May 18, 2017 Edition.
The Budget is now over a week old and it seems to have gone down pretty well with most apparently happy with what has been done. While still waiting to see what happens next with the banks calm has been restored on pretty much everything else.
Internationally we have North Korea at it again on the weekend and Trump still as mad as ever. (Thursday note: Sadly things have now spun out of control and as I type all sorts of awfully ominous things are happening! We seem to now have serious talk of impeachment and already a former FBI director has been installed as a Special Prosecutor. I have no idea how this will end but right now Trump is in pretty deep do-do. Markets are down and people are pretty worried so we now just have to wait till James Comey (the former FBI Director - now fired) testifies to a legion of committees next week! The outcome is not certain to say the least!
-----
Here are a few other things I have noticed.
-----
National Budget Issues.
Time to factor in some realistic pessimism
- The Australian
- 12:00AM May 8, 2017
Adam Creighton
“Prediction is very difficult, especially about the future,” wrote Niels Bohr, a Danish physicist. That’s certainly proved true for Australian government budgeting. Every federal budget for a decade has proved wildly optimistic, pencilling in billions in tax revenues that have never materialised. And tomorrow night’s federal budget will once again prompt laser-like focus on budget outcomes that will never occur.
The Treasury will assume the fastest lift in revenues as a share of the economy for almost 20 years — “tax on steroids” according to Chris Richardson, a director of Access Economics. Company tax, for instance, is expected to bring in more as a share of the economy by 2020 than at any time since the late 1970s. Income tax collections are forecast to rise 7 per cent a year — more than double the sum of inflation and population growth — over the next three years.
Despite sluggish wage growth, anaemic inflation and a highly uncertain outlook for the global economy, the government will once again assume the economy goes gangbusters for five years in a row. And once again, it probably won’t. It is only because of these rosy forecasts the government will be able to present a return to a (tiny) surplus by 2021.
-----
Federal Budget 2017: 'Bludgers' to have payments cut
SHARRI MARKSON & KYLAR LOUSSIKIAN, The Daily Telegraph | 9th May 2017 10:50 AM Updated: 4:21 PM
BLUDGERS will face a driver style demerit system in the Federal Budget which will cut off their payments for up to a month when they lose all seven points.
Welfare recipients who take taxpayers for a ride by failing to turn up to job interviews or work-for-the-dole appointments will start losing payments when they reach four points - and when they hit seven demerit points, they will have their payment cut-off, effective immediately for four weeks.
But some welfare bludgers who commit serious offences will lose their seven points in one fell swoop.
The Turnbull Government will today announce the tough demerit system as one part of major welfare sector reform, that includes scrapping Newstart allowance, combining it with other payment categories, and rebadging it under a new name to simplify the complex system.
-----
Federal Budget 2017: Scott Morrison's fresh start budget comes with fresh pain
Michelle Grattan
Published: May 10 2017 - 6:23AM
Scott Morrison has delivered a surprisingly big taxing budget that pays for the last burial rites of the 2014 toxic Abbott legacy. The Conversation
The Medicare levy will be increased to fund the hyper-expensive NDIS and Australia's big banks are being slugged with a new tax. The public will feel some impact from the levy rise - by 0.5 to 2.5 per cent - but Treasurer Scott Morrison is selling it as extra money for an "insurance" scheme.
Morrison's insistence that the problem was not on the revenue side suddenly has become oh, so yesterday.
Ordinary people will feel little sympathy for the major banks bearing extra impost, although some of the new levy on them, raising more than $6 billion over the forward estimates, will likely flow through to customers. If the banks squeal, the government has the comeback: if we are voted out you'll get a royal commission from Labor.
-----
Budget 2017: Scott Morrison slugs banks, workers
- The Australian
- 9:45PM May 9, 2017
David Crowe
Scott Morrison is slapping a $8.2 billion income tax increase on workers and a new $6.2bn levy on the big five banks to help achieve a budget surplus within five years, blaming the Senate for the need to raise more revenue.
The Treasurer described the new measures as “basically a Senate tax” to change course after years of being blocked in the upper house, as the government abandons unpopular spending cuts while aiming for a surplus.
The bank levy is far greater than the industry expected and is being matched with tougher regulation, giving the government a way to counter Bill Shorten’s demands for a royal commission into the sector.
-----
Federal budget 2017: A bold, big spending, big taxing, big borrowing budget
Ross Gittins
Published: May 10 2017 - 10:38AM
Of the government's four goes so far, this is its best budget. For a budget aimed squarely at improving Malcolm Turnbull's ailing political fortunes, its economics is much better.
At long last it completes the Coalition's 180 degree turn away from its toxic first budget of 2014.
