Accessible transcript - Task A4.3 You make the decision

This is the accessible text transcript for You make the decision.

Introduction

Deciding the nation's Budget

As Treasurer of Australia, you face pressure about the best way to allocate government spending. Many people have strong views about where and how much of taxpayers' money the government should spend.

You have worked extensively with Treasury advisers and at this point the Budget for the coming year is close to completion. Your advisers have recommended that the current state of the economy requires your Budget to be as close as possible to 'balanced', that is, revenue should equal spending.

Six people representing various organisations and government departments have made a special trip to Canberra to see you. They want you to fund a specific initiative in the forthcoming Budget.

Each project has a large number of supporters who are very keen for your government to accept their request. Most of the initiatives have been well publicised on TV and in newspapers and other media, so your decision will be widely discussed.

Your task

Consider each proposal and decide whether to provide funding or not. If you decide to fund the initiative, choose one of the three funding alternatives.

To balance the Budget, you need to cut another form of spending, or raise a tax to gain the revenue required to fund the proposed initiative. Consider the choices in Financing options to decide how you will balance the Budget.

What you need to do

Consider each representative and choose a level of funding. Indicate if you decide not to fund their initiative. Then consider Financing options and decide how to fund this expenditure.

Representatives

Brett Martin – Commonwealth Weather Bureau

Hi, I'm Brett Martin. I'm an oceanographic scientist from the Commonwealth Weather Bureau.

Oceanic buoys can be used to measure changes in sea levels and ocean currents. If we invest $720m in a program of automated deep sea buoys, sensors on the sea bed and the surface will allow scientists to gather comprehensive and up-to-the-minute information. They can use this detailed data to model the impacts of climate change for Australian farmers.

The benefit will be more accurate predictions on sea level changes that can lead to coastal erosion and inundation of low-lying coastal farming regions. It also helps with long-range weather forecasting, a service that is becoming increasingly important for Australian farmers.

Make a funding decision

Don't fund

Representative's response:

That's really disappointing. Without accurate climate data, our Australian farmers won't be able to plan to meet this global challenge.

Only fund a trial program in local waters $240m

Representative's response:

A trial program is always beneficial to any project, but we really had hoped to see a more long-term commitment.

Only fund buoys in the Pacific $480m

Representative's response:

Thank you. Funding buoys in the Pacific will help us gather important localised data to improve our understanding of climate change.

Fully funded $720m

Representative's response:

That's such great news! Gathering a comprehensive range of data will help Australian farmers to manage the challenge of climate change.

Dave Wilson – Cycling In2 the Future

Hi, I'm Dave Wilson and I'm from Cycling In2 the Future.

Adding additional cycle lanes, overpasses and underpasses to every major city will make it quicker and safer to cycle. This will encourage people to cycle to work and will cut the number of cars on the roads. Dedicated bike lanes mean fewer accidents so it will reduce pressure on hospitals and doctors. Fewer cars on the road will mean buses can run easier, so this becomes a win-win for everyone, not just for cyclists.

We need to invest in bike lanes for every city – that's $610m for the whole country to make this a reality.

Make a funding decision

Don't fund

Representative's response:

Without any funding, lives will continue to be lost on our roads. The need to provide safe paths for cyclists and care for the environment are issues that won't go away.

Only fund in Sydney and Melbourne $160m

Representative's response:

Limiting funding to just two major cities to manage a country-wide problem is less than ideal, but at least it's a start. It's better than where we are now and will begin to save some lives.

Only fund larger cities $360m

Representative's response:

Thank you. Your decision will provide cycle lanes to the majority of Australians, but I urge you to not forget our smaller communities.

Fully funded in every city of 200,000 people or more $610m

Representative's response:

What an excellent outcome! The benefits of this program will make a huge impact right across Australia.

Michael Cruz – State Government

I'm Michael Cruz and I work as a quantity surveyor for the State Government.

This state urgently needs a major new high speed rail link that can carry raw materials from inland regions to our recently approved world-class Super Port. Far-sighted, long-term investment is desperately needed to create our future as a global export, trading and manufacturing hub. We propose an ambitious five-year investment plan that will create a world-class facility which will not only benefit this state but also place Australia firmly on the international trading map.

We need $3.6b to start constructing the high-speed rail link right now and develop the required Super Port infrastructure.

Make a funding decision

Don't fund

Representative's response:

We urge you to reconsider this decision. The long-term benefits to our state and the nation will outweigh the investment for years to come.

