Balancing the budget by lowering the baby bonus
This story originally appeared at news.com.au > Money > Cost of Living on 29 November 2011.
More than $400 will be shaved off the baby bonus and some visa charges will jump as the Government battles to turn a $37 billion budget deficit into a $1.5 billion surplus.
Treasurer Wayne Swan today outlined widespread Budget pruning as he released the Treasury's regular assessment of the economy, the Mid-year Economic and Fiscal Outlook (MYEFO).
The bid for a surplus was backed by a new AAA rating from a financial agency, meaning that for the first time even Australia has been given top marks by all three major rating agencies.
The Government forecasts a $1.5 billion surplus in 2012-13 - to be contained in next May's Budget - despite a giant deficit of $37 billion for 2011-12, up from a projected $22.6 billion.
Treasurer Wayne Swan today confirmed that Government tax revenue had fallen by $20 billion over the four years beginning this financial year, ramping up the deficit.
Along with the baby bonus cut, Mr Swan announced other cost cutting measures including:
- A one-off increase in the efficiency dividend demanded of departments, set to raise $1.5 billion, and possibly causing public service job losses and service reductions;
- Attacking rorting of the Living Away from Home Allowance tax concessions for foreign executives working here, expected to save $710 million;
- Making it harder to get the Dependent Spouse Offset available to spouses without children by limiting it to those born after 1952, which is expected to save $370 million;
- Reducing the Baby Bonus from 1 September 2012 to $5000, down from $5400, and a three-year pause in indexation of the payment. The Paid Parental Leave Scheme will not be touched;
- Increasing charges for some visas for non-residents coming to Australia to ensure Australian taxpayers are no longer subsidising visa applications, saving $613 million.
Today the third of the big three economics ratings agencies, Fitch, upgraded Australia's long-term outlook from AA+ to AAA.
The promotion was credited in part to Australia's "low public debt" and "credible inflation target" by Fitch Ratings, which with Standard&Poors and Moodies evaluates the strengths of national economies.
"These factors have helped Australia weather a number of externally-driven shocks over the past two decades," said the agency.
It added Australia's debt-to-GDP ratio was 26.3 per cent in 2010-11, while the average for like economies was 55.7 per cent in 2010. But it warned the aim for a Budget surplus in 2013 might not be practicable.
"The Federal Government remains committed to returning the Commonwealth Budget back to surplus by FY2012-13 (fiscal year ending 30 June, 2013), although a further deterioration in global economic conditions could delay the achievement of this objective," said the Fitch assessment.
The cuts make it more likely the Reserve Bank will lower official interest rates by another 0.25 percentage points next week as the Government looks for parallel assistance on monetary policy.
It wants mortgage and credit interest rates generally to fall as it improves the Budget result.
The Government’s confidence in Australia being able to withstand the collapse of European economies was bolstered by an independent forecast that investment in the mining industry at October was a record $231.8 billion, a rise of 34 per cent from April.
The public service will be asked to provide much of the savings and the Opposition immediately accused Ms Gillard of breaking an election promise.
In July last year Ms Gillard said the public service would be spared across-the-board cuts.
The mid-year assessment said unemployment was expected to go from 5.2 per cent to 5.5 per cent as national output falls.
Economic growth in 2011-12 was expected to come in below expectations at 3.25 per cent, down by 0.75 per cent.
Net debt - as opposed to the gross debt calculated by Fitch Ratings - is expected to be 8.9 per cent of GDP in 2011-12, falling to 7.7 per cent in 2014-15. This would be one of the lowest debt ratios in the world.
Timeline: India takes unicorn leap with six in five days
We chart an historic week in India’s tech industry, where in just five days, between 5-9 April 2021, the country achieved six new unicorns, bringing India’s total to 10 in 2021 to date, an immense unicorn leap from just seven in 2020 and six in 2019.
April 5: Meesho
India’s first social commerce unicorn, Meesho raised US$300m from SoftBank, Facebook and Shunwei Capital, giving the Bangalore-based startup a US$2.1bn valuation, a threefold jump from its previous funding round in 2019. Founded in 2015 by two IIT-Delhi graduates, Meesho connects producers and resellers, helping small businesses sell through social media. It has 45m customers and has enabled 13m entrepreneurs to start their online businesses with no investment.
April 6: CRED
Founded just over two years ago, Bangalore-based credit card repayment app CRED raised US$215m from Falcon Edge Capital and Coatue, nearly trebling its valuation to US$2.2bn from its January US$80m round. Allowing customers to pay off their credit card debt while earning CRED coins which they cash in for rewards, CRED has grown rapidly during COVID-19, doubling its customer base to nearly 6 million in a year.
April 7: API Holdings / Groww
The first epharmacy startup to gain unicorn status, PharmEasy (API Holdings), which has digitised 60,000 brick and mortar pharmacies and 400 doctors across India, raised US$350m in a round led by Prosus Ventures. Founded by four former Flipkart employees as a way of making investing simple, investment platform Groww became India’s second-youngest fintech unicorn, raising US$83m in Series D funding led by Tiger Global, quadrupling its previous round in September.
April 8: ShareChat
New Delhi-grown social media startup ShareChat, founded in 2016 by Mohalla Tech raised US$502m from Lightspeed Ventures, Tiger Global, Twitter and Snap taking its raised total over six rounds to US$766m and pushing its valuation to US$2.1bn. The funding will be used to grow its user base and short video platform Moj, which launched in 2020 following TikTok’s ban in India. The regional language startup claims 280m users.
April 9: Gupshup
AI-led conversational message startup joined the unicorn club after raising US$100m from Tiger Global giving it a ten-fold valuation of US$1.4bn. The smart messaging platform, which has seen accelerated growth during the pandemic, was founded in Bangalore in 2005 by serial entrepreneur Beerud Sheth, whose online freelancing platform Elance is now listed. Gupshup’s API enables 100,000+ businesses to build messaging and conversation experiences across 30+ communication channels.