taxes and cost-of-living increases."
Welfare groups were also critical, upset that families, pensioners and youth were being targeted.
"There are measures in this budget that rip the guts out of what remains of a fair and egalitarian Australia," said John Falzon, chief executive of leading charity St Vincent de Paul Society.