While the federal budget was released on Tuesday, it is likely coming from a lame duck government.
There were no surprises, with a major focus on spending and the claim of no increased nor new taxes. The Treasurer was very pleased to forecast Australia to be back in budget surplus next year but that is dependent upon factors outside the Government's control. Big spending announcements on infrastructure, health and early education along with enhanced tax cuts for low to middle income earners were the centre pieces of the budget speech.
Last night we heard about a potential Labor government’s policies, and while they may take power in May, we can’t be certain that policies will be legislated, and if they are, to what extent the minority and special interest parties compromise the original intent.
Labor has pledged to match the tax breaks announced by the government but won't support the long term plan to flatten the tax brackets. They also focused on education, climate change, wages growth and health. Interestingly, there was no comment relating to tax/super changes other than a reaffirmation on changes to negative gearing.
Therefore, there still remains considerable risk over the coming weeks as we head to the election in relation to tax and superannuation policy.
We will continue to monitor the situation and make recommendations where we think there are opportunities to mitigate the risks.