Tuesday, May 12, 2015

2016 Budget Watch. Parliament Closed Until Budget Later Today. Here Is The Latest!

Budget Night is May 12, 2015.
Here is what seems likely the day before!
The key points seem to be:
1. Major changes to PBS. Pharmacists not happy

2. Large spending on the PCEHR. With what sort of actual plan unclear.

3. A small dental package and some major PBS drug listings

4. A big time social / childcare package. Big backflip on Paid Parental Leave.

5. Some cuts to richer pensioners with some less well-off helped.

6. A major small business package with all sorts of goodies.

7. Some tax shifting changes - announced Monday - effect unclear

8. A deficit which Mr Hockey says will be a bit better than the market thinks - maybe a bit under $40 Billion is the betting

9. Apparent abandonment of the hoped for surplus for years into the future.

The main flavour from Mr Abbott is that there are goodies - but that they will need to all be paid for with some of the old and some new plans. Be assured there will be some stings in the tail - there always are!

Now to wait till 7:30 pm and see what surprises there are!
Details of recent reports follow.

General Budget Issues.

Coalition reveals details of its childcare assistance package ahead of budget

Government set to means test new benefits, which will reportedly be paid directly to childcare centres rather than parents
The federal government has announced the continuation of funding for accessing preschool, as further leaks on its yet-to-be-released childcare package emerged ahead of next week’s budget.
News Ltd reported the government would means test its new childcare assistance measures, with families on a combined income of $165,000 or less getting the greatest benefit. The assistance would be tapered up to and above $250,000.
The new assistance would replace existing childcare rebate and subsidies, and would reportedly be paid directly to childcare centres rather than parents, as recommended by the Productivity Commission.

Budget 2015: Budget tax trap laid for Labor

David Crowe

Cabinet ministers have killed off a new option to increase revenue in order to cut the deficit as Tony Abbott marshals a new attack on Labor for proposing higher taxes rather than tougher spending cuts, preparing the ground for a fundamental political fight over budget repair.
Ministers have rejected a proposal for a new charge on internet shopping that could have raised hundreds of millions of dollars, amid concern it would have been seen as a hit to consumers and a naked grab for more money.
The decision comes after ministers dismissed the idea of extending the deficit levy on wealthier Australians.

Deficit blowout will be $50bn worse than official forecasts

David Uren

Commonwealth deficits will total $150 billion over the next four years — almost $50bn worse than official forecasts — with next week’s budget to reveal further massive shortfalls in tax revenues as spending blows out to its highest level in 30 years.
Consulting firm Deloitte Access Economics expects personal income tax revenue to fall short of the rapid growth expected by Treasury as wage rises are pegged, while company and superannuation tax revenue will also fail to meet the forecasts on which the budget update in December was based.
The firm’s budget preview shows deficits out to 2017-18 will be a combined $46.7bn worse than had been expected in December. Every budget and budget update since December 2010 has now shown deficits worse than Treasury’s forecasts.

No more shortcuts to budget surplus

Date May 4, 2015 - 6:27AM

Ross Gittins

The Sydney Morning Herald's Economics Editor

Maybe we're getting somewhere. The nation's almost unanimous rejection of the proposed Medicare co-payment has proved to be a blessing. It's obliged the replacement Health Minister, Sussan Ley, to go back to basics and find genuine savings.
It won't be long before we find out what effect the failure of last year's budget has had on this year's. Judging by most accounts, it won't a favourable one.
Badly burnt by the monumental misjudgments in his first attempt, Tony Abbott seems to have swung to the opposite extreme of doing little or nothing to tackle our medium-term budget deficit problem.
4 May 2015, 5.38am AEST

Three tests the 2015 federal budget must pass

PPro-reformists Some may view 2014 as a wasted year, but the lessons from the federal budget could make it a watershed one instead.

Author Mark Triffitt

Lecturer, Public Policy at University of Melbourne
If poor policy were to gather all its devils together, they would fit – with plenty of room to spare - between the pages of federal budget released last May.
Broken promises and quarter-truths, ill-thought through spending cuts targeting the less well-off, a cosmic-sized disconnect from public sentiment, consumer confidence undermined. With such a hellish list, it’s little surprise the political and policy debate of the last 12 months has been dominated by the budget’s sorry legacy.
In a new post-mining boom world, Australia has much to do in terms of updating its economic and fiscal settings. It must also set out new policy foundations to grapple with systemic problems such as an ageing population and rising inequality.

Apparent Budget Leaks.

Budget 2015: Tighter pension assets test

David Crowe

The dollar can't save Australian business

Federal cabinet has locked in plans to tighten access to the age pension for wealthy retirees who have enough private assets to pay their own way, securing a major budget saving while leaving room to reward others on modest ­private incomes.
A new pension assets test will scale back payments to older ­Australians who have substantial private wealth in addition to their family homes, but the changes will be balanced so there will be ­winners as well as losers from the changes.
Cabinet ministers have ­decided the details of a new policy that dumps last year’s proposal to adjust the indexation of the pension in favour of tighter rules on the value of the assets people can hold while still qualifying for a part-pension.

