Savings In this MYEFO the Government has identified savings of $16.4 billion in 2012-13 and across the forward estimates. These savings build on previous saves of over $130 billion identified by the Government in the five budgets since 2008-09. After paying for all new expenditure since the 2012-13 Budget, including the Dental Health Reform Package and the Government's response to the Expert Panel on Asylum Seekers, the Government has achieved a net saving of $10.5 billion in this MYEFO.
The savings in this MYEFO have been carefully targeted to minimise the overall impact of the fiscal consolidation on the economy and on vulnerable people. The Government will continue to balance these considerations, particularly if there is any further deterioration in economic conditions or in tax receipts. These savings have helped sustain strength in the position of the budget in 2012-13 and over the forward estimates.
Importantly, some of the savings will continue to improve the underlying position of the budget after the end of the forward estimates by reducing the growth of significant areas of expenditure such as the PHI rebate. These enduring savings build on the long-term savings that this Government has made since the 2008-09 Budget and will help make room for emerging priorities over the medium-term.
Box 3.1: Long term savings and the budget position
The Government has made savings decisions since the 2008-09 Budget that will continue to impact on the budget position well beyond the end of the forward estimates. In part, these enduring savings provided the room for significant new priorities, such as the pension increase in the 2009-10 Budget. They have also contributed towards sustaining and improving the budget bottom line over the medium and long-term.
Since the 2008-09 Budget some of the most significant of these savings are:
Increasing the pension age to 67 by 2023. Reforms to the family payments system. Means testing of the PHI rebate. Reforms to personal tax offsets such as the net medical tax expenses offset and dependent spouse tax offset. Fringe benefits tax reforms including changes to the concessions for cars and living away from home allowances. Changes to the concessional contribution arrangements for superannuation. Means testing for aged care recipients. In this MYEFO the Government is making further long-term savings to contribute to the budget bottom line beyond the forward estimates. The reforms to the PHI rebate in MYEFO will control one of the fastest growing areas of health expenditure. Other savings include the changes to baby bonus, targeted increases to visa application charges, and the removal of fringe benefits tax concessions for in-house benefits accessed through salary sacrifice.
Without these savings since the 2008-09 Budget, the medium-term budget outlook would be in a much poorer position. Rather than net debt returning to zero in 2020-21, it would be over $250 billion in that year.
