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Kohler ~ early election: Gov. disgorges ASIC $98m unclaimed funds gives BFCSA Nil

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"On the whole this MYEFO definitely looks like a pre-election effort: prepare for an early Federal poll."

In addition to that, the MYEFO includes $109 million from unclaimed bank accounts; and -- $98 million from unclaimed company funds held at ASIC, also booked as current revenue.

 

Prepare for an early election

 

[Published  24 Oct 2012]

 

We knew the Government would have to cook the books to some extent to stay in surplus this year, but the scale of the culinary exertion in this week’s mini budget deserved three stars from Michelin.

The change to “large company” (that is, those with $20 million revenue or more) tax payments from quarterly to monthly has smacked gobs across the business world, although it won’t help this year’s balance. Its main effect is to provide a one off $6.2 billion pull forward of company tax for the 2013-14 budget and keeps the forward estimates in the black. 

Most companies will have to borrow for this and yesterday many were ruefully referring to themselves as the Government’s cash flow bankers.

The Government’s immediate pre-election problem – the 2012-13 budget – is made surplus by four main menu items and lots of smaller ones: scooping up lost super accounts after one year instead of five ($515 million this year), pausing some grants and “targeting” others ($283 million), investing $390 million in the Tax Office bureaucracy for an assumed 300 per cent ROI over four years ($300 million) and making the most optimistic economic forecasts in the land.

The first three dishes add up to $1.1 billion, which is the new 2012-13 surplus.

The final item is the most significant. Most forecasters reckon the Australian economy will grow at little more than 2.5 per cent this year, and some are forecasting less than that.

The Government’s forecast has been held at 3 per cent growth. It that was cut to the consensus, at least $5 billion would disappear from the budget modelling. But we won’t know who’s right or wrong on this until well into 2013.

It is what the corporate world would call a stretch budget, not a worst-case budget, or even a conservative one. 

The Government has thus avoided any real politically painful cuts to expenditure, apart from cutting the baby bonus by $2000 for second and subsequent children. CEOs around Australia are being forced by the boards to go through their costs, line by line, and cut whatever they can; the Federal Treasurer, meanwhile, dons the chef’s hat and heads into the kitchen.

The lost super shift is an especially tasty dish: sudden death now applies to superannuation accounts, and if you are out of the country for more than a year or are not paying attention for other reasons, your retirement savings will be swiftly confiscated by the Tax Office and booked as revenue by the Government.

That is $515 million of real individual retirement savings in this financial year alone that the government will simply acquire and account for as current revenue.

In addition to that, the MYEFO includes $109 million from unclaimed bank accounts and $98 million from unclaimed company funds held at ASIC, also booked as current revenue.

Pausing and re-targeting grants is a good wheeze because it means you don’t have to announce their cancellation, but money comes out anyway.

As for the “investment” in the Tax Office, you wonder when diminishing returns might start to appear. This week’s MYEFO books $1.6 billion across the forward estimates in revenue, in return for extra spending on Tax Office resources of $390 million, but why stop there?.

If every new ATO employee brings in four times his or her salary, the Government should obviously fling far more than $390 million at the ATO. Another $1 billion would produce a 2012 surplus of $5 billion; a vast new $10 billion tax bureaucracy would result in a Norway-style sovereign wealth fund sufficient to secure the nation’s future.

On the whole this MYEFO definitely looks like a pre-election effort: prepare for an early Federal poll.

Follow @AlanKohler on Twitter.Share on favorites

 

15 Comments


Contribute to the Conversation

Tim Bullen wrote:

confiscating(ie. stealing) superannuation accounts is the surest sign of this government's desperation.. these accounts represent hard work for thousands of ordinary australians...they aren't lost...labor's problem is terminal..expenditures exceed revenues (Prepare for an early election, October 24).

24 Oct 2012 9:45 AM

vasso massonic wrote:

One can fool the people some of the time but not all of the time - Labor have now run out of time.(Prepare for an early election October 24)

You are spot on as usual. The hodgepodge budget review will certainly, not bring home the bacon but probably be Swan's last hurray

24 Oct 2012 10:07 AM

Peter Watson wrote:

It is time the business world went on strike - business should not pay its tax on time for six months and let's see where the Government gets its money - oh yes silly me - they would just increase borrowings (Prepare for an early election, October 24). Alan, this is the most opportunistic and devious government we have ever had - add to that the most incompetent and hateful in our long history - just have the election now so we can all move on.

24 Oct 2012 10:36 AM

Tony Holland wrote:

Alan you underestimate Gillard, she will have to be carried out feet first rather than face election defeat early (Prepare for an early election, October 24).

The ALP under Gillard will go on the last day possible, not one minute before...trust me.

24 Oct 2012 10:45 AM

John Chalmers wrote:

With a 34% poll the ALP is not about to go charging into an election. That is absolute fantasty! (Prepare for an early election, October 24.)

24 Oct 2012 11:34 AM

Mervyn Sher wrote:

This is without doubt the most incompetent and hateful of governments that our country has ever seen (Prepare for an early election, October 24). However, we also have an opposition vying for the same credentials.

Personally, as the people voted Labor into power, I think that she should be allowed another term in office – to really show just how much further the country can be stuffed by her government, and for the Opposition to actually start behaving like an alternative.

