08 May 2014

Prime Minister Tony Abbott has given a strong indication the government will introduce a deficit levy for high-income earners in next week’s federal budget.

In a doorstop interview with journalists yesterday, Abbott said the budgetary changes to be unveiled next Tuesday by Treasurer Joe Hockey would “not all be popular”.

However, he said it was important all Australians understood “we are all in this together”.

“No one ever said that it was going to be easy to tackle Labor’s debt and disasters … we will honour [our election commitments] … but we will do it in ways that are fair,” he said.

“It’s important that we are all in this together. If we’re all chipping in something, we can chip away at the disaster … everything in this budget is about building a stronger economy.”

Asked whether he was concerned the introduction of a levy would mean the government had broken an election promise, he was non-committal.

“I’m confident that this is a budget that keeps our commitments, I’m confident that this is a budget that’s fair,” he said.

“They elected us to take tough but necessary decisions to address the debt and deficit disaster that Labor left us.”

Finance Minister Mathias Cormann echoed Abbott’s comments.

“It’s important for people across Australia to understand the challenges we face as a government and the challenges we face as a nation as we put this first budget together,” Cormann said.

He made the comments during a press conference to unveil a Liberal Party document entitled, “Labor’s Mess”. The document was compiled by the federal member for Higgins, Kelly O’Dwyer, without any involvement from ministerial staff.

Cormann said the government had spent the past seven or eight months working through the “information in front of us”, analysing the situation “Labor left the country in”.

“We understand why there is a level of concern about [possible tax measures] in the budget,” he said.

“Coalition members and senators don’t like tax increases. This government, this cabinet doesn’t like tax increases.

“We want to see lower taxes, and in the budget we will be delivering the lowest possible taxes, given the challenge we are facing, given the budget situation Labor has left behind.”

The government would repair the budget as well as pursue structural savings and structural reform through fair and equitable measures, he said.

“The virtue and the downside of the structural reform and savings is that they start low and build over time,” he said.

“We do need to get the budget into surplus over time … our focus is on a strong and fair budget.”

Last week, the National Commission of Audit released the findings of its review of the activities of the government.

It found that without change, the budget deficit would place a significant burden on future generations in Australia to bring the budget under control.

Hockey will deliver his maiden budget speech on 13 May.

Article by Kate Kachor in the financial observer.

What impact will a deficit levy have on your financial well being? Can anything be done to prepare for the proposed changes? Call (07) 3231 4004.

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