Each year the Australia federal government releases an economic plan known as the

Budget, which introduces a new economic policy that aims to achieve the seven most
important objectives. The seven economic objectives are economic growth, price stability,
full employment, standard of living equitable distribution of income, improved efficiency
and external stability. Fiscal policy is the use of government revenue collection and
expenditure to influence the economy, the Budget the biggest fiscal policy of the year. In
the current economic stage of Australia, the economy is growing slowly and did not achieve
the expectation, this can be reflected by the inflation rate of Australia, in this current
Budget year 16-17, the inflation rate was constantly lower than 2%(refers to figure 1), this
reflect the economic is not active. The 2017-18 Budget has partly done a successful job in
improving the seven important economic objectives, which aims towards the economic
growth ultimately.

(figure 1)

In the 2017-18 Budget, it has specifically targeted for a stronger growth in the economy to
secure more and better-paying jobs. It also guarantees to strengthen essential services like
health care, housing, disability support, education and employment. It also targets to tackle
high housing price pressure in certain area. It also targets to preserve AAA credit rating of
Australia by balancing the deficit and the growth in the debt of Australia.
The Budget also introduces a major bank levy that tackles only the big bank to help out
small banks. It also purposes to tackle all kind of tax avoidance such as big bank
multinational tax avoidance, black economy, foreign investors and GST avoidance.

All the Budget target is related to an economic objective that the government want to
achieve, targeting for stronger growth in the economy are related to full employment and
to increase standard of living, which also ultimately aim at economic growth. Strengthening
essential services and tackling high housing price pressure both related to increase standard
of living, AAA credit rating related to external stability. This Budget is mostly expansionary
policy.

One action of the Budget is to lower company tax rate to 25% for business. This action has a
multipurpose in helping the economy, lowering the tax will reduce the cost of running a
business, especially small business. When the revenue of the business increased, the capital
will increase and invest more money to expand the company, this will boost the productivity
of Australian worker with all the new technology and equipment. These benefit will
encourage more business activity in Australia and more people to start new business.

Another policy introduced by the Budget is lowering taxes for small business, this will
improve the cash flow of small business and increase their competing power in the market.
Both policies above provide more jobs for the market, this can be related to the economic
objective of achieving. Full employment also affects standard of living, when people have
more job, their income increase, then they can create a better living standard, which leads
to higher growth in national the economy.

Another policy is to abolish the 457 visa and replacing it with another temporary skill
shortage visa, this will reduce the number of foreign labours in Australia and creates more
free jobs for local Australian. This also follows up by government providing a fund to
support the training for Australian, this will increase the skill level of Australia labour. The
above policy together will increase the skill level of Australia labour, as well as creating
more jobs for them. This policy can be related to achieve full employment and at the same
time increase the external stability by training Australian own skilled labour, instead of keep
importing foreign labour. This aim to achieve external stability, by minimizing the import, it
maximizing the GDP that stays in the country, which targets for more economic growth.

The Budget also guarantees the essential services that Australian rely on, such as Medicare,
disability insurance, child care, education and so on. In this Budget, the government will put
in another $1.2 billion for new patients, $510 million for hearth problem patients, $1.8 to
make Medicare more affordable for all patients, $65.9 million for medical research and
many more. By investing a lot of money in the medical system, this can help Australia to
have at least basic Medicare that is needed, and therefore they have better health. Which
can be related to the economic objective standard of living, if the people are taken care
well, they will have a better standard of living.

The Budget also provides $18.6 billion funding for education usage, this can be related to
the economic objective efficiency in resource allocation. Although putting money and focus
on the current market is very important, to increase economic growth and other action, but
education can not be ignored as well because education is the further of the society and
economic system of the country. By investing money in the education system, it keeps the
steam going for the society and keep having new entrepreneur, labour and new technology.

According to Australia Taxation Office (ATO), the latest update of company tax was in 12th
December 2017, the small business company tax was 27.5% and general company tax was
30%, both are still the same as last year 2016-2017, the company tax has not reached the
25% that was said in the Budget. Even though the action has not been executed, some
economist also has some criticism on the company tax cut. Australia Treasury predicted that
the cut can boost investment by 2.7%, stimulate foreign investment, also lead to more new
jobs and capital investment. Economist professor Peter Swan throw a punch at the
prediction criticizing that the annual cost of cutting tax should be $8 billion, instead of the
so call estimated $3.7 billion by the Treasury, because the expected foreign investment
boost would not eventuate. There is a clear bias noticed in this case, the Treasury has a
strong bias toward the Budget policy, while economist think critically when they see the
Budget.

