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Archive for January, 2019

31 January
Comments Off on Samsung trumpets ‘super-fast’ 5G network tests

Samsung trumpets ‘super-fast’ 5G network tests

5G networks could allow “a wide range of services such as 3D movies and games, real-time streaming of ultra high-definition content, and remote medical services”: Samsung. Photo: Louie DouvisSamsung says it has successfully tested super-fast 5G wireless technology which would eventually allow users to download an entire movie in one second.
Nanjing Night Net

Despite the fact that major countries including Australia, Britain and China have yet to complete their 4G mobile phone network roll-out, the South Korean electronics maker claims its new technology could offer ”ubiquitous” access to ultra high-speed networks operating at 100 times present speeds and offering regular gigabit access.

5G networks could allow ”a wide range of services such as 3D movies and games, real-time streaming of ultra high-definition content, and remote medical services,” Samsung claimed in a blog post.

Tests of the new technology had witnessed data transmission of more than one gigabit per second over a distance of two kilometres.

Independent telecommunications analyst Chris Coughlan said that at such an early stage, the 5G wireless technology could not be compared with the national broadband network. He said there would be questions on how costly the 5G technology would be and how much spectrum it would need to use.

The federal government’s national broadband network will also deliver speeds of up to 1Gbps in some areas by the end of this year, but mobile networks and Labor’s fibre optic broadband network have differing strengths.

Mobile data becomes more congested the more people are using it at the same time, and is at present much more expensive than fixed broadband.

”As a result, subscribers will be able to enjoy a wide range of services such as 3D movies and games, real-time streaming of ultra high-definition content, and remote medical services,” it said.

Samsung said it had found a way to harness millimetre-wave bands, which have proved to be a sticking point for the mobile industry.

The test used 64 antenna elements, which the company said overcame the issue of ”unfavourable propagation characteristics” that have prevented data travelling across long distances using the bands.

South Korea, one of the most wired countries on Earth, already has about 20 million 4G users.

The ”mmWave Mobile Technology” is the first system that claims to be fully fledged, though research into 5G has been going on in laboratories around the world for some time. Last year, Britain’s University of Surrey announced £35 million ($54 million) funding for a research centre back by Huawei, Samsung, Fujitsu, Telefonica and others.

Until now, however, scientists have believed that high-frequency wavebands were typically not suitable for the long-range communications required by mobile networks.

”The implementation of a high-speed 5G cellular network requires a broad band of frequencies, much like an increased water flow requires a wider pipe,” Samsung said. ”While it was a recognised option, it has been long believed that the millimetre-wave bands had limitations in transmitting data over long distances due to its unfavorable propagation characteristics.”

Samsung’s new research has concentrated at much higher frequencies and the company claims it has worked over distances up to two kilometres. ”Samsung’s new adaptive array transceiver technology has proved itself as a successful solution,” the company claims. ”It transmits data in the millimetre-wave band at a frequency of 28GHz at a speed of up to 1.056Gbps to a distance of up to two kilometres. The adaptive array transceiver technology, using 64 antenna elements, can be a viable solution for overcoming the radio propagation loss at millimetre-wave bands, much higher than the conventional frequency bands ranging from several hundred MHz to several GHz.”

Telegraph, London

This story Administrator ready to work first appeared on Nanjing Night Net.

31 January
Comments Off on Treasurer Wayne Swan’s budget speech 2013

Treasurer Wayne Swan’s budget speech 2013

STRONGER ECONOMY, SMARTER NATION, FAIRER SOCIETY
Nanjing Night Net

Tonight this Labor government makes the choice to keep our economy strong and invest in our future.

To support jobs and growth in an uncertain world.

To chart a pathway to surplus through responsible savings.

And to ensure no Australian is left behind because of the circumstances of their birth or misfortune in their life.

Speaker, no government gets to choose the global economic circumstances in which the budget is framed.

But you do get to choose the priorities for the nation.

Labor chooses a stronger, smarter and fairer Australia.

An Australia where our school children get the opportunity to reach their full potential with $9.8 billion invested in new school funding.

An Australia which gives dignity to people with severe and permanent disability through the historic $14.3 billion investment in DisabilityCare Australia. This is a proud moment for our country.

