Federal govt to make changes to baby bonus, health insurance

Federal government would be making changes to the baby bonus like the way big companies pay tax and further reforms to private health insurance.

The government has lowered its predictions for growth and will be making $16.4 billion in the new savings over four years to return the budget to surplus.

Wayne Swan, the Treasurer, released an update to the May 2012/13 budget, and layed out the changes to the baby bonus and the way big companies pay tax as well as further reforms to private health insurance.

Mr. Swan also said, while Australia’s economic fundamentals remain strong, the worsening global conditions have also cut almost $22 billion from the tax receipts over the forward estimates and $4 billion alone in 2012-13.  

Mr. Swan states, “The weaker global outlook and lower than expected commodity prices, along with the general easing of price pressures in the economy, are again slowing the recovery in tax revenue.”

The domestic growth forecast has been cut since the May budget and the real GDP is now forecast to surge at around trend at 3% in 2012-13 and 2013-14. 

Australia’s terms of trade is also forecast to worsen and decline by 8% this financial year compared to the previous forecast fall of 5.75%.  Meanwhile, the unemployment rate is likely to remain low at 5.5% in 2012-13 and 2013-14. Inflation is likely to remain well contained.  

Mr. Swan also said, “The government has also responded to the more challenging global outlook by delivering $16.4 billion in the new savings over the forward estimates.”  

Government has also slashed its forecast surplus for this financial year to $1.1 billion from $1.5 billion. Besides, it has also raised the surplus for 2013/14 to $2.2 billion from $2 billion. The private health insurance rebate costs will be reformed further as part of its savings measures.

Also, from April 2014, the premium to which the rebate is applied will move in line with the consumer price index or the commercial premium increase which is low. There will also be changes to the way in which large companies are paying tax and moving from quarterly to monthly installments.

Government also said this will better align tax payments with the way businesses pay GST and make payments closer to when the income is earned, like salary earners and wage.

Mr. Swan also says, because of the government’s fiscal discipline, government payments as a share of the economy were expected to fall by 1.5% in 2012-13 to 23.8%. Besides, he also said, it is estimated that payments as a share of GDP will remain relatively stable over the forward estimates.