Federal Budget 2010

The federal budget produced by former Prime Minister Kevin Rudd, Treasurer Wayne Swan and the Labor Party forecasted that the budget will be in surplus by 2012-13 through changes to the fiscal policy. As previously indicated by the Labor Party, it has produced a restrained budget in which it focuses on economic management in an aim to get the budget back to a surplus and thus made changes to their fiscal policy. The changes to the fiscal policy will impact upon the level of economic activity, resource allocations and the distribution of income in Australia.  
Government revenue is expected to recover thanks to booming commodity prices, higher business profits and lower unemployment after “Australians have defied the global economic gravity” (Wayne Swan). Major changes include the introduction of the tobacco excise tax and a 40% resource tax which have been particularly controversial. The tobacco excise tax will raise cigarette prices and is expected to bring in an extra 5 billion dollars meanwhile the resources tax is anticipated to give the government 12 billion dollars by the end of the 2013-14 financial year. The tobacco excise tax which was introduced was highly publicised in the media with many arguing that it will not be effective in reducing the number of smokers. Many like the AACS (Australasian Association of Convenience Store) has gone on to state that “the excise tax decision will fuel the black market and organised crime” therefore many view this tax as being ineffective in achieving one of the main aims which is to reduce the number of smokers. It is also further argued by the AACS that it is the in fact, the low income earners who buy the bulk of the cigarettes so in essence, this new tax does not create an equal distribution of income which goes against one of the fundamental values of the Labor Party. The compulsory resource tax or otherwise known as the resources super profits tax was probably the most...