An Australia with the critical infrastructure we need to drive our economy forward, with $24 billion of new investment in road and rail.

An Australia where our prosperity spreads opportunity to every postcode in our nation.

Speaker, tonight, we put in place the savings to fully fund these priority investments for 10 years and beyond, an achievement unprecedented in our nation’s history.

We make these historic investments in the Labor tradition from a position of economic strength.

The facts are, under Labor’s economic leadership:

• Our economy is 13 per cent bigger than before the GFC.

• More than 950,000 jobs have been created with more Australians in work than ever before – there is no fact we are more proud of.

• For the first time ever we have a Triple-A credit rating from all three global agencies with a stable outlook – one of only eight countries to do so.

• And all this with contained inflation and new record low interest rates.

That is because we got the big calls right on the economy.

Now we enter a period where new choices must be made.

Challenging global conditions and the high Australian dollar have put huge pressure on the budget and led to a significant reduction in expected tax receipts totalling over $60 billion over the four years to 2015-16.

Speaker, we face a clear choice.

Radical cuts to the bone that would risk jobs and our economy. Or a sensible, calm and responsible approach that puts jobs first. We have always put the interests of working Australians first. In this budget, we do so again.

Just because the global economy took an axe to our budget, does not mean we should take an axe to our economy.

Just as we shielded Australia from the worst during the GFC, we will continue to follow the responsible middle course.

Two simple but powerful words are at the heart of our approach and they mean an awful lot to every Australian watching tonight – jobs and growth.

Speaker, because of our deep commitment to jobs and growth we have taken the responsible course to delay the return to surplus, and due to a savage hit to tax receipts there will be a deficit of $18 billion in 2013-14.

The alternative, cutting to the bone, puts Australian jobs and our economy at risk, something this Labor government will never accept.

Speaker, this is our choice.

To those who would take us down the European road of savage austerity I say the social destruction that comes from cutting too much, too hard, too fast is not the Australian way.

Instead, we’re making targeted, sustainable savings of $43 billion over the forward estimates.

To deliver a measured and balanced consolidation of around 0.5 per cent of GDP a year on average from 2013-14.

Since mid-2009 we have fully offset all new spending with savings measures and that continues tonight.

This discipline gives Australia a responsible pathway back to balance in 2015-16 and surplus by 2016-17.

It is a fairer way forward, by helping modern families with targeted assistance for the everyday pressures, by delivering the Schoolkids Bonus and through the Low Income Super Contributions.

A smarter way forward providing businesses with a skilled workforce, boosting incentives to innovate and adapt, to reap the benefits of the Asian Century.

And a stronger way forward, investing in education and training, boosting productivity, protecting and creating jobs, growing the economy, and keeping inflation and interest rates low.

ECONOMIC AND FISCAL STRENGTH

Speaker, tonight we build on Australia’s resilience during the global financial crisis and its fallout.

Our nation’s outlook is bright and our economy is set to grow faster than most of the developed world.

Real GDP growth of 2.75 per cent in 2013-14 and 3 per cent in 2014-15.

By mid 2015, our economy will be 22 per cent bigger than before the global financial crisis, outstripping every major advanced economy.

An economy in transition

From this position of strength, our economy is undergoing an important transition.

Our nation’s largest resource investment boom is shifting to a boom in production and exports.

As the resources boom enters its new phase, the economy is also transitioning towards broader sources of economic growth.

And while our opportunities are great and our future bright, this transition will not be seamless.

Unemployment is forecast at 5.75 per cent in 2013-14, up slightly, but still among the lowest in the developed world.

This transition comes against the backdrop of a profound shift in the global economy.

The weight of economic activity is shifting towards our region. As the Asian century unfolds, there are many new opportunities.

Not just in mining, also for our farmers, manufacturers, and service providers, but only if we make the choice to invest.

Because you don’t want to find yourself in the fastest growing region in the world, with yesterday’s economy.

You can’t be a first-world economy in the 21st century if you haven’t laid the groundwork to seize the opportunities.

Training a highly skilled, educated and productive workforce.

Supporting business to be innovative and competitive.

Investing in high quality infrastructure.

Ensuring a strong, fair and sustainable tax system.

All achievements of this budget.

And you can’t be a first-world economy in the 21st century if you’re not on the path to a clean energy future.