Budget 2015: Boost for 120,000 seniors

David Crowe

The federal budget will offer higher payments to more than 120,000 retirees and ensure thousands more can keep a valuable concession card that cuts their cost of living, easing the impact of pension savings that will cut the deficit.
The sweeteners will help build support for changes to the Age Pension assets test to target payments to those who need them most, as an opportunity emerges to get the reform through the Senate.
While wealthier retirees will face a stricter test on the assets they can own while still getting the Age Pension, The Australian has been told the part-pension will be increased for those with relatively modest assets in addition to their family homes. Access to the Commonwealth Seniors Health Card will be preserved as part of the reforms so that anybody who currently gets the concessions — on medicines, hospital visits and transport — will be able to keep them. About 80,000 older Australians will lose the part-pension, as revealed by The Australian yesterday, but this will be offset by the number of retirees who will get higher payments under a new scale to “taper” the amounts, according to each recipient’s private wealth.

Federal Budget 2015: pensions overhaul to help the poor and hit the rich

Date May 7, 2015 - 8:27AM

Matthew Knott

Communications and education correspondent

Pensioners welcomes 'fairer' changes

The government's pension overhaul makes sense, but a wider review into retirement incomes is needed says Councils on the Ageing Chief Executive Ian Yates.
The Abbott government will overhaul Australia's pension system in next week's budget, with over 170,000 low to middle income pensioners to be $30 a fortnight better off.
We're helping those with more modest assets 
But the tightening of the pensions assets will hit wealthier retirees, with around 91,000 expected to lose access to the part-pension and 236,000 people to have their pensions decreased.

Federal budget 2015: Budget 2.0 will determine future of Joe Hockey-Tony Abbott partnership

Date May 9, 2015 - 8:39AM

Heath Aston

Political reporter

"There are no choices here. This is about the sustainability of our quality of life. It is about what we want to be in five, 10ten, 20 years' time. I often ask myself if there was a drug that is going to save my child's life in 10ten years' time and I couldn't afford it ... in 10ten years' time is the government going to have the money to afford the drug? ... they won't have it tomorrow unless we actually start fixing the budget now and we fix it early."
Joe Hockey said this before his first budget.
Even the Treasurer's own children might go without lifesaving medicine if he did not take an axe to spending, tackle Labor's "debt and deficit disaster" and end the "age of entitlement".
Compare Hockey's 2014 rhetoric to his modest assessment on Thursday of the impending budget: "It's an optimistic document. It's a realistic document but it's focused on growing the economy."
Invited by a Sydney talkback radio host on Thursday to wade back into the story of debt and deficit disaster, Hockey thanked him and brought the interview to a quick close.

The $1,500 Mother’s Day gift: Childcare reforms to get mums back to work

  • EXCLUSIVE Samantha Maiden National Political Editor
  • The Sunday Telegraph
  • May 10, 2015 12:00AM
  • Families will gain $1,500 to encourage mums to get back to work
  • Stay-home mums to lose some subsidies
  • Two years to wait, then some fee relief for working families
FAMILIES will be better off by $1500 a year on average under childcare reforms that will encourage mums back to work and create a Medicare-style childcare smartcard.
Social Services Minister Scott Morrison will today unveil reforms that will put $30 a week back into the pockets of low and middle-income families who are currently earning up to $165,000.
But parents will have to wait until 2017 to secure childcare relief as the changes will be phased in over time.

Federal Budget 2015: Why the new budget will be completely different

Date May 10, 2015 - 1:03AM

Peter Martin

Economics Editor, The Age

A few years back Coca-Cola decided to enter the energy drink market. It launched a product called Mother that was so bad eight out of 10 consumers said they hated the taste. Instead of deleting it Coca-Cola completely reformulated it and printed on the top of every can: "New. Tastes nothing like the old one".
Tuesday's budget is genuinely new. Two of the six-member expenditure review committee that put it together weren't there before – the new Social Services Minister Scott Morrison and the new Assistant Treasurer Josh Frydenberg​. The three top bureaucrats who put it together are new in their jobs – Michael Thawley​ in prime minister and cabinet, John Fraser in treasury and Jane Halton in finance. 
This time the Prime Minister Tony Abbott chaired almost every meeting. The nominal Treasurer and deputy chair Joe Hockey played less of a role.

Health Budget Issues.

Budget 2015: Federal Government to subsidise $1.3 billion life-saving drugs

By medical reporter Sophie Scott and Alison Branley
Patients waiting on life saving medicines will get a sweetener in this week's budget with the Federal Government spending $1.3 billion on subsidies for new drugs.
Health minister Sussan Ley said medications for melanoma, breast cancer and blindness would now be listed on the Pharmaceutical Benefits Scheme.
"Access to new medicines is crucial if we're to help Australians beat life-threatening diseases such as cancer, as well as overcome chronic and degenerative conditions that can rob them of their independence," Ms Ley said.