24 Oct 2012 11:40 AM

Anthony Element wrote:

'Hateful' Mervyn?

Oh, please.

They're politicians being politicians (11.40am, October 24).

Mayhap you've sipped a tad too long at Abbott's coolaid.

This has been a highly effective government operating under difficult circumstances (Prepare for an early election, October 24).

Moreever, as:

1. We Aussies are now the wealthiest, per capita folk on the; planet;

2. The Oz economy was masterfully managed through the GFC without even going into recession;

3. The Carbon Tax is achieving exactly what it is supposed to achieve;

4. We have the most inept policyless opposition in Australian history;

5. We have an opposition leader who demonstrates his incompetence on an almost daily basis;

6. We have a shadow treasurer who show a profound inability to wrap his head around basic numbers,

I shall be busily supporting effort to reelect Labor with a strong majority at the next election, whenever that might be.

24 Oct 2012 11:52 AM

Jim Donney wrote:

As much as I would welcome an early poll, I am in agreeance with the comments that Gillard will hang on to the death (Prepare for an early election, October 24). Even she must realise that an early poll will still mean defeat so she will hang on as long as possible. Who knows, she may be delierous enough to think that if the Libs get in they will not be able to fix the mess without sufficient pain, ala Qld LNP, and perhaps Gillard thinks she can wim next time around. I for one can not fathom a government which is so determined to stay in power that they screw everyone who helps build a decent country. The only ones to prosper are those with their hands out.

24 Oct 2012 11:54 AM

Mark Coleman wrote:

I'm constantly amazed at the way this government has consistently acted to undermine our confidence in the superannuation system, that was introduced with such high hopes by Paul Keating (Prepare for an early election, October 24).

It imposes ridiculous levies (eg $467m to fund its SuperStream project) and then confiscates inactive super balances. Its super "policies" are volatile and mean.

No wonder that we average Australians are looking elsewhere to save our money, and probably will remain dependent upon the pension due to a lack of faith in superannuation.

24 Oct 2012 12:08 PM

Heather Macauley wrote:

As usual Alan, a legitimate comment and insight (Prepare for an early election, October 24).

I have to no wish to support the ‘right’ or ‘wrong’ themes emerging here, however it'’s time for the ‘Keystone Cops’ to leave, however that takes grace and judgment, something that is lacking in both ‘leaders’ and both sides of politics, and parliament generally.

What needs to happen, dare I say it is for Kevin Rudd to be returned to his former job, aided and abetted by ministers and a caucus that were unwilling to become better people and grow, and for the opposition to reinstall Malcolm Turnbull as their leader.

We may then be capable of constructive dialog within both the parties themselves and the community in general, rather than the disgraceful tactics employed by both sides of politics.

Divide and conquer is no way forward, and that’s a lesson that has been around for millennia.

24 Oct 2012 12:24 PM

Chris Hearn wrote:

Are the funds confiscating permanently, or can they reclaimed? (Prepare for an early election, October 24.)

24 Oct 2012 12:25 PM

Tim Marsh wrote:

How is it even legal to steal people's super? And savings? (Prepare for an early election, October 24.)

Can you get them back?

I am shocked at the apathetic, mind numbing response from the lumpentariat. They are zombies.

This zombie parasite govt must go. They add no value at all.

24 Oct 2012 12:38 PM

David Foot wrote:

Millions of PAYE taxpayers pay their taxes monthly and manage their cash flows accordingly. Why should businesses be the priviledged exception? (Prepare for an early election, October 24.)

24 Oct 2012 1:03 PM

Robert Garven wrote:

What's Wayne Swan going to do with China slowing down every month now for the past 8 months (Prepare for an early election, October 24). Remmeber according to Julia the mining boom will go on for more than 30 yrs. They have already taken a hit from company and mining taxes and this will continue into 2013. With no sign of asylum seekers slowinging down I can see another mini budget in 2013.

24 Oct 2012 1:04 PM

Geoffrey Morris wrote:

And the other positive points Anthony Element could have included were:-

- Shrinking tax as % of GDP

- Shrinking deficit as % of GDP (if you accept the unofficial pessimistic estimates for 2012-13, the deficit has been cut by more than 50% in 12-13. Not bad?)

We need to avoid lazy responses to AK's comments. Especially if the responses just abuse one political party rather than encouraging both sides of government to rethink things like negative gearing, baby bonuses, family tax benefits, health fund rebates and other middle class welfare.

We should be more interested in using this commentary for ideas to assist promoting productive investment (Prepare for an early election, October 24).

24 Oct 2012 1:28 PM

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Comments

  • doyla66
    doyla66 Tuesday, 06 November 2012

    I can't see the justification for a baby bonus in Australia. Incentivising people to have more children is pointless unless we're so short of population that it becomes necessary. As this is unlikely the decision to keep any part of it is both anachronistic (Howard era) and a political compromise.
    Stealing super is completely unjustified. That's just a money grab to make the budget look a bit better.
    And, as you've noted, Andy, nothing for the BFCSA unless that's coming out of the grants budget. A new grants client used to get a small grant and if that were acquitted properly with good results for the govt they were able to reapply until a sensible amount was granted. It may be possible to get an educational NFP or NGO grant for educational services for the BFCSA. Still looking ...

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