According to Department of Home Affairs of the Australian Government (DHA), it was

announced that on 18th April 2017, the 457 visa will be abolished and will be replaced by the
Temporary Skill Shortage visa (TSS) in March 2018. From the Subclass 457 quarterly report
ending at 30 June 2016 published by DHA (refers to figure 2) and Subclass 457 quarterly
report ending at 30 September 2017 also published by DHA (refers to figure 3), it can be
seen that from 2015-2016 the total 457 visa in that year, which was just added in 2015-2016
have a total number of forty-five thousand workers. But in 2016-2017, the number has
greatly decreased to twelve thousand, and in 2017-2018, which is the time when the Budget
announced this policy, the number has significantly decreases to eight thousand. From the
trend data of 457 visa, it can certainly be seen that this policy has some huge success.

(figure 2)
(figure 3)

Although this policy seems to have good success on decaying the number of 457 visa, there
are arguably some limits to the evaluation, it is global constraints and political constraints.
The greatly decay in 457 visa can be a consequence of global changes, for example, China is
growing stronger in the economy, China applicants have more faith in China economy, and
therefore they stay in China instead of coming to Australia. Global economic growth may be
a reason for decaying 457 visa, this is a global constraint limit to the evaluation.
On the other hand, unlike the last policy of the Budget, cutting the tax can only encourage
business to invest, but the business still holds on to the decision whether they do
investment or saving. But abolishing the 457 visa is a very forcing policy, the government
have the absolute power to just cut the visa and close the application, an applicant has no
bargaining power against the government, this is a political constraint limit to the
evaluation.

To conclude, the 2017-18 Budget has partly done a successful job in improving the seven
important economic objectives, which aims towards the economic growth ultimately. The
recent year of low economic growth indicated by the under-target inflation, triggered the
Australia government to introduce a new policy in the 2017-18 Budget, which aims to
improve the seven important objectives, aiming towards more economic growth. The
policies are lowering business tax, abolishing 457 visa and guaranteeing essential services.
The lowering business tax is criticized and bias is identified, which abolishing 457 visa
statistically did a good job, but can be criticized that there are limits during the evaluation.
Overall, this is a partly successful Budget, it has successfully provided more job and
improved the Australia economy, which can be reflected by the increase of inflation rate to
1.9% currently. Looking into the future, the Budget should be more successful after a longer
period of time, the jobs from 457 visa are now available for Australian, but they still need a
bit of time to train for the skills.
References
Ato.gov.au. (2018). Company tax. [online] Available at:
https://www.ato.gov.au/Rates/Company-tax/?page=1#Tax_rates_2017_18 [Accessed
22 Mar. 2018].
Budget 2017-18. (2017). Budget Overview. [online] Commonwealth of Australia. Available
at: http://budget.gov.au/2017-18/content/glossies/overview/download/Budget2017-
18-Overview.pdf [Accessed 22 Mar. 2018].
Department of Home Affairs (2016). Subclass 457 quarterly report. quarter ending at 30
June 2016. [online] p.6. Available at:
https://www.homeaffairs.gov.au/ReportsandPublications/Documents/statistics/457-
quarterly-report-30-06-2016.pdf [Accessed 22 Mar. 2018].
Department of Home Affairs (2017). Subclass 457 quarterly report. quarter ending at 30
September 2017. [online] p.6. Available at:
https://www.homeaffairs.gov.au/ReportsandPublications/Documents/statistics/457-
quarterly-report-300917.pdf [Accessed 22 Mar. 2018].
Homeaffairs.gov.au. (2018). Abolition and replacement of the 457 visa – Government
reforms to employer sponsored skilled migration visas. [online] Available at:
https://www.homeaffairs.gov.au/trav/work/457-abolition-replacement [Accessed 22
Mar. 2018].
Martin, P. (2018). 'Already zero'. Economist raises questions over benefits of company tax
cut. [online] Canberra Times. Available at: http://www.canberratimes.com.au/federal-
politics/political-news/economist-raises-questions-over-benefits-of-company-tax-cut-
20180321-p4z5fy.html [Accessed 22 Mar. 2018].
Reserve bank of Australia (2018). The Australian Economy and Financial Markets Chart Pack
March 2018. RBA, p.5.