Collect information and review material from the media about the details of the Budget. Also investigate the likely impact of this Budget on the Australian economy for the next financial year and beyond.
cent of the haul.
If dwelling investment keeps rising, and rates rise, the tax debate will intensify.
About 18 months ago, Reserve Bank governor Ian Macfarlane warned Australian houses were becoming the most expensive in the world in relation to income. But the surge of negatively geared buying (plus a large number of Australians returning home from abroad buying very expensive homes) pushed home values to new highs and maintained interest in new units.
If the US economy does well, then the pressure to lift Australian interest rates early next year will be intensified, unless the local dwelling market goes into a nosedive. Australians have substantially increased their debt so small rises will have a dramatic effect.
Stronger defence
¡P Increased spending on defence of $2.1 billion over 5 years.
¡P $1.1 billion over 5 years to support funding for ships, aircraft and land-based specialist military equipment.
¡P $645 million over 3 years for Australia¡¦s contribution to disarming Iraq and reconstruction activities.
¡P $157 million over the next 4 years for a Special Operations Command to enhance Australia¡¦s capacity to respond to threats to national security.
¡P $411 million to further upgrade Australia¡¦s existing domestic security arrangements
Comments
The budget suggests a shift away from the defence of Australia to supporting international operations in the war on terrorism. The favoured view is for a better investment in counter-terrorism in our intelligence and police agencies, rather than the special forces that performed so superbly in the Iraq war.
Effect on economy
The increase in spending on anti-terrorism on an international level can be viewed as strengthening the relationship with United States and UK. It also helps indirectly on improving the economic relation with United States and UK. With the increase in spending on security in Australia to protect Australians from terrorist attack, it helps to protect the economy from being disrupted. The World Trade Centre incident shows that the financial market could be disrupted temporarily and dragging down US share prices.
Education spending
¡P $1.5 billion over 4 years growing to an extra $870 million each year to strengthen Australia¡¦s higher education institutions.
¡P $775 million over three years from 2005 will increase baseline funding. From 2005 universities will able to set their course fees lower, as well as up to a maximum of 30% above standard HECS rates.
¡P A new Higher Education Loans Programme from 2005 to improve access to higher education.
Effect on economy
The budget on education can be viewed as maintaining the current standard of education, if not improving on it. It affects the longer term of Australia¡¦s economy as the quality of human capital is always considered to be the key factor of success.
Comments
"We have finally set universities free by allowing them to set their own fees," Education Minister Brendan Nelson commented. "Universities will have the freedom to choose to be good at what they need [next page]