Ms CARNEY - 2006-05-02
In the current financial year, you raised much more in tax than you expected. You sold liquid assets and raised an extra $40m; you received an extra unexpected $78m in local taxes; you received $63m more than you expected from the GST, and you received another $36m from other charges that you did not even expect. In total, you have received $217m more than you originally budgeted for. With all of the extra money, you still could not manage to balance your budget. Why can’t you?
ANSWER
Madam Speaker, without going to the detail of some of those figures, which are patently incorrect, in general terms, the government did receive more income throughout the financial year 2005-06, as is always the case with every government in history.
The budget, as it stands in May 2005 when it is delivered, is delivered on the advice and knowledge that the government has to date of the expenditure requirements of the agencies for the 12 months going forward.
Quite clearly, when large agreements, such as the training agreement with DEET, which runs to tens of millions of dollars; the health agreement between the Commonwealth, the states and territories; and the housing agreements are not signed up at the time that the May budget goes down on the books, of course, expenditure will go up during the year, as it will when unforeseen events occur and have to be met throughout the year, as it will when enterprise bargaining agreements are set.
We had a fairly interesting time with teachers negotiating their EBA last year which resulted in pretty healthy wage increases for them. How much worse that would have been if we had said: ‘Okay, we have negotiated an agreement but we cannot pay you until 1 July 2006 because it will mess up our budget. It will make DEET look like it spent more than it budgeted for so, while we are going to give you 6%, 7%, 8%, 15% over three - whatever the figure was - we are actually not going to pay that until 1 July 2006’. I doubt they would have signed that bit of paper, and nor would nurses, doctors, or any other worker who is entitled to a fair remuneration.
It is a bit like - there was an incident last year; I cannot quite recall - but if a school falls over, you go and build it. You do not tell them: ‘Oh, you have to wait until the financial year next year because that will upset the budget books, and then the opposition will pick on us and create a nuisance by saying we actually spent more than we budgeted for’.
That will be the day when an agency actually comes in - and there would be something very wrong indeed, I would think, something very funny going on, where an agency came back at the end of the financial year, not knowing until about November of that year, that they actually spent less than was budgeted for at the time of the May budget.
Many things are not known. Yes, increased revenue, in big part, from a strong and robust economy: properties changing hands; businesses changing hands; accruing conveyance duties and stamp duties. In fact, you will see in stamp duties and property duties next year that we expect, as of today, to probably receive something like $52m or $53m less in financial year 2007-08 because around $50m of those conveyance duties coming through were in the form of a number of very large one-off transactions that occurred in the past; the duty was payable and paid in the 2005-06 year. That is not to say that something of that ilk might not occur throughout 2006-07 - so much the better for government and the taxpayer if it does. However, it is not known at this stage, so you do see a predicted $52m to $53m drop off in property conveyancing.
In relation to payroll tax, notwithstanding that we have taken that payroll tax threshold from $600 000 when we came to government to $1m as of 1 July 2005, and $1.25m from 1 July 2006, payroll tax receipts continue to grow. How can that be? When you are cutting the threshold, you are reducing the number of businesses going into the payroll tax. There is only one reason for that, and that is increased growth, a buoyant economy, more people working and greater payroll tax receipts. It is an area we are going to continue to focus on. I gave the Chamber of Commerce a commitment at lunchtime that we will next work on the rate, currently standing at 6.2%, and we will work to bring that down to 5.9% in the outer years.
Members: Hear, hear!
ANSWER
Madam Speaker, without going to the detail of some of those figures, which are patently incorrect, in general terms, the government did receive more income throughout the financial year 2005-06, as is always the case with every government in history.
The budget, as it stands in May 2005 when it is delivered, is delivered on the advice and knowledge that the government has to date of the expenditure requirements of the agencies for the 12 months going forward.
Quite clearly, when large agreements, such as the training agreement with DEET, which runs to tens of millions of dollars; the health agreement between the Commonwealth, the states and territories; and the housing agreements are not signed up at the time that the May budget goes down on the books, of course, expenditure will go up during the year, as it will when unforeseen events occur and have to be met throughout the year, as it will when enterprise bargaining agreements are set.
We had a fairly interesting time with teachers negotiating their EBA last year which resulted in pretty healthy wage increases for them. How much worse that would have been if we had said: ‘Okay, we have negotiated an agreement but we cannot pay you until 1 July 2006 because it will mess up our budget. It will make DEET look like it spent more than it budgeted for so, while we are going to give you 6%, 7%, 8%, 15% over three - whatever the figure was - we are actually not going to pay that until 1 July 2006’. I doubt they would have signed that bit of paper, and nor would nurses, doctors, or any other worker who is entitled to a fair remuneration.
It is a bit like - there was an incident last year; I cannot quite recall - but if a school falls over, you go and build it. You do not tell them: ‘Oh, you have to wait until the financial year next year because that will upset the budget books, and then the opposition will pick on us and create a nuisance by saying we actually spent more than we budgeted for’.
That will be the day when an agency actually comes in - and there would be something very wrong indeed, I would think, something very funny going on, where an agency came back at the end of the financial year, not knowing until about November of that year, that they actually spent less than was budgeted for at the time of the May budget.
Many things are not known. Yes, increased revenue, in big part, from a strong and robust economy: properties changing hands; businesses changing hands; accruing conveyance duties and stamp duties. In fact, you will see in stamp duties and property duties next year that we expect, as of today, to probably receive something like $52m or $53m less in financial year 2007-08 because around $50m of those conveyance duties coming through were in the form of a number of very large one-off transactions that occurred in the past; the duty was payable and paid in the 2005-06 year. That is not to say that something of that ilk might not occur throughout 2006-07 - so much the better for government and the taxpayer if it does. However, it is not known at this stage, so you do see a predicted $52m to $53m drop off in property conveyancing.
In relation to payroll tax, notwithstanding that we have taken that payroll tax threshold from $600 000 when we came to government to $1m as of 1 July 2005, and $1.25m from 1 July 2006, payroll tax receipts continue to grow. How can that be? When you are cutting the threshold, you are reducing the number of businesses going into the payroll tax. There is only one reason for that, and that is increased growth, a buoyant economy, more people working and greater payroll tax receipts. It is an area we are going to continue to focus on. I gave the Chamber of Commerce a commitment at lunchtime that we will next work on the rate, currently standing at 6.2%, and we will work to bring that down to 5.9% in the outer years.
Members: Hear, hear!
Last updated: 09 Aug 2016