What does the budget mean in plain English?

www.nomoney.com.au

What is the budget?

The budget is where the government estimates revenue coming in for the next year and makes decisions on what it will spend it. As I write this in May 2013, the budget looks like it will have a lot of cuts to government spending. The government budget is probably similar to your own spending – there are lots of things you want but not enough money.

 

What happens on budget night?

On budget night, the treasurer announces information regarding government revenue (read: taxes) and government expenses. Afterwards, TV and newspapers share on the main points.

 

What changes could happen in the budget?

Like any budget, changes that the government make will affect revenue and spending/expenses.

 

What changes could happen to government revenue?

Tax is a key revenue generator. Examples of revenue changes could be:

  • New taxes or ways of generating revenue (such as the carbon and mining taxes)
  • Tightening loopholes in current tax laws so that people pay their fair share of tax
  • Reducing previous tax concessions allowed
  • Tightening ATO policy on people with tax debts
  • Reducing tax rates (however, as this has happened over the last 10 years, it may be unlikely to happen again for some time)

 

What changes could happen to government spending (or expenses)?

The government is usually trying to keep costs as low as possible (while maintaining quality of life for Australians). Quality of life also means that the disadvantaged might be eligible to receive subsidies such as Centrelink. Examples of spending changes could be:

  • New spending initiatives
  • Increases to previous spending
  • Cuts to existing spending

 

What is the deficit/surplus?

A surplus is having more than is needed or expected, like cash in the bank. A deficit is the amount that the government has borrowed to fund spending.

Australia is currently in deficit, however has been in surplus in the past.

 

Does Australia have a problem because it has a deficit?

While Australia does have a deficit, it has a smaller percentage (when compared to the size of the economy) than a lot of other nations. Also, by spending money the government helps stimulate the economy. For example, a new building project creates a lot of jobs which in turn provide income for workers to spend etc.

Posted in Life, Tax

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