As is widely accepted, putting a price on carbon pollution is the lowest cost and most efficient way to tackle dangerous climate change.

This budget recognises as we move to an emissions trading scheme the carbon price is likely to be lower as is associated spending, reflecting lower costs to the economy, households and business.

We will continue to deliver existing household assistance, including increases in pensions, allowances, family payments and other benefits, and ensure future assistance remains adequate.

Weaker tax revenue

While our economy remains resilient, powerful global forces and the stubbornly high Australian dollar have savaged budget revenues.

Not since Hawke and Keating floated the dollar has it remained so high.

This has put acute pressure on prices and company profits, weighing more heavily than expected on tax receipts.

Speaker, let’s be clear about the magnitude of the hit to revenue.

This year we face the second largest revenue writedown since the Great Depression.

Since last year’s budget, expected tax receipts for 2012-13 have been written down by $17 billion.

And since our mid year update in October, there has been a total revenue writedown of over $60 billion over the next four years.

Company taxes, capital gains tax, resource rent taxes have all been hit. We’ve seen almost $170 billion wiped off our tax receipts since the GFC.

The tax-to-GDP ratio in 2013-14 is estimated to be 22.2 per cent, 1.8 percentage points lower than the average of the 5 years prior to the GFC.

It’s as simple as this — if we were taxing Australian families and Australian businesses like our predecessors did, we’d have an extra $24 billion in taxes in 2013-14 and be comfortably in surplus every year of the forwards.

The hit to our tax collections will see our very low level of net debt peak at 11.4 per cent of GDP, still less than 1/8th the level of major advanced economies.

This budget sets a sensible pathway to surplus, while making room for the big investments in our nation’s future.

We’ve put in place over $180 billion in responsible savings over six budgets since 2008-09.

And we have been putting structural savings in place since day one.

The long-term savings we’ve made over the last five years add up to over $300 billion by 2020-21.

Of course, these savings involve some very difficult decisions.

But Labor has always tackled the reforms our nation needs.

We take the difficult decisions knowing they allow us to fully fund better schools for our children, the historic creation of DisabilityCare Australia, and of course the next wave of nation building.

BUILDING A SMARTER NATION

Speaker, we know that a smarter Australia means a stronger Australia.

An Australia able to grasp the opportunities of the Asian century.

A skilled workforce and a strong, productive and resilient economy.

We know we’ll only win the economic race in the Asian Century if we win the education race.

Our current school funding system is broken, it’s failing our children.

That’s why we are transforming our nation’s schools by investing $9.8 billion in new school funding.

Delivering more teacher training, extra resources for school libraries, specialist language assistance, and literacy assessments in the early years.

We are also ensuring funding will grow for every school.

The budget fully funds this investment over the next decade, meaning we can return the budget to surplus without leaving our children an education deficit.

Building on our unprecedented investments in early childhood education and care with $660 million to continue the National Partnership that will achieve universal access to preschool.

And establishing a $300 million Early Years Quality Fund to support childcare workers.

Speaker, this Labor government has delivered a 75 per cent funding increase for university places, supporting around 189,000 more university students.

And in this budget we ensure this funding continues to grow sustainably.

Tonight we announce an additional $97 million investment to boost the number of Commonwealth-supported university places, and an extra $186 million for research infrastructure.

Speaker, the investments we make tonight will ensure our children are equipped to take up the high-skill, high-wage jobs of the future.

On this side of the House, we believe every Australian child deserves the same opportunities in life, and a child’s postcode should not determine their future.

BUILDING A FAIRER AUSTRALIA

Speaker, the fair go is at the heart of everything Labor stands for.

That’s why we’re so proud to establish DisabilityCare Australia, the National Disability Insurance Scheme.

Supporting Australians with significant and permanent disability has long been in our

nation’s heart.

In March we put it in our nation’s laws, and tonight we put it in our nation’s budget.

Following in the huge footsteps of Medicare and Labor’s record of historic social policy reforms.

In 2018-19 around 460,000 Australians with significant and permanent disability will get the support they deserve.

Our current disability system is underfunded, unfair and fragmented.

For too long, people with disability have been denied the opportunity to live a life many of us take for granted.

For too long, Australia has failed to reform this broken system.

