FORMER Prime Minister John Howard (pictured) identified the carbon tax and asylum seekers as big problems within the Federal Budget today and accused the Gillard Government of lacking dialogue with voters.
Howard fronted a Price Water House Coopers breakfast in Brisbane this morning where he defined the two problems.
“The carbon tax is a difficult and politically terrifying proposal for the Government because it’s gotten itself into the predicament of talking about a new tax without being able to explain what that new tax is,” he says.
“On the issue of asylum seekers, I’m a supporter of immigration – it’s going to drive growth and I think the fall off in immigration figures is a big mistake. I think one of the reasons people are more nervous about immigration is because they think the borders are out of control and if you remedied that problem then I think public support for asylum seekers would increase.
“What I think the Government needed to do last night was kick-start a political dialogue on something else that would get the public’s attention away from the carbon tax and asylum seekers because I don’t think they achieved that.”
Howard told Gold Coast Business News it was a ‘mistake’ for Treasurer Wayne Swan to introduce the Federal Budget as a Labour Budget.
“I think the Treasurer has earned his position but he made some elementary mistakes last night in my opinion – it’s always a mistake for a Treasurer or indeed a Prime Minister to start off their announcement by saying ‘this is a labour budget, or this is a liberal budget’,” he says.
“This is an occasion when you are talking to all Australians who vote in different ways, so once you say this is a liberal or a labour budget, then you lose half of the population already.
“Peter Costello never came out and said ‘this is a Labour budget or this is a Liberal budget’, they were documents directed at all of the people of Australia and not just a small section of the population.”
Business and financial commentator Peter Switzer dubbed the budget the Seinfeld Budget – as it was ‘all about nothing’.
“We have the Seinfeld Budget this year because the Government is caught between two irrepressible forces, one called China and the other called the Reserve Bank of Australia (RBA),” he says.
“The RBA underestimates how spooked consumers are – household savings are now 10 per cent of GDP and I can’t remember seeing a figure like that in my lifetime – it’s a massive figure and this is the reason we’ve got a two speed economy.
“The threat of two or three interest rate rises over this current year has got people scared so I’d like to see the RBA show some moderation. The Government’s preoccupation with the surplus is obsessive – it’s ok if we don’t get there quickly but it’s become a political promise.”
The Australian Retailers Association (ARA) says small businesses will feel ripped off by the budget after ‘recycled initiatives’ were offered as new ones.
ARA executive director Russell Zimmerman says there was no real relief to retailer business costs or red tape and no new incentives for business investment.
“The reduction in the company tax rate to 29 per cent for incorporated small businesses as well as the tax write-offs for assets under $5000 were announced firstly as part of the Henry Tax Review and then again in last year’s budget announcement,” he says.
“These small business incentives have now been recycled twice over – there’s not much that is new for retail in the 2011 Federal Budget announcement.
“The immediate write-off of the first $5,000 on the purchase of any motor vehicle is good news for retailers but incentives for investment in other areas of business would have received a greater welcome. Moreover, businesses won’t be able to claim the write-off until the 2013/2014 financial year but retailers need some relief now.”
Zimmerman says that as the changing market place demands retailers deliver online shopping facilities, there’s nothing in the budget that gives incentives for retailers to invest in the training or infrastructure they need to achieve this.
“Spending cuts were necessary for a return to surplus but the phasing out the Dependent Spouse Tax Offset will take cash away from working families. This is more bad news for the retail sector with affected families expected to further reduce their spending.
“Changes to quarterly PAYG installments will mean little for retailers who mostly lodge PAYG monthly. With retail figures released last week for March dropping 0.5%, retailers are hoping spending cuts in the Budget are enough for the Reserve Bank to hold back on rate rises for the time being.”
The Green Building Council of Australia (GBCA) welcomed the Government’s announcement of $160 million in funding for projects that support sustainable urban development.
GBCA CEO Romilly Madew says the result establishes the first step on what is a long journey towards the integrated strategy necessary to enable our buildings, cities and communities to adapt to climate change.
“We’re particularly pleased to see the $29 million earmarked to support the development of sustainable plans for regional and coastal high growth areas as well as the $20 million allocated to support urban renewal projects,” he says.
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