It heeds mainstream economists' advice and abandons the Coalition's misguided professed concern about a "debt and deficit crisis".
It is, however, a lot stronger on principle than practice.
-----
Federal Budget 2017: Banks have 'target on their chests'
Mathew Dunckley
Published: May 10 2017 - 9:25AM
It's all bad news for the nation's banks as the shock $6 billion levy revealed in Tuesday night's budget sinks in with market watchers.
When news of the levy leaked on Tuesday ahead of the budget, investors wiped $14 billion from the value of stocks.
Investors were already wary of the banks and the news, combined with slightly soft trading update from the Commonwealth Bank of Australia, deepened a sell-off that began on May 2 and has now sliced $30 billion from the capitalisation of the banks.
-----
Federal Budget 2017: Banks would pass on new tax to customers
Mathew Dunckley
Published: May 9 2017 - 4:13PM
A new $6 billion tax on banks tipped to be revealed in Tuesday night's budget would likely be passed straight onto customers, says a major investment bank.
The Australian Financial Review reported on Tuesday afternoon that a so-called "Tobin Tax" was set to be unveiled in the budget.
The tax would be levied on financial transactions and the prospect of its implementation helped send bank stocks into a tailspin on Tuesday as more than $13 billion was wiped off the value of the banks.
-----
Budget 2017: Surplus expected within four years
Sean Aylmer
Published: May 9 2017 - 9:34PM
- Federal Budget 2017-18 full coverage
Consumers are expected to spend more and the global economy is forecast to pick up pace, allowing for faster economic growth in coming years. But Australians shouldn't expect to see too much more in their pay packets, nor are prices expected to rise significantly.
Forecasts in Tuesday's federal budget show the economy is tipped to rebound from the Cyclone Debbie induced slowdown and expand at a 2.75 per cent clip next financial year, before hitting 3 per cent the following year.
The budget is expected to be back in surplus within four years, under Treasury's forecasts, in part due to the higher Medicare levy adding $8.2 billion to the government's coffers in the three years after it's introduced. New policy measures introduced since the mid-year economic review will add $20.8 billion to revenue over the next four years.
-----
Federal budget 2017 at a glance: how it affects you and Canberra
Published: May 9 2017 - 9:08PM
- Full federal budget coverage
ECONOMY
- moderate economic growth: 2.75% above inflation, up from 1.75% this year
- sluggish jobs growth: 1.5%, up from 1%
- wages growth (2.5%) slightly higher than inflation (2.5%)
- 2017-18 deficit of $29.4 billion; return to surplus in four years
-----
Distortionary levy not smart business
- The Australian
- 12:00AM May 10, 2017
John Durie
The federal government’s $6.2 billion attack on the big banks represents the most blatant and inefficient tax grab in recent memory and is based simply on the fact that banks and big business are on the nose politically.
This is fundamentally bad policy in the hope of winning popular support because no one likes the banks. More to the point, it negates the ALP’s push for a banking royal commission.
The big four and Macquarie now know what it means when people talk about a social licence to do business and, in case they were wondering, they have lost theirs. Sectoral-specific tax measures are inefficient and this one raises $1.6bn a year at the cost of $650 million to the economy.
-----
Budget 2017: 'No one now is talking about paying back debt' - Peter Costello
James Massola
Published: May 10 2017 - 11:33AM
The Liberal Party's longest-serving treasurer, Peter Costello, has suggested the Turnbull government's projected budget surpluses will not be enough to pay back Australia's ballooning debt.
But he has praised Treasurer Scott Morrison's "politically smart" second budget, suggesting it had "blind-sided" Australia's five biggest banks by imposing a 0.06 percentage point levy on their liabilities, which will rake in about $6 billion over four years.
Australian Bankers Association chief executive Anna Bligh has already hit out at the levy and warned it could threaten Australia's financial stability, but it is expected the measure will pass the parliament with the support of the ALP.
-----
Federal budget 2017: No tax cuts to stop bracket creep makes Australians worse off
Nassim Khadem
Published: May 11 2017 - 12:15AM
The federal budget's failure to include any changes to personal income tax rates and thresholds will push more Australians into bracket creep, tax experts say.
Middle-income Australians will bear the brunt of those changes, but experts warn workforce participation rates could fall as result of people receiving lower take-home pay. They want the Turnbull government to commit to personal tax cuts.
The impact of bracket creep – where wage inflation pushes people into higher tax brackets – will hit those on middle incomes to worst, said PwC managing partner, financial advisory, Tom Seymour.