Speaker, tonight we right this wrong.

We provide choice, control and dignity to people with disability.

This could mean the difference between getting the right wheelchair now or waiting three long painful years using a wheelchair that doesn’t fit.

It could mean the difference between a shower every day, or only once a week.

This budget will fully fund our share of DisabilityCare Australia, beyond the next decade.

From 1 July 2014 the Medicare levy will increase by 0.5 a percentage point.

The money raised will be placed in a special fund for 10 years and only used for the additional costs of DisabilityCare Australia.

Tonight, we end the cruel lottery of the current system.

Speaker, the government is investing $64.6 billion in health funding, up 40 per cent since we came to office.

This includes National Health Reform funding for state and territory governments who will receive unprecedented growth of 35 per cent for public hospital services over the next four years.

This includes $14 billion in 2013-14 which grows to $19 billion in 2016-17.

This means that health funding to every state and every territory will grow over the forward estimates.

As a cancer survivor myself, I’ve experienced the high quality treatment provided by our health system but I know more needs to be done to prevent, detect and treat this disease.

Tonight’s budget builds on the $3.5 billion we’ve already invested in cancer prevention, detection, treatment and research.

We continue the fight against cancer, investing over $226 million in world-leading cancer care.

Investing over $100 million in screening for breast, cervical and bowel cancer.

Supporting critical chemotherapy medicines, and investing $23.8 million for life-saving bone-marrow transplants.

Funding a third Prostate Cancer Research Centre and continuing support for the two existing centres.

Supporting CanTeen’s work with young people living with cancer, and supporting those affected by lung cancer.

Speaker, Labor also has a strong record of supporting older Australians.

We introduced the largest single increase in the age pension in 100 years, and we introduced the Superannuation Guarantee, which we’re raising gradually to 12 per cent starting from 1 July this year.

We’re improving aged care services through our $3.7 billion Living Longer. Living Better package.

Tonight marks another step in the Gillard government’s plan to turn Grey into Gold and harness the wisdom of our senior Australians.

We will invest another $127 million to help senior Australians continue their active engagement in society and introduce a pilot program to help downsize their home without affecting their pension.

We’re also tackling entrenched disadvantage.

Committing $777 million to renew the National Partnership on Closing the Gap on Indigenous Health Outcomes.

And funding a new transitional National Partnership to continue vital homelessness services.

BUILDING A STRONGER ECONOMY

So we are investing in Australia’s human capital, at the same time as we invest in our economic capital.

Nation-building infrastructure

We have already invested a massive $36 billion in roads, rail and ports.

Tonight we continue our ambitious program with a new $24 billion investment in the next wave of nation building infrastructure.

It’s critical to invest in both urban road and rail infrastructure.

Traffic congestion costs commuters time with their families and is estimated to cost our economy up to $20 billion a year by 2020 if not addressed.

That’s why we have committed more to urban public transport infrastructure than all our predecessors since Federation combined.

But there is more to be done.

So tonight we’re investing in transformational public transport projects like Brisbane’s Cross River Rail and Melbourne Metro.

These projects will change the way these cities work and allow them to grow into the future.

We’re also putting funds towards productivity-enhancing infrastructure in Sydney — the M4 extension and M5 duplication — and funds that will see the Missing Link between the F3-M2 constructed.

We will partner with the private sector and state governments to deliver these critical projects as efficiently as possible.

We are also investing in the Gateway North Upgrade in Brisbane, Melbourne’s M80 Ring Road, and the South Road Upgrade in Adelaide.

And in our regions we are investing in the Swan Valley Bypass in WA, the Bruce Highway in Queensland, the Pacific Highway in NSW, the Midlands Highway in Tasmania and the Tiger Brennan Drive in the Northern Territory.

These investments will boost productivity, build capacity, improve safety, and relieve congestion, as well as improving the quality of life in our communities across the nation.

The National Broadband Network is putting Australia at the cutting edge of broadband technology and turbocharging productivity for decades to come.

Tonight we announce $12.9 million to connect more local councils to the NBN and provide training for small business and not-for-profits in 20 regional NBN rollout sites.

Supporting business to innovate

Speaker, the strength of our economy also depends on the ability of Australian businesses to win work at home and abroad.