Govt to give $200 million in dental health

  • May 10, 2015 8:52AM
  • AAP
LABOR has labelled reports that the Abbott government intends to spend $200 million in dental health care as a "cruel hoax".
FAIRFAX media reported that Health Care Minister Sussan Ley will announce $200 million in dental health funding for the state and territories in Tuesday's budget to "allow for reform work to be undertaken over the next 12 months".

Medical Future Fund.

Medical research fund gets second life

EXCLUSIVE Andrew Probyn Federal Political Editor
May 9, 2015, 12:55 am
The Abbott Government will recommit to a multibillion-dollar medical research fund in next week's Budget despite abandoning the $7 Medicare co-payment which was to help fund the plan.
The Weekend West understands the Government intends the Medical Research Future Fund to reach $20 billion within four years.
Sources concede this is ambitious given the 2019-20 timeframe was originally to be achieved through patient contributions for 70 per cent of Medicare services.

Pharmacy Issues.

  • May 4 2015 at 12:16 PM

Federal budget 2015: Pharmacy faces $5b cut

The Abbott government is preparing to endorse $5 billion savings on pharmaceuticals for next week's federal budget, which will hit manufacturers and wholesalers, and appears set to spark an advertising war by pharmacists claiming changes will hit the sickest people in the community.
The expenditure review committee of federal cabinet is understood to have last week signed off on a package of changes to the pharmaceutical benefits scheme to be announced in the budget. But the package is still to be considered by the full cabinet this week.
A furious pharmacy sector is understood to be preparing an aggressive advertising and public relations war against the plans – already confirmed by Health Minister Sussan Ley – to introduce a 'discount' on pharmaceutical co-payments. The cost of the discount, estimated to be worth between $800 million and $1 billion to the budget, would have to be borne by individual pharmacies.

PBS copayment discount ‘will punish elderly’

Joe Kelly

The government is facing a damaging industry backlash if cabinet greenlights a plan this Thursday to clawback $400 million in new savings over the next five years by introducing optional $1 discounts on prescriptions in next week’s budget.
The $1 discount, if passed on by pharmacists, means a concession card holder would need to pay for 72 scripts a year instead of 60 to reach the $366 threshold at which point medicines under the Pharmaceutical Benefits Scheme safety net drop to zero.
The measure is likely to be part of a package of changes to the medicine industry to be included in the budget generating net savings of $3bn and which are likely to heavily impact manufacturers, wholesalers and pharmacists.
The proposal for an optional discount on PBS co-payments — reducing the costs of medicine for pensioners from $6.10 to $5.10 and general patients from $37.70 to $36.70 — was approved by the Expenditure Review Committee of cabinet last Friday.

Pharmacy Guild vows campaign to fight $1 prescriptions discount

Joe Kelly

The government will save some $400 million over five years introducing an optional $1 discount on prescriptions in the budget.
However, the Pharmacy Guild of Australia will launch a fierce ­advertising campaign against it.
The discount is likely to be one of several changes to the medi­cines industry generating net budget savings of about $3bn, say industry sources.
While encouraging competition, given the reluctance of government to free-up location restrictions the discount is still thought to cost pharmacists about $800m over a half decade.
The move would reduce the costs of medicine for pensioners from $6.10 to $5.10 and for general patients from $37.70 to $36.70.
It would also mean a concession cardholder would have to pay for 72 scripts a year instead of 60 to reach the $366 safety net threshold, after which medicines under the Pharmaceutical Benefits Scheme become free.

Pharmacy Guild threatens campaign over $1 discount that could save $400m

Government plans to make budget saving by allowing chemists to offer discounts on the amount they are required to charge for scripts, among other measures
The Pharmacy Guild – sometimes dubbed the most powerful lobby group in Canberra – is threatening an intensive lobbying campaign against the Abbott government if cabinet agrees on Thursday to change what Australians are required to pay for medicines.
The changes involve relatively small budget savings for the federal government – at most $400m over five years and probably less – but would open the door to chemists competing with one another because they would be allowed to offer $1 discounts on the amount they are required to charge for scripts.
While the savings will be included in the budget, the changes are part of the closed-door negotiations for a new five-year agreement between the government and the Pharmacy Guild to replace the existing $15bn deal.

Defiant Sussan Ley stands up to Big Pharma

Sid Maher

The budget battle over proposed cuts to medicine prices has deepened, with Health Minister Sussan Ley vowing to stare down drug company protests amid warnings from the industry that the cuts will harm cancer patients and the vulnerable elderly.
Medicines Australia chief exec­utive Tim James wrote to Ms Ley yesterday seeking an urgent meeting on the cuts, warning that they could “destroy’’ the Pharmaceutical Benefits Scheme and create a two-tiered scheme where rich patients gained quick access to drugs while poor patients had to wait.
However, government sources hit back, arguing that Medicines Australia was affected by only about $1 billion out of the $3bn in total cuts to medicine prices.
I plan a blog on Wednesday 13th May on what we actually saw.

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