The first Labor budget in 13 years was directed, in Treasurer Wayne Swan’s words, at “the Australians who work hard, pay their taxes and demand little more than a fair go”.
The $55 billion package comprises targeted initiatives in tax, childcare, education, housing and other family budget essentials.
“It’s the Robin Hood of budgets, taking a little from the rich and giving to the battlers – very fiscally responsible and inflation and bond market friendly, with bonds and futures rallying on the news,” Perennial head of retail investments Brian Thomas said.
“Given that it is contractionary with a higher than expected surplus it really confirms that the economy will slow from fifth gear to third gear pretty quickly.
“It’ll be interesting to see how the equity market judges this one. On one hand responsible that will see interest rates on hold for longer, but on the other hand the rise in unemployment to 4.75 per cent is a sobering statistic when looking at 2009 earnings.”
Planners were relieved the simpler super measures of last year were untouched. Securitor-backed Wealth Stream Financial Solutions principal Keith Gateley said: “The good part is that there are no changes for superannuation [rules] and many changes that have been implemented in the last couple of budgets still stand true.
“My business is about retirement and that was my concern.”
Griffin Financial Services principal Ray Griffin said the budget would be positive in the long term for financial planning clients because it looked to combat inflation.
“I think the best thing about the budget is that it looks to be a good thing on controlling inflation,” Griffin said.
“It will be interesting to see the [share market and currency market’s] reaction.
“Because if the budget aids in combating inflation in conjunction with what the Reserve Bank of Australia is doing, then that should be seen as a positive.
“What was conspicuous was the lack of any superannuation announcement in the surplus, but that may well be contained in the detail.”
Australian Institute of Superannuation Trustees chief executive Fiona Reynolds said she was disappointed the budget did not do more for Australia’s low-income earners’ superannuation savings, when last year’s budget delivered a “super bonanza” for the rich.
However, the institute supported the review of the tax system and particularly the removal of the 15 per cent superannuation contributions tax for low-income earners.
Housing was another focus of the budget, with the Government announcing enhanced First Home Saver Accounts attracting a 17 per cent government contribution on the first $5000, taxed at 15 per cent. Withdrawals will be tax-free if used to buy or build a first home.
However, Laing and Simmons general manager Leanne Pilkington said the Government could have done more to address the housing crisis by phasing out stamp duty.
“Stamp duty was supposed to be phased out after the introduction of the GST, but squabbling between different levels of government has seen it continue to plague the property market,” Pilkington said.
“Until stamp duty is abolished we will not see a flurry of investors returning to the market.”