-----
Only the economically naive would expect banks to fix the budget
- The Australian
- 12:00AM May 13, 2017
Judith Sloan
There are two kinds of treasurers: ones who really understand economics and business, and those who don’t.
The category into which treasurers fall is not dependent on whether they have had formal training in economics or whether they have worked in business.
But, believe me, it makes a huge difference to how they conduct themselves as the country’s chief money man (we have yet to have a female treasurer) and how they assess various policy options.
Paul Keating and Peter Costello were examples of the first type of treasurer.
-----
Moody's queries budget deficit projection
- Peter Trute
- Australian Associated Press
- 11:34AM May 12, 2017
Ratings agency Moody's says Australia's triple-A credit rating remains intact but has expressed doubt about the federal government's timetable for reducing the budget deficit.
Moody's said on Friday it expects that government revenues will rise more slowly than projections in Tuesday's federal budget, while spending will be higher than forecast.
The agency said it expected government debt to rise to slightly above 40 per cent of GDP within three years - from around 36 per cent in 2014/15 - but that such a debt burden "would be in line with that of other Aaa-rated sovereigns".
-----
Federal budget 2017: Coalition gives up, embraces high taxes and big spending ... until the next crisis
Simon Cowan
Published: May 13 2017 - 12:15AM
Whatever the public response to the 2017 budget, it won't be a policy victory for the government. Surrender to the special interest groups – and the bleating of the revenue-istas that tax rises are the only "fair" answer – will have long-term ramifications. In fact, the 2017 budget resembles nothing so much as the Coalition reaching the final of Kübler-Ross's five stages of grief over Australia's parlous fiscal position.
The main reason the budget is important is the discipline it imposes on government. The budget requires the government to commit the details of its proposals to paper; to come up with a cost and a bottom line. Whatever nonsense politicians belt on with for the rest of the year, at budget time we get to see what they really believe in and are actually going to do.
For some time, it's been clear that Australia has a structural deficit problem. The government correctly identified that it is not, and has never been, a revenue problem. The fall in revenue after the global financial crisis just exposed the truth that permanent increases in health, education and welfare spending had been financed by a temporary mining boom (and then by debt).
-----
And For Fun:
Bipartisan consensus defies everything we thought we knew about Australian politics
Annabel Crabb
Published: May 13 2017 - 12:36PM
There's a very funny song about redheads written by the Australian performer Tim Minchin that goes "Only a ginger can call another ginger 'Ginger'."
And it started running through my head with hysterical insistence as soon as I cracked open the 2017 budget speech and registered – pupils dilating with incredulity – that the Turnbull government was seriously proposing to slot the banking sector with a $6 billion tax.
Maybe only a banker, like Malcolm Turnbull, can tax another banker to such a cartoonish degree and keep a straight face.
-----
Health Budget Issues.
Budget focus on affordable health care and medicines
Renee Viellaris, The Sunday Mail (Qld)
May 7, 2017 12:00am
THE Turnbull Government will use Tuesday’s Budget to unveil substantial measures to drive down the price of healthcare.
Treasurer Scott Morrison will announce a cost-of-living Budget that in part will focus on cheaper medicines and visits to doctors.
Health Minister Greg Hunt, who grew up with a mother who struggled with mental illness, is also expected to unveil a significant package for those affected by mental illness.
Highly placed sources also emphasised the significance of infrastructure in the Budget, with a bagful of cash for the long-touted Melbourne-to-Brisbane inland rail, which would be a massive coup for farmers exporting their produce.
-----
9 May 2017 - 8:57pm
Budget 2017: How will health services be affected?
The government says it will increase Medicare rebates and cut the cost of medicines.
By James-Elton Pym
9 May 2017 - 7:57 PM UPDATED YESTERDAY 8:57 PM
Here's how the health system fared from Budget 2017:
Rebates and drugs
A new Medicare Guarantee Fund is to be established from the 1st of July, 2017 to secure the ongoing funding of the Medicare Benefits Schedule and the Pharmaceutical Benefits Scheme.
The fund will receive income from the Medicare levy - after the NDIS funding is deducted – and topped up by personal tax receipts.
This Budget restores indexation of the Medicare rebate, starting with GP and diagnostic imaging bulk-billing incentives from the 1st of July.
At the same time, the Medicare levy low-income thresholds for singles, families and seniors and pensioners will be increased so that low-income taxpayers generally continue to be exempted from paying the Medicare levy.
-----
Budget 2017: PBS shake-up to cut cost of drugs
- The Australian
- 12:00AM May 10, 2017
Sean Parnell
Price reforms in the Pharmaceutical Benefits Scheme will deliver $1.8 billion in savings over five years, which the Turnbull government will reinvest in drug subsidies and pharmacy initiatives.
