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Treasurer hands down big-spending budget with $10b surplus

The federal Treasurer has handed down his 12th Budget, complete with extensive pre-election sweetners including a raft of tax cuts and one-off payments. Peter Costello was at pains to tell journalists that he's delivering \"major reforms\", although some analysts are concerned that his big spending may fuel inflation and a variety of different interest groups feel that not enough has been done in their area.

Key measures include:

• Increases in tax rate thresholds, with the 30% rate kicking in at $30000 from July 1 this year and the 40% rate increased to $80000 from July 2008, which will cost about $8 billion this financial year
• An increase in the low income tax offset, to $750
• Large increases in education spending (after cuts in past years), with $1.7 billion over four years to support regional universities, improve income support for students, and expand the existing Commonwealth scholarship programme
• A new \"Higher Education Endowment Fund\", made of $5 billion that would otherwise have been put into the Future Fund, which will be managed as if it were a bequest shared between every university in the country. Income generated from this money will be used for facilities and research. To compare, this is $110 million per university, and UWA is considered rich with $450 million of income-producing assets
• $550 million over four years to better support apprentices in skill-shortage trades
• $84 million to build additional Australian Technical Colleges -- one each in Perth, Sydney, and Brisbane
• New \"tutorial vouchers\" for parents to pay for private tuition when their children have literacy or numeracy difficulties
• A 10% increase in the Child Care Benefit and a change to the delivery of the Child Care Tax Rebate, so that parents can claim it as a direct payment each year
• Massive spending on roads: $19 billion over five years to create a second Auslink programme, and $700 million for Auslink 1 (which delivered roads like Sydney's Westlink M7 and Melbourne's Craigieburn Bypass)
• About $7 billion over the next seven years for local road grants, Roads to Recovery, and the Black Spot programme
• A one-off extra payment of superannuation co-contribution for anyone who received it last financial year, doubling the total co-contribution that they receive
• A $500 one-off bonus payment for senior citizens
• A one-off bonus of either $1000 or $600 for people receiving carer benefits
• $300 million per year to recruit more Defence personnel
• $175 million per year for various projects that are supposed to strengthen our national security
• An increase in foreign aid, taking the AusAID budget to 0.28% of GDP
• Increases in veterans' pensions
• New tax breaks for filmmakers and a restructure of the Government bodies that distribute arts payments
• $740 million over the next five years to combat climate change, the details of which haven't been announced

The Budget also includes several measures that have already been announced, such as additional funding for industry research and productivity, simplified GST accounting for small business, $7 billion over 13 years to buy Super Hornets, and $1 billion per year for the next decade for water projects (primarily around the Murray River).

Reports so far are calling this a \"clever\" Budget, in that it blunts many of Labor's criticisms ahead of the election, while also delivering money into voters' pockets at just the right time. But in my view, despite the spending increases in health, the environment, and education, the measures that have been announced don't go far enough to fixing the problems that have emerged in these areas.