Non-means tested benefits are likely to bear the brunt of cuts in Tuesday’s federal budget, according to a leading bank representative.
At a media conference on May 2, St George chief economist Hans Kunnen said the federal government would avoid instituting major cuts in order to reach its stated goal of surplus.
“Some of the target seems to be middle-class welfare and higher-income welfare, where benefits have not been means tested and people on high incomes are still getting benefits,” Mr Kunnen said.
“We saw some of the aged care issues a month ago, when they changed funding for aged care, and there have also been changes to superannuation.
“It will be those sorts of things, not massive cuts. It’s possible for them to find $2-3 billion relatively easily without crippling the economy.”
Treasurer Wayne Swan is due to announce the 2012/13 budget on Tuesday night in Canberra.
Mr Kunnen said he believed a small surplus was within reach.
“I think they could come in with a $500 million surplus,” he said.
“To go for a figure bigger than that would require more cuts, and that wouldn’t be popular.
“So, it will be constrained, but not a horror budget.”
A shortfall in cash coming into the economy was the main reason for cuts, Mr Kunnen said.
“It’s not that they’re spending hell-for-leather, they’re just not getting the revenue,” he said.
“In last year’s budget, they were forecasting a surplus of $1.5 billion, based on the policies that were already in place, and their revenue expectations,” he said.
“That’s all slipped, as the money’s not coming in as fast as they had hoped. They’re looking at a loss of revenue of about $2-3 billion, and that’s what they have to make up to get to their surplus level.”