We’re boosting innovation, productivity and competitiveness through our $1 billion Plan for Australian Jobs.

Investing over $500 million to create Industry Innovation Precincts around Australia.

And providing $378 million to stimulate private sector investment in entrepreneurial small to medium-sized enterprises.

Part of our plan to support and create jobs, building on our loss carry-back and instant asset write-off reforms for three million small businesses.

Meeting industry’s skills needs

Speaker, as well as having the infrastructure for the future, we must also ensure our economy has the skilled workers it needs.

Labor has increased annual funding for skills and training by almost 50 per cent.

Tonight we build on that record, with a $69 million Alternative Pathways to the Trades program, providing more flexible pathways for 4000 Australians undertaking trade and technical qualifications.

We have created a $45 million Skills Connect Fund to deliver more effective workplace training for Australian businesses.

Workforce opportunity

Speaker, this Labor government will do everything in its power to boost workforce participation and support transitions to employment.

Tonight we continue our support by allowing Newstart recipients to earn around $1000 more a year before their payments are affected, the first increase in more than a decade.

We are also supporting parents in their efforts to balance work and family with around 280,000 parents already reaping the benefits of the nation’s first Paid Parental Leave scheme.

Our scheme has been in place for two years, is fully funded, affordable, sustainable, equitable, and supported by every member on this side of the House.

Stronger regions, resilient rural communities

Speaker, tonight we announce new reforms to build stronger regions and more resilient rural communities.

Over $330 million to support the historic Tasmanian forests agreement, and continuing our investment in Tasmanian economic growth and jobs.

Nearly $100 million for a new Farm Household Allowance to support farmers in hardship, part of the National Drought Program Reform.

And a new Farm Finance package to help farmers struggling with debt, providing concessional loans, more rural financial counsellors, and a better approach to debt mediation.

This comes on top of the almost $1 billion of investment in the Regional Development Australia Fund supporting the infrastructure needs and sustaining economic growth in Australia’s regions.

We also commit another $200 million for Reef Rescue to help farmers improve the quality of water entering the Great Barrier Reef.

Recovering from natural disasters

Speaker, Australians well know the devastation nature can unleash on our country, our communities, and our people — from floods, cyclones to bushfires.

Since 2010-11, Labor has paid $5.7 billion to the states to support disaster relief.

We expect to pay a further $6.2 billion over the five years from 2012-13, including $1.9 billion to help Queensland through the January floods.

Tonight we invest $40 million to rebuild local council infrastructure to a better and more resilient standard.

Strong foundations

And Speaker, as we build a stronger Australia for the future, we continue to honour those who laid the foundations of our country’s strength.

As the Centenary of Anzac draws near, we honour the hard work and sacrifices of Australian service personnel and their families.

We build on our previous commitment to commemorating the Centenary of Anzac investing a further $25 million and expanding veterans mental health services.

And this budget funds the core defence capabilities required to protect Australia’s national security interests.

Royal Commission

We have also provided the Royal Commission into Institutional Responses to Child Sexual Abuse with the resources required to go about its important work and ensure survivors have the support they need.

ENDURING SAVINGS

Speaker, this budget makes historic investments in our children’s education, in care for our most vulnerable citizens, and in building our nation.

But you only get to make the big investments if you are willing to make the savings to fund them.

To fund the critical investments over the next decade and to return the budget to surplus, this government has made $43 billion in savings over the forward estimates.

In addition to the savings already mentioned we are:

• improving the sustainability of the family payments system by extending indexation pauses; not proceeding with increases to FTB-A announced in the 2012-13 budget and abolishing the Baby Bonus; while providing new support for families of newborns through FTB-A;

• closing loopholes and protecting the corporate tax base to ensure multinationals and big businesses are not being given an unfair advantage;

• better targeting superannuation tax concessions to improve the system’s fairness,

sustainability and efficiency;

• improving the sustainability of the health budget through phasing out the poorly-targeted Net Medical Expenses Tax Offset and making changes to the timing of Medicare Benefits Schedule indexation;

• changing tobacco indexation to make it more consistent with consumers’ purchasing power;

• continuing to grow overseas development assistance to 0.5 per cent of gross national income, but deferring the target date by one year from 2016-17 to 2017-18; and

• continuing to improve the responsiveness of income tax instalments for all large entities.

