A " Courageous " budget !

Most people are still trying to digest the many changes revealed in Tuesday night's budget but it seems clear that it is designed to reduce the unsustainable and growing deficit and bring this country back to fiscal sobriety - and most sectors of society will share in the pain.

Those earning in excess of $ 180,000 will pay a 2% " Debt Levy " for the next three years - and clearly that is a tax increase.  The indexing of petrol excise has been scrapped and we can expect to pay several cents a litre more at the pumps in the years ahead and this will be entirely directed into upgrades of the road network.   A variety of tax benefits have either been scrapped or reduced across a broad spectrum - from which most people will feel the pain.

Medical costs have been in the cross hairs with a new $7 co-payment each time we see a doctor or have blood tests and each script presented at a pharmacy will cost $5 more, with pensioners paying an extra 80 c to their $6 subsidy.  Several more scripts will be necessary for the pharmaceutical safety net to become operative.

Pensioners have been largely spared in the current three year period, but the age pension will only apply from age 70 by 2035.  Those people on disability pensions will be retested and efforts made to reintegrate them back into the workforce - and the under 30's seeking Newstart or the Youth Allowance will face a six month wait before they start receiving unemployment benefits.

Our universities will be deregulated to allow more innovation.  It is likely that this may mean an increase in fees and those deferring education costs under the old HECS will now be required to commence repayment of their debt when they reach a lower grade salary start of $ 50,638.

The public service will face a loss of 16,500 jobs in redundancies spread across all sectors and foreign aid will be cut by a massive $ 7.9 billion.  Job creation efforts will include giving a $ 10,000 subsidy to employers who employ the over 50's who have been out of work for six months - and retain that position for two years.

Many people will heave a sigh of relief that this budget is less threatening that some predictions.   The family home has not been included in the means tests - and most people accept that we could not go on spending way beyond our means and compiling a growing debt that we would saddle on our kids and grand kids to repay.

One of the problems is that our three year parliamentary term imposes an almost impossible political cycle - and many other countries now have a five year term.   The Senate will probably be obstructive and these changes need to happen fast to deliver results that can be seen as the next election approaches.   It is therefore in the interests of political opponents to try and delay enabling legislation for political gain.

There will be the usual yelps from self interest groups, but the broad spectrum of economists are giving this budget a grudging nod.