Confirming newspaper reports today, Ms Gillard told a forum in Canberra the government's revenue had slid $12 billion since the last budget update in October.
BY now we all know the government's revenue has slid by $12 billion since the last Budget update in October.
Sure, it's a big number, but what does it actually mean?
Thankfully the helpful people at Deloitte Access Economics have worked it out.
Read: Federal Budget decisions "grave" and "urgent"
Deloitte is not saying Prime Minister Julia Gillard should do any of these things immediately (in fact, it would be ugly if she did) but this is a simple way to understand how big the $12 billion shortfall is.
The PM offers an analogy to help explain the cuts that will need to be made in the upcoming budget.
- Entirely abolishing all Family Tax Benefit A payments (saving $14 billion).
- Or stopping all funding to the States for health care (saving $13 billion).
- Or stopping all funding to schools (saving $13 billion).
- Or stopping all funding to aged care homes (saving $8 billion), as well as community care ($2 billion) and veterans' care ($2 billion).
- Or cutting all Medicare payments by two-thirds (saving $12 billion).
- Or cutting pensions to the aged by a third (saving $12 billion).
- Or abolishing all disability pensions (saving $15 billion).
Or if the shortfall was made good entirely from taxes and 'tax expenditures':
- Extending capital gains tax to the family home (raising – eventually – $15 billion a year).
- Or raising the current 45 per cent rate to 66 per cent (raising $12 billion).
- Or having the current 45 per cent rate cut in at incomes of $65,000 rather than $180,000 (raising $12 billion).
- Or raising the 32.5 per cent rate to 37 per cent (that is, do away with that rate completely, raising $10 billion).
- Or lowering the $18,200 threshold to $12,500 (raising $13 billion, but you'd be taxing about an extra 650,000 people, including many pensioners).
- Or taxing all superannuation contributions at marginal tax rates (raising $14 billion).
- Or raising the rate of company tax from 30 per cent to 35 per cent (raising $12 billion – but also adding to franking credits that would cut the personal tax take).
- Or adding 30 cents a litre in additional taxes on the price of petrol (raising $12 billion).
- Or tripling the existing taxes on cigarettes (raising $12 billion, and adding about $17 to a pack of 25 cigarettes).
- Or lifting the carbon tax to $60 dollars a tonne and removing the future link to the European carbon price (raising $12 billion).
Summary: It's A LOT of money.
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