Only fund improving the current rail links $800m

Representative's response:

Our current railway lines do need improving, but this level of funding won't help us to develop the Super Port we need.

Fund only the rail link $1.7b

Representative's response:

The high speed rail link is a good outcome and there will be notable benefits. We still believe, however, that investment in the Super Port is needed.

Fully funded $3.6b

Representative's response:

This is the best possible result; Australia's place as a world-class exporter, manufacturer and trading hub is now assured.

Ling Chan – Future Forestry Association

My name is Ling Chan and I represent the Future Forestry Association.

As a building material, timber takes much less energy to produce than bricks, steel or aluminium. Investment in plantation forests of genetically modified fast-growing trees will help Australia meet an ever increasing demand for housing materials.

Genetic modification technology, when used commercially in forestry, produces high timber yields. In addition to producing construction materials, we can also take advantage of the high global demand for timber fibre. And, of course, we shouldn't forget that each timber product from a plantation forest will ease the pressure on our native forests.

We need $1.2b to establish four major plantations to provide all of Australia's timber needs and provide a resource of export-grade timber.

Make a funding decision

Don't fund

Representative's response:

Your decision doesn't support the need in Australia for a viable forest industry able to meet local and global demands for timber. The rural communities will be hardest hit by not funding these plantations.

Only fund one major plantation $350m

Representative's response:

Funding for only one plantation will really diminish the scientific and commercial outcomes of the project.

Funding two major plantations $650m

Representative's response:

Thank you; two plantations will get this project off to a good start.

Fully funded funding four major plantations $1.2b

Representative's response:

We are extremely pleased with this vote of confidence in our work.

Rachael Morris – Aussie Home Support

My name is Rachael Morris. I am the treasurer for Aussie Home Support, which is a not-for-profit organisation.

Our not-for-profit organisation is usually funded by the generous donations from the community but, as our population is ageing, there has been an increased demand for our services. We desperately need funding to maintain our in-home support services for the elderly and disabled in our community. We provide meals, domestic services, home maintenance and other support services to those who need just that little bit of extra help. Most importantly we are a regular visitor, a friendly face at the door.

We now want to expand our program right across Australia, particularly to reach those more isolated people in rural locations. We need an additional $1.3b to help us extend our services and help the more than 2 million carers out there.

Make a funding decision

Don't fund

Representative's response:

Our ageing and disabled populations need our support and we need funding to continue our work. Please reconsider your decision.

Only fund a limited expansion of the current program $300m

Representative's response:

Whilst any funding in this sector is welcome, $300m just isn't enough to cover our growing needs.

Only fund major rural centres $600m

Representative's response:

Reaching those isolated in rural locations will be a great achievement.

Fully fund coverage right across Australia $1.3b

Representative's response:

What a wonderful result! This funding will give immediate help to the elderly and disabled right across our community.

Lena Costa – Protect Our Wildlife Society

Hi, I'm Lena Costa and I'm a vet from Protect our Wildlife Society.

Stray and feral animals pose a constant threat to our wildlife. Desexing our pets makes them less likely to wander from home and fight and, more importantly, will reduce the numbers of unwanted pets that become the stray feral dogs and cats that currently prey on our native animals.

The problem is that many people can't afford to get their pets desexed and microchipped. To address this problem, we want to set up a free mobile service nationally. To do this, we will need to purchase and modify 600 locally built panel vans. We estimate that the staff training, salaries, equipment and support services for this much needed scheme will cost $111m in total.

Reducing unwanted strays through desexing is necessary if we want to look after our wildlife as well as our pets.

Make a funding decision

Don't fund

Representative's response:

The impact of this decision will soon be apparent in our dwindling wildlife numbers as the feral population grows uncontrollably. We need something done before it's too late to save our wildlife and pets.

Only fund a trial scheme $10m

Representative's response:

A trail scheme will only scratch the surface of this problem.

Fund a reduced scope $50m

Representative's response:

Thank you, we will be able to make a real difference with this level of funding, but would of course prefer more!

Fully funded $111m

Representative's response:

Fantastic! This scheme will make immediate and dramatic improvements to our native wildlife and the safety and security of our pets.

Financing options

Choose Financing options to raise finance to pay for the initiatives.