Under an agreement with Medicines Australia, the government will mandate bigger price cuts, and for longer — drugs listed on the PBS for more than 10 years will be especially targeted — and embrace cheaper alternatives. This will enable new drugs to be listed on the PBS, including Sacubitril with Valsartan (product name Entresto), for patients with chronic heart failure, at a cost of $514.6 million.
Health Minister Greg Hunt has struck similar agreements with the Pharmacy Guild — community pharmacies will benefit from funded medication management reviews and other initiatives — and the Generic and Biosimilar Medicines Association.
-----
- Updated May 9 2017 at 11:00 PM
Hunter Medical Research Institute leads search for $30b in health savings
One-fifth of Australia's $160 billion annual health budget could be saved by better technology assessment at the hospital and primary care level, and a Novacastrian research foundation has developed a model to deliver it.
While government scrutiny of the Pharmaceutical Benefits Scheme and Medicare Benefits Schedule had reduced waste, little attention had been paid to inefficient procedures at the general practitioner and hospital level, according to the head economist at Hunter Medical Research Institute (HMRI), Andrew Searles.
"We spend 40 per cent of the total federal and state healthcare budget in hospitals, and 38 per cent in primary care, yet remarkably little has been done to identify low-value healthcare and invest the savings into high-value healthcare in these sectors," said Mr Searles.
-----
- Updated May 9 2017 at 6:32 PM
Budget 2017: Health deal provides unprecedented level of political cover
Budget 2017: Find out where the money is going
A week ago, Health Minister Greg Hunt finally received the signed letters giving him the green light to proceed with the Turnbull government's $10 billion health package.
The heads of the Australian Medical Association, the Royal Australian College of General Practitioners, the Pharmacy Guild, Medicines Australia, and the Generic and Biosimilar Medicines Association congratulated Hunt on their "shared vision".
For the first time, a health minister had written confirmation from the health industry's loudest and most powerful voices that they approved of a massive overhaul of the taxpayer funding of their sector.
No matter what theatrics Labor might pull in question time after Tuesday's budget, the five-party agreement gives the government an unprecedented level of political cover.
-----
Federal Budget 2017: Medicare rebates to increase as part of $10 billion healthcare package
Staff reporter
Published: May 9 2017 - 8:28PM
Patients will have to pull less money out of their own pockets for a trip to the doctor when the government increases Medicare rebates as part of a $10 billion healthcare package at the heart of the 2017 federal budget.
Treasurer Scott Morrison appeared determined to snuff out any remaining doubt about the Coalition's intentions on Medicare, after Labor's "Mediscare" campaign during last year's election.
"Tonight, we put to rest any doubts about Medicare and the Pharmaceutical Benefits Scheme," he said in his budget speech, before announcing a "$10 billion re-investment in Australia's health care over four years".
-----
Pharmacy wins a budget boost
Good outcome for the sector, although many measures were already in train
Pharmacy groups are applauding the Federal government and Health Minister Greg Hunt for delivering a good Budget for the profession.
Measures to solve the ongoing risk share impasse and deliver on 6CPA professional service program promises are highlights of a Budget that was more relevant to pharmacy than many in recent years.
-----
Federal budget 2017: Increase in Medicare levy to fund gap in National Disability Insurance Scheme
Staff reporter
Published: May 9 2017 - 7:49PM
The Medicare levy will rise to 2.5 per cent from July 2019, raising $7.8 billion over two years in an effort to plug a "funding gap" that turned the National Disability Insurance Scheme into a political football earlier this year.
Raising the levy by 0.5 percentage points for all taxpayers, from 2 per cent of taxable income to 2.5 per cent, is expected to raise $3.55 billion in 2019-2020, and another $4.25 billion the following year. The government says this will ensure the NDIS can become fully operational by 2020.
Treasurer Scott Morrison said funding the NDIS, which will support about 460,000 people at a cost of $21 billion a year once it is fully operational, fell on the shoulders of all Australians.
-----
Damage done to health already, Labor says
May 10, 20179:46am
Labor has dismissed the health profession's backing for federal government budget measures, saying doctors and specialists would have welcomed anything that "left them alone for a while".
The indexation freeze on Medicare rebates - a huge sticking point for doctors - will be lifted in stages over the next four years at a cost of $1 billion to federal coffers.
Australian Medical Association president Michael Gannon welcomed the move, but also said it was overdue.
"We acknowledge that the three-stage process will provide GPs and other specialists with certainty and security...and will help address rising out-of-pocket costs for patients," he said.