CHOOSING OUR FUTURE

Speaker, tonight this Labor government has made the choice — a clear choice — to keep our economy strong and invest in our future.

We’ve chosen to give every child a world class education, and to make sure no Australian is left behind.

We’ve chosen a responsible path to surplus while supporting jobs and growth.

To make our economy stronger, our nation smarter and our society fairer.

Labor has a proud record of making visionary choices that strengthen this great nation.

The Age Pension…Medicare…Universal Superannuation…Paid Parental Leave…the National Broadband Network…Pricing Carbon.

And with the ground-breaking investments I have announced tonight, we build upon that proud Labor tradition.

This is the Australia that Labor governments choose.

Because creating prosperity and spreading opportunity are the values that drive this Labor government every single day.

I commend the Bill to the House.

This story Administrator ready to work first appeared on Nanjing Night Net.

31 January
Comments Off on Multinationals and banks targeted

Multinationals and banks targeted

Multinational businesses are the prime targets of a sweeping plan to close down corporate tax loopholes, in a move expected to raise an extra $4.2 billion over the next four years.
Nanjing Night Net

With big downgrades in company tax punching a hole in the government’s revenue forecasts, Labor has tightened rules it says are being exploited by corporate giants.

The group of measures is the second biggest source of savings in the budget, behind the $11.5 billion raised by increasing the Medicare levy, and threatens to further damage Labor’s frosty relations with the big end of town.

The key targets of the crackdown are complex practices that allow big foreign businesses to shift profits into countries where they pay less tax, minimising their Australian liability.

But the local banks are also in the government’s sights, with tougher rules flagged for locally-based, low-taxed banking units that sell their services to overseas customers.

Treasurer Wayne Swan said the move to close the range of ‘‘unfair’’ loopholes in the corporate tax system was needed to make sure other taxpayers did not carry an unfair burden.

‘‘Businesses that aggressively exploit tax loopholes gain an unfair advantage over their competitors,’’ Mr Swan said.

‘‘If a few large companies use loopholes to avoid paying their fair share of tax, an greater taxation burden is placed on other taxpayers, like small and medium businesses and individual taxpayers.’’

A key plank of the changes relates to tax breaks that foreign subsidiaries receive on money they have borrowed – often from another arm of the same company.

Until now, foreign subsidiaries have been able to finance up to 75 per cent of their operations with debt, which allows them to make hefty tax deductions.

But the government will raise an extra $1.4 billion by lowering this limit to 60 per cent, following similar moves from cash-strapped governments overseas.

The taxman is also expected to raise an extra $406 million over four years through increased scrutiny of offshore restructuring activity that ‘‘facilitates profit shifting.’’

Big local banks including Macquarie Group are also likely to be affected by tougher rules for domestic units set up by the banks that pay only 10 per cent tax rates rather than 30 per cent.

The government believes the lenders are directing domestic activity into these areas and dodging tax in doing so. It estimates it can raise an extra $320 million over four years by tightening up on the rules, including a ban on different parts of the same bank trading with each other so that they get the tax break.

Mining companies also face changes that will net more for the taxman.

The budget contained measures to tighten the rules on exploration deductions for miners, in a move that is likely to prompt anger among the industry.

The changes are worth $1.1 billion to the government over four years, and are designed to avoid penalising junior miners conducting greenfields exploration.

The changes will have the most impact on companies that purchase a tenement that has previously been explored, by excluding the purchase price of the mining right and certain intangible elements like knowledge from being claimed.

The Government appears to be well aware the change could spark another stoush with the resources industry, and stressed in the budget papers that the government would ‘‘consult closely with industry on the design and implementation of the measure’’.

‘‘This measure will improve the sustainability of this important concession, which recognises that resources exploration is a vital and economically risky activity that has spillover benefits to the economy,’’ the budget papers said.

The government also expects to claw back an extra $60 million through a ban on a strategy known as ‘‘dividend washing’.’ The strategy, used by big domestic investors, allows them to effectively double the tax break they receive from franking credits.

The move to target big business for more tax revenue came as it was revealed that falling company tax receipts were the main reason for the sharp deterioration in the budget’s bottom line.