Compensating actions

  • Increase GST on goods and services to 10.5%. Increases revenue by $2.5b.
  • Reduce eligibility for youth allowance. Saves 500m.
  • Reduce tax-free threshold by $1,000. Increases revenue by $1.5b.
  • Increase company tax by 1%. Increases revenue by $1b.
  • Increase income tax rates for incomes over $100,000. Increases revenue by $500m
  • Reduce overseas aid spending by $500m. Decreases spending by $500m.

Present the Budget

Total up your selected funding decisions, for example

Dave Wilson
Cycling In2 the Future
Only fund larger cities $360m
+ Rachael Morris
Aussie Home Support
Fully fund coverage right across Australia $1.3b
+ Lena Costa
Protect Our Wildlife Society
Fully funded $111m
= $1.771b

Total up your selected compensating actions, for example

Increase company tax by 1%
Increases revenue by $1b
+ Increase income tax rates for incomes over $100,000
Increases revenue by $500m
+ Reduce overseas aid spending by $500m
Decreases spending by $500m
= $2b

Subtract your funding total from your compensating actions total, for example

Compensating actions total
$2b
- Funding total
$1.771b
= +$229m

Funding decisions

Representative and funding options Enter your chosen funding value $
Brett Martin
  1. $0
  2. $240m
  3. $480m
  4. $720m
 
Dave Wilson
  1. $0
  2. $160m
  3. $360m
  4. $610m
 
Michael Cruz
  1. $0
  2. $800m
  3. $1.7b
  4. $3.6b
 
Ling Chan
  1. $0
  2. $350m
  3. $650m
  4. $1.2b
 
Rachael Morris
  1. $0
  2. $300m
  3. $600m
  4. $1.3b
 
Lena Costa
  1. $0
  2. $10m
  3. $50m
  4. $111
 

Total $

 

Compensating actions

Compensating action Revenue Enter your chosen financing value
Increase GST on goods and services to 10.5%. $2.5b  
Reduce eligibility for youth allowance. $500m  
Reduce tax-free threshold by $1,000. $1.5b  
Increase company tax by 1%. $1b  
Increase income tax rates for incomes over $100,000. $500m  
Reduce overseas aid spending by $500m. $500m  

Total $

   

Budget

Enter your compensating actions total Enter your funding total Subtract your funding total from your compensating actions total to determine your Budget

$

$

$

How good is your Budget?

How many financing options did you choose?

None

Your choices are important. Think about what you are being asked to fund, how important it may be now and in the future, and the benefits to the community.

Only one financing option

Compensating action Revenue
Increase GST on goods and services to 10.5%. Choosing only one way to fund these projects might seem easy but is this the best way? What other options might you consider?
Reduce eligibility for youth allowance. If you make this your only choice, think what might happen to those who need the Youth Allowance. Should you re-examine your decision?
Reduce tax-free threshold by $1,000. How might this decision affect your community? Is there a better way? What could you do differently?
Increase company tax by 1%. Taking this as the only option might create other problems. Could this be true? What might happen? Is there another way to fund these projects?
Increase income tax rates for incomes over $100,000. How might this decision affect your community? Is there a better way? What could you do differently?
Reduce overseas aid spending by $500m. Some countries are in desperate need of assistance; this option will not help them. Would this choice be better than other options you have?

Two or three financing options

  Minimum Maximum  
Major overspend   -$601m By spending more than you have, this may complicate your future budget position and the services you can afford to fund in the future. Go back and re-examine your choices what can you change to produce a better result?
Minor overspend -$600m -$201m How close can you get to balance your budget? Can you do something differently?
Balanced -$200m +$200m Well done. Balancing the budget is about making choices and decisions to fund services for the community. It's not always easy, but you've done a pretty good job!
Minor underspend +$201m +$600m How close can you get to balance your budget? Can you do something differently?
Major underspend +$601m   You have more money available to fund more community services. Is there anything else you would like to fund?

Four financing options

Think for a moment about what your decisions may mean for the community. Are there other ways to balance your Budget?

Five financing options

Your decision means there are lots of changes. Ask yourself who is affected, what does it mean to them and how will you explain it to your community? Is there a better way?

Six financing options

You've managed to fund your choices by changing everything. Is this the best way?

Summary

Your reasoning

Consider the reasons for your decisions.

  • Fact 9

    The Australian Taxation Office started as the Commissioner of Land Tax in 1910 with a dozen employees. It was based in the Department of Treasury, situated in Melbourne, which was the seat of the Commonwealth Parliament until 1927.

Fringe benefit

A benefit received by employees from their employer instead of salary or wages, such as the use of a car for private purposes.

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