-----
Why the Budget leaves general practice out in the cold
| 10 May, 2017 |
No government will put money into general practice unless bulk-billing rates collapse.
This is the key principle that should be applied when looking through the debris of last night’s budget.
There is no immediate respite from the continued cuts to patient rebates for GP care.
What has emerged — contrary to the brave self-declarations of victory from the RACGP — is not an end to the specialty's woes.
-----
Budget 2017: Greg Hunt promises more health reform
- The Australian
- 12:00AM May 11, 2017
Sean Parnell
Health insurance costs, workforce distribution and mental health services are next on the reform agenda for Health Minister Greg Hunt after the federal government used the budget to mend relations with the sector.
The key measures of ending the Medicare freeze, cutting the cost of pharmaceuticals and reinvesting in new drug subsidies have generally been well-received by health groups, who were rocked by the slash-and-burn approach of the Coalition’s 2014 budget and contentious policy initiatives.
Mr Hunt also signed “compacts” with the Australian Medical Association, Royal Australian College of General Practitioners, Medicines Australia, Pharmacy Guild and the Generic and Biosimilar Medicines Association.
-----
Primary, Sonic rise as budget measures propel medical sector
- The Australian
- 12:00AM May 11, 2017
Sarah-Jane Tasker
The Turnbull government’s ongoing battle with the healthcare sector appears over, for now, with Tuesday’s budget neutralising funding and reform concerns.
The ceasefire saw listed healthcare stocks enjoy a bounce on the local market yesterday as investors digested the news that Scott Morrison’s second budget was light on negative surprises for the sector.
Shares in Primary Health Care were almost 2 per cent higher at $3.82 yesterday, while Sonic Healthcare was up 1.2 per cent at $23.24 and Healthscope added 1.8 per cent to $2.24.
-----
Senate inquiry adds pressure to medical device industry
- The Australian
- 10:43AM May 12, 2017
Sarah-Jane Tasker
Health Minister Greg Hunt’s push on the medical device industry has been boosted by a senate inquiry calling for greater transparency on the significant gap in prices paid between the public and private systems.
A senate inquiry into price regulation associated with the Prostheses List, which sets the cost health insurers must pay for a device, has delivered the government 16 recommendations to reform the process.
The community affairs reference committee said it noted that stakeholders identified several areas in the Prostheses List framework that would benefit from reform.
-----
Why you could have to pay $1 more for medicine
Sue Dunlevy, National Health Reporter, News Corp Australia Network
May 13, 2017 12:00am
Subscriber only
HEALTH Minister Greg Hunt has changed his script - and the change is about to hit your hip pocket.
The cost of prescription medicine could rise by $1 per script as a result of Mr Hunt reaching an agreement with the Pharmacy Guild of Australia.
Mr Hunt has confirmed to News Corp he will review a policy that allows pharmacists to discount the $6.30 and $38.80 prices consumers have to pay for subsidised prescription medicines.
-----
Health Insurance Issues.
Budget 2017: private health insurers fear ‘breach of faith’ on tax break
- The Australian
- 12:00AM May 8, 2017
Joe Kelly
Health insurance chiefs and economists are urging the government not to extend the Medicare Levy surcharge to those with private coverage in tomorrow’s budget, arguing it would be a “breach of faith” and would force more people into the public system.
With the government expected to lift its freeze on the Medicare rebate for GP visits, Scott Morrison yesterday brushed aside questions on whether he would unveil new taxation measures targeting high-income earners to buttress health spending and counter Labor’s 2016 “Mediscare” campaign.
The Treasurer flagged further health announcements would be held back for budget night in an interview with veteran political journalist Laurie Oakes while West Australian Liberal senator Linda Reynolds told Sky News she was “confident” there would be “very significant” health announcements tomorrow.
-----
International Commentary.
Donald Trump and the US backflip on China
Tom Switzer
Published: May 8 2017 - 12:15AM
Many Australians were furious about Donald Trump's election last November. To put it mildly and politely, he is incapable of understatement. He is strikingly ignorant of the world. He is also an impulsive and unpredictable character. Not surprisingly, critics warned his strident anti-China rhetoric could drag us into an unnecessary war with our largest trade partner.
However, although it is still very early days, these doubters have been proved wrong about the new president's ability to deal with Beijing. Having once fumed about Xi Jinping, Trump now calls the Chinese leader a "very good man". Having once promised a 45 per cent tariff hike on Chinese imports, he is rapidly abandoning talk that Beijing is a currency manipulator.
The power of Trump's U-turn and reverse gear is up to best international standards. But it's his volte face on the South China Sea that really surprises. And it has received no coverage in the Australian media.
-----
I look forward to comments on all this!
-----
David.
