Australia v NZ: Swan's budget

The Australian budget has been released today. As expected Australia is cutting taxes. I myself am receiving $1,100 extra in the year from July 1 (although hopefully my salary will go up too) through threshold movements, plus the 1.5% medicare surcharge will disappear.

However, lots and lots of money is going to 'working families', as if they didn't get enough extra
compared to us productive childless earners anyway. Read here and here for a nice criticism of family friendly tax regimes; they really don't make any economic sense.

A note on the tax cuts and inflation, inflation (currently at 4%) will erode about $3000 from my purchasing power overt the next year, the threshold movements will redeem a bit of that, but (like the problem in NZ) bracket creep is robbing more than the threshold movements. Therefore the tax paid as a proportion of total income grows each year. At least Australia has been increasing these thresholds over the last few years unlike NZ, but the movements have not been enough to prevent bracket creep completely. It will be interesting to see what Cullen does on the 22nd, I think he will probably raise the thresholds (at least the low ones).

P.s. I am watching Malcom Turnbull trying to rip apart the budget, unfortunately he is not very convincing.