The 2013 Federal Election Result: Implications For Your Personal Finances - Case Study Example

The 2013 Federal Election Results: Implications For Your personal Finances Student’s Name Affiliate Institution The Election Promises Abbott’s campaign focussed on deficit reduction by A$1.5 Billions every year and on their spending, promised a paid parental leave scheme, company tax cuts, among other tax eliminations. This government’s policies appeared to reduce taxes and at the same time increase spending. It affects personal finance because the revenue to finance projects has to come from somewhere. If the other goal is to minimize the Budget deficit, even though Abbott suggested that estimating the date the country will reach a surplus budget is bad policy, the country will minimize borrowing and may need to increase income tax in the long run. On Broadband, the Coalition promises a less costly option of $29.5 billion compared to Labor party’s $44.1 Billion but offers a slower broadband of 25-100 Mbps against Labor Party’s 1000 Mbps. The Labor party promised to stick to the existing 18 weeks paid parental leave at the minimum wage, and without superannuation. In contrast, The Coalition promised an expensive package of 26 weeks paid parental leave at the mother’s current wage to a maximum of $150,000 alongside paid superannuation. The Coalition promised to tear out the mining tax to pieces to save the tax burden on families and businesses while the Labor Party promised to keep the previous mining tax saying that tearing it down would result to billions of lost revenue. The Labor party promised to carbon taxing to a carbon trading system that was expected to generate $16 billion in the next four years. This would help in the renewable energy investment of $10 billion. In contrast, the Coalition promised to tear down the carbon tax, and instead spend money on climate management programs. On Asylum seekers, the Labor party attempted to advocate for policies that would stop the illegal smuggling of trade and resettling the asylum seekers in Papua New Guinea. The Coalition advocated for a tougher approach which involved stopping the boats and turning them back and also refusing settlement. The Labor party promised a $800 million to build infrastructures including a $715 million for the Brisbane Cross River Rail. In contrast, the Coalition promised a $18.5 Billion allocation on major road works. The Labor party promised a Budget surplus by 2016-17, whereas the Coalition promised that the Budget would be at a believable surplus by the end of its term. The Labor party promises to bring the Budget ack to surplus sooner than the Coalition. Prior to the election, the Australian economy was slowing down as a result of unprecedented investments, especially in coal, natural gas and Iron ore. Similarly, the cost of doing business was too high especially in terms of great distances, high regulation and wages. According to the Bloomberg (2013), Australian employers had cut down payrolls prior to the election and the unemployment rate was at a four year high. Prior to the elections, the industry was squeezed by the currency since mid-June holding above $1. Similarly the Manufacturing industry slumped 7.6 points downwards to 42 a month before the elections. This was the biggest decline since April. In August 2, the government cut down it’s growth estimates for the financial year to 2.5% and stated an anticipated increase in unemployment rate to 6.25% by mid 2014. The campaign targeted the ability to guide the economy away from mining investment-led growth (Heath, Bloomberg, 2013). The Election Outcome It was always clear that the election competition was between two players; the Liberal National Party and the Australian Labor Party. When the Australian Labor party voted out their leader Krudd, and then voted him back in, they already set a bad precedent on his campaign. I think it was a great decision to motivate as many people to vote as possible by introducing the fine. The opinion polls suggested a win for the opposition [Tony Abbott’s side] before the election by 53% of the vote. I supported this prediction because Abbott had run a more disciplined campaign than his rivals. He focussed mainly on stability and growth and offered realistic policies which appeared to benefit the majority. There was a minor blunder on the internet filtering policy and it appeared as though the Liberal party was splitting into free-speech liberals and social conservatives, but they controlled the situation pretty good [Grubel, Reuters, 2013]. The outcome was anticipated, and having a clear result and the loser conceding defeat is expected to boost business confidence. The outcome was good for investors because it removes the uncertainty and motivates investors, businesses and consumers to work together and make the economy stronger. The influence of the media in support of Abbott’s Campaign cannot go unnoticed, especially from the media magnate [Rupert Murdoph] and Fairfax Media Newspapers. I think Krudd’s Campaign lost direction and ended up as allegation central, levying allegations of hidden massive cuts in Abbott’s policies and failing to demonstrate their clear-cut agenda. The elections can be explained in a simple narrative, that the voters were seeking for change, and it was about who offered the most attractive policies package. The only loophole in the whole promises issue that I will be waiting to see, is whether the government will manage to finance its expenditure amidst the underlying cuts in Taxes which are likely to reduce revenues. Implications In the new government, Parents who receive Family Tax benefit part A and have school aged children will not receive the annual school kids bonus of $410 for primary and $820 for secondary school. This will directly affect the personal finance of such parents. Similarly, parents