Forecasts of corporate tax receipts were written down by $24.3 billion over the four years to 2015-16. The big downgrades in company tax have been blamed on falling commodity prices, a stubbornly high dollar that is squeezing many firms, and weak consumer spending.

This story Administrator ready to work first appeared on Nanjing Night Net.

31 January
Comments Off on More pain than gain as repair job starts

More pain than gain as repair job starts

The budget takes more than it gives.It was one of those cold yet sunny late autumn days Canberra excels at. It fitted in well with what is probably Wayne Swan’s last budget before Labor enters the winter of opposition: a budget that takes more than it gives but, in the circumstances, is not a bad effort at all.
Nanjing Night Net

This is like no other pre-election budget. In the old days, when governments had money, these budgets would lure us with fistfuls of dollars. This one is different. It takes fistfuls of dollars off us – mostly off Labor’s political enemies such as big corporations, tax avoiders and high-income earners – and locks them away as savings.

Some is taken off ordinary people. Those who screamed for the budget to hack into middle-class welfare have got their way. This budget not only cancels the $11 a week increase in family tax benefit part A due on July 1 but it scraps the baby bonus and freezes the threshold for the full benefit at just over $100,000 for a family with two children, with the benefit cutting out entirely at $113,000.

These are indeed “middle incomes”. Labor is subtly converting Australia’s mainstream family benefit from an entitlement for all families to a welfare benefit for those who need it. How will the Liberals, who denounce excessive welfare spending, respond to Labor following their advice?

The net impact of the budget is to cut spending by $6 billion over the next four years and raise revenues by $29 billion. Very little of that would happen in 2013-14 but, by 2015-16, these measures would withdraw $12 billion a year from the economy – even after the budget’s new spending.

Sure, we are likely to have a new government by then, with different priorities. But it will have to start from where Labor leaves off. It will have to honour, or extricate itself from, the agreements Labor makes with the state governments, which will naturally put their own and their state’s interests first.

And one of the things to admire in this budget is the mixture of economic responsibility and political rat cunning that has gone into designing the dramatic shift from deep budget deficit to small budget surplus within three years.

Responsible, in that it gives priority to avoiding anything that will rock’s Australia boat in the uncertain seas of 2013-14. The budget consolidation does not begin until 2014-15, assuming the economy survives in good shape, with other things picking up the slack left by the mining boom’s demise.

Readers may be unaware of the fears weighing on policymakers when they ponder what might take over from mining as the engine of growth. Every previous mining boom has ended in a bust – and this has been one hell of a boom.

Yes, the budget has to get back to surplus – and in reasonable time. But it does not have to be in 2013-14, when the first responsibility on policymakers is to do nothing to increase the risk of Australia heading into recession. A medium-term consolidation strategy was the right one and this budget takes it.

The deficit is tipped to shrink from $19.4 billion this year to $18 billion in 2013-14. But that is entirely due to the government pre-paying $1.1 billion of 2013-14 grants to local government so they become part of this year’s deficit. Neat, but shifty.

It’s an impossible year to forecast, but Treasury’s estimate of 2.75 per cent growth in 2013-14 matches the market’s view and seems as good a guess as any. If wrong, it’s not to make the numbers look good but because the future is hard to forecast.

It is appropriate that the budget repair job is being done after next year and appropriate that it be mostly on the revenue side, because that’s where the damage was done.

In the past four years, revenue as a share of gross domestic product has been the lowest since the last recession. Revenue this year is forecast to be 23 per cent of GDP, compared with the Howard government’s post-GST average of 25.4 per cent. Spending is estimated to be 24.2 per cent, the same as Howard’s post-GST average.

If you hear Tony Abbott, Joe Hockey and Andrew Robb tell you there’s been no revenue slump, you tell them to look at pages 10-6 and 10-7 of Budget Paper 1. It’s all there, in numbers prepared by the same impartial public servants who served them in government.

But this is a budget that will win more applause from economists than voters. The one bunny pulled out of the hat was $3 billion for the Melbourne metro. For most of us, there was more pain than gain.

And Wednesday in Canberra is forecast to be cold and showery.

This story Administrator ready to work first appeared on Nanjing Night Net.