with children in childcare will not benefit from the $450 million funding that was promised by the Labor party, but would instead expect an unspecified affordable childcare system from the new government. The same applies to University prospective students from a disadvantaged background that would miss the $50 million funding project of the Labor party. The financing for education by Abbott’s government seems vague. This uncertainty is likely to affect the personal budgeting of families with children in school. The Low income super contribution will be abolished for low earners of $37,000 and below per year to $500, to help them save for their retirement. The implications of not electing the Labor party are that low earners of less than $19,400 will not benefit from abolishment of the tax return filing. This new government will give the unemployed persons a $2,500 job commitment bonus to get a job and remain off welfare for a year and an additional $4000 for two years. Similarly, the new government will provide $6,000 for long term unemployed persons who move to a regional area for a job, or a $3000 incentive if they moved to a metropolitan area. These policies are likely to motivate people to stay on jobs for one or two years and reduce job turnover over a two years period, and will also motivate people to change their regional locations to take job offers. This will help control the unemployment rate and help maintain a certain level of personal finance for the job seeking individuals. The new government appears to have laid down a structure that involves low taxes and a lot of spending. In order to afford these policies, there must be a tax increase on other sectors unless this money comes from public debt. An increase in taxes has a direct effect on individual’s incomes and therefore affects their personal finance. The new government’s pledges included a $50 billion drain on the budget including; $20 billion tax cuts over four years in Carbon, Mining and Companies, and an $18.5 billion road works expenditure among others. By abolishing the carbon Tax, the new government will lose $9.6 billion in taxes over a three years period. Similarly, by abolishing the Mining tax, they lose $5.1 billion in revenues over a three years period [Irvine, Herald Sun, 2013]. By rejecting the Labor’s Fringe benefits tax, they lose $1.8 billion in revenue from tax changes on cars. Cutting the company tax to 1.5% reduces the revenue receipt by $5 billion over a two years period. Their budget will include expensive constructions and policies such as the Queensland’s Bruce Highway at $6.7 Billion, the Labor’s paid leave scheme at $6.1 billion, to complete the duplicaton of the pacific Highway Newcastle to Queensland at $5.6 Billion, the construction of the East West Link in Melbourne at $1.5 Billion, the West Connex Project at $1.5 Billion, among many others [Irvine, Herald Sun, 2013]. The new Government only outlined a $17 Billion in savings, which is low, compared to the outlined expenditure. Conclusion The election outcome will have an immediate impact on every Australian. Small business owners will be affected because of the changes in the spending the government will make to create a small business enterprise Ombudsman, and improve access for small businesses to commonwealth contracts and cutting the red tape and changing the superannuation payment methods. These moves will benefit those working in small businesses and indirectly boost their personal finance. This may also motivate people to operate small businesses because the new government will also spend $1 million to extend unfair contract protections on traders and consumers. Those working i the manufacturing sector will also benefit from the two years $50 million manufacturing transition grant program and a $50 million Expert market development grant. These grants will be available to communities, stakeholders and businesses and will help them to transition into competitive industries. In the same way as small businesses, all employees and stakeholders involved in the manufacturing industry will have a boost in their personal finance over the next two years and in the long run if the program is a success. Those working in the car industry will also benefit from the launch of a productivity commission review which will look into public funding for Australian cars. Those who are planning to have a baby will also benefit from the 6 months leave and on full pay, a $75,000 cap. The government also promised to cut funding for indigenous affairs, which include legal services by $42 million over four years. A national Disability insurance Scheme will also be in place and will benefit the disabled, and increase mental health spending by $430 million, with some of this amount set on finding a cure for diabetes and other research. References Heath, M. (Aug, 8, 2013), “Australian Jobs Drop in Blow for Rudd’s Re-Election Bid: Economy,” BloomBerg, Retrieved Sept 23, 2013 from http://www.bloomberg.com/news/2013-08-08/australian-employers-unexpectedly-cut-10-200-workers-in-july.html Irvine, J. (August 27, 2013) “Jessica Irvine: We simply cannot afford pollies’ election spending promises,” Herald sun, Retrieved September 23, 2013, from http://www.heraldsun.com.au/news/jessica-irvine-we-simply-cannot-afford-pollies8217-election-spending-promises/story-e6frf7jo-1226705288717 Grubel, J. (Sep 5, 2013), “Australia’s opposition blunders on internet policy on election eve,” Reuters, Retrieved Sept 23, 2013 from http://www.reuters.com/article/2013/09/06/australia-election-idUSL4N0H20E420130906 Michael, S. (September 06, 2013), “Federal Election Promises, cuts and what they mean for you,” News Australia Retrieved September 23, 2013 from http://www.news.com.au/national-news/federal-election/federal-election-promises-cuts-and-what-they-mean-for-you/story-fnho52qo-1226709750378 Read More