31 January
Comments Off on Resource price cycle taking Swan for a ride

Resource price cycle taking Swan for a ride

Federal budget 2013: Full coverageMichael Gordon: Hedging wedgingAdele Ferguson: Politics not economicsTim Colebatch: More pain than gainPeter Hartcher: Labor to leave with some dignityRoss Gittins: Labor chooses brave way out
Nanjing Night Net

There has certainly been revenue erosion. According to the latest budget papers, since the mid-year economic statement alone, events beyond the government’s control have reduced tax by an estimated $61 billion over the four years to 2015-2016. The expected company tax take is $24.3 billion lower.

Government decisions including the Medicare levy top-up ($11.4 billion) and business tax loophole closures ($4.1 billion) are predicted to boost receipts by $25.5 billion over four years, and the government is also lowering its spending by $18.3 billion.

Total revenue in 2014-2015 of $411.6 billion will, however, still be $17.2 billion or 4 per cent lower than it was expected to be in the May 2012 Budget. Tax revenue will be $12.7 billion lower.

Most people thought last year’s budget was overly optimistic in its forecasts. I wrote at the time that it had more rubber in it than Gumby. But not everyone could see a shortfall of this magnitude looming. One of the themes of the resources boom that peaked at the end of 2011 was that Australia had entered a commodity price super-cycle, where prices and Australia’s terms of trade would stay “stronger for longer” as Asia continued to industrialise and create a new consumer class.

The current downturn is only a chapter in the longer story. Commodity prices are the tell-tale: iron ore and coal are about 35 per cent below their boom-time peaks and all metals are below their highs, but the Reserve Bank’s commodity price index is still three times higher than a decade ago.

However, Labor is also off the mark when it blames the budget deficit blow-out on external factors alone. One of the supposed culprits, the Australian dollar, has done pretty much what was expected. Last year’s budget anticipated an average exchange rate of $US1.03, and the mid-year statement predicted $US1.02: the one-year average was in fact $US1.03.

What Treasury and the government did not predict, however was what the continuing strength of the Aussie would do to the non-resources economy. It pushed up export prices, pulled down import prices, sent already cautious consumers overseas and backed the government into a corner. It was committed to spend money that was not going to show up.

The cuts outlined in the budget reduce spending growth from 2.2 per cent in 2013-2014 to 1.2 per cent by 2015-2016. Spending as a percentage of GDP falls, and the cuts combine with revenue-raising measures to deliver a wafer-thin surplus by 2015-2016 and a slightly larger one (0.6 per cent of GDP) the following year.

Labor’s tactical call that heavier surgery would be dangerous at this stage is supported by the ratings agencies. They see no threat to Australia’s triple A credit rating, as long as Australia charts a medium-term path back to surpluses

It makes this budget feel that much less permanent though – one delivered by a government that is likely to be replaced in a little over four months, with a mini-budget from the new government likely in December.

Budget aficionados will recall 1996, when the newly-elected Howard government delivered its first Budget. Peter Costello declared that the deficit was out of control and handed down a crushing plan to cut outlays by 0.5 per cent in the first year, and by 2.1 per cent in year two. Without a serious tax increase (the GST is the ideal vehicle but for some reason is sacred) it would take cuts of similar magnitude to quickly push the budget back on a path of sustained, sizeable surpluses. Whether an Abbott government would have the desire and bottle to do this is unclear.

Business was the loudest lobby for the budget to set some sort of course towards surpluses, so there should be only muted groans on news that rumoured corporate tax crackdowns have been delivered. Anxiety will be further eased by the fact that offshore groups cop the brunt of the changes.

Thin capitalisation rules that limit tax deductions on debt raised by foreign-owned entities have been toughened to raise $1.5 billion over four years. Loopholes in company consolidation rules that have enabled companies to “double dip” deductions will be closed to drag in $540 million, and immediate full tax deductibility for the acquisition of mining rights and associated exploration will be replaced by a 15 year depreciation regime.

The exploration tax change rakes in $1.1 billion over four years and adds weight to the resources sector at a time when lower prices are already a drag on activity.

Government sources say, however, that there has been a growing trend in the resources sector, as the boom matures, for companies to claim write-offs on the acquisition of “exploration” rights that are in fact ownership shuffles involving resources that are well defined, moving towards production, and priced accordingly. Such deals have killed the goose.

This story Administrator ready to work first appeared on Nanjing Night Net.