Budget: Joe Hockey asks too much too soon and puts credibility at risk

Looking like a man in too great of a hurry: Treasurer Joe Hockey’s budget may fall short on fairness. Photo: Andrew MearesRarely has a federal Treasurer laid out so quickly and clearly such stark reforms to the Australian way of life. Rarely have voters been left wondering about the justification and asking, ”Why the rush?”
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Dozens of changes to benefits, handouts and programs have been outlined, along with new taxes, curbs to health and savings on higher education.

There have been myriad broken promises. And many surprises.

Joe Hockey’s first budget speech builds a narrative of short-term pain for long-term gain; not by tightening the economy to the extent that a slowdown is imminent, but by drawing on a highly developed ideological framework.

This new user pays world fits snugly with what Mr Hockey admitted was the goal of ”reducing the government’s share of the economy over time”.

”The age of entitlement is over,” Mr Hockey declared in his budget speech, recycling a treatise he delivered in 2012 in London but conveniently omitted to stress during the 2013 election campaign. True, the Coalition in opposition promised to fix the budget, albeit not to raise taxes, or make excuses.

As a result many voters, and the Herald, backed Tony Abbott and Mr Hockey as best placed to embark on much-needed economic and budgetary reforms to end years of Labor dysfunction.

Eight months on and no one can accuse them of not having a red hot go at changing the nation.

The public can, however, ask whether the government’s zeal for shifting the burden of economic change risks jeopardising the sort of national unity needed if Australia is to accept many of the necessary reforms in this budget.

The Treasurer is looking like a man in too great a hurry.

No doubt he is gambling that an unviable opposition under Bill Shorten will pose little obstacle. Mr Hockey will have his fingers crossed that consumer confidence holds up, infrastructure jobs grow and the economy outperforms his relatively pessimistic assumptions. That way, voters who have been hit in the hip pocket through family payment cuts will forget any taint of unfairness in this budget by the time they enter the polling booths in 2016.

True, many of the most severe cuts affecting the middle class – as opposed to the easy targets of jobless youth – kick in after the next election or will be temporary.

But the so-called economic growth dividend from reform will need to come quickly to offset the unsettling 16,500-plus public service job cuts and the uneasy sense that it has suddenly become more comfortable to be a wealthy Australian than someone who needs a helping hand.

Mr Hockey’s narrative tries to keep voters engaged through a series of give-and-take deals. He pledges to recycle health savings and most funds from the new $7 co-payment for doctor visits into a $20 billion health fund. Government assets will be sold and recycled into new job-boosting infrastructure. A hike in fuel tax will be funnelled into road upgrades.

A welfare crackdown will be recycled into a better work culture and a more sustainable safety net for the vulnerable. Capped university fees will be recycled into a fee free-for-all, but with 20 per cent converting to scholarships for the poor.

Labor’s age of entitlement will be recycled into what Mr Hockey calls an ”age of opportunity” under the Coalition. But it all depends on voters replacing their ”age of self interest with national interest”.

”Doing nothing is not an option,” he says – to which some voters may ask, ”But why do so much?”

”Repairing the budget is necessary to protect living standards and prepare for an ageing population,” he says – to which some might ask, ”Explain why this can’t be staged more slowly and why you didn’t tell us at the election?”

”It will allow us to respond to future unexpected events” – to which some will say, ”But our debt position is still the envy of the world”.

To make room for future tax relief and pay it forward – to which many will say, ”At whose cost?”

Many of the easiest ways to reduce budget spending by means testing upper-class welfare or reducing tax breaks for the wealthy on superannuation, capital gains and negative gearing are conspicuously absent from the budget. What’s more, voters must be confused about the need to act so strongly now.

Although the Coalition told Australians before the election the economy was dire, it is now showing signs of recovery. While the prices for our exports remain subdued and may fall further, interest rates remain low, lifting household spending.

Even Mr Hockey says, ”Now is not the time to talk our country down but to talk the facts” – to which many angry at broken promises and policy surprises will respond, ”We aren’t sure we can trust you to tell us.”

Such a potential disconnect between a new government and those who elected it is distressing given the positive aspects of this budget. With more explanation and less aggression, Mr Hockey could have made a strong case for medium-term adjustments to government programs with the burden shared by all.

As it stands, the danger is the necessary pain in Mr Hockey’s plan will become embroiled in the politics of backlash.

The Herald believes Australians do need to realise that the return to budget surplus is a valid goal.

That super tax breaks and other lucrative perks created long-term structural flaws in the budget just as governments should have been banking the proceeds.

That privatisation of some assets is a useful way of freeing up funds for roads.

That indexation of fuel excise does need to be reintroduced especially as the government shrinks the tax base.

That pension assets and income tests do need to be toughened over time in concert with the rise in the retirement age.

But the Herald also believes increased equality of opportunity for education is an investment not a cost and that early intervention will save money on health.

What’s more, a temporary tax on those earning over $180,000 is a poor replacement for removing structural programs that support those who need them least.

Granted, Mr Hockey had to make tough decisions. But if the Treasurer had said no to more Australians who could afford to hear the bad news this would be a better and fairer budget – and it would have a greater chance of gaining acceptance among a rightfully cynical public.

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Garrett takes fall but points finger at Rudd

Former Environment Minister Peter Garrett has taken responsibility for the Labor Government’s failed insulation scheme but revealed Prime Minister Kevin Rudd refused to approve a change to the installation system just weeks before the first installer died.
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Mr Garrett told of Mr Rudd’s involvement via a statement given to the Royal Commission into Home Insulation Program, which is sitting in Brisbane.

On Tuesday Mr Garrett became the highest profile minister to appear at the inquiry, which is due to hear evidence from Mr Rudd on Wednesday.

In his statement Mr Garrett said: ”I was responsible for the rollout for the HIP and bore ultimate responsibility for its implementation.”

He also revealed he had tried to introduce a requirement for two quotes for insulation jobs because he ”felt there was a need for a rigorous process that ensured value for money”.

He said his requirement was removed from the initial roll out in phase two on the basis of advice from the Department.

Then on August 27, 2009 he said he sought the Prime Minister’s approval to make the change but Mr Rudd did not approve the request.

Four installers died during the program – the first, Matthew Fuller, was electrocuted on October 14, 2009, less than four months after the main program started. The following month 16-year-old Rueben Barnes was electrocuted.

Mr Garrett confirmed he received a ministerial briefing three weeks before Fuller’s death warning that ”concern about new entrants to the market were not meeting skills competencies”.

He also blamed public servants and ministerial advisors for not providing information to him about safety issues .

Giving evidence as to why he had not seen a key risk assessment raising installer safety concerns Mr Garrett said it would be a matter for his department and advisors to ”highlight” for him if they determined it necessary.

”In the ordinary course of the role of a minister I would have to seek to see it if I’m advised about it … but in the normal practice or necessity I wouldn’t ask to see it,” he said.

He reiterated this in his statement to the inquiry saying at no time were the risks of death or serious injury communicated to him via briefings from the Department.

Mr Garrett confirmed that as a consequence of Matthew Fuller’s death he became distrustful of the advice he was getting from the department including relating to the advice not to ban foil insulation.

Mr Garrett said, in hindsight, he would have recommended the scrapping of the program after the death of the scheme’s first victim, Matthew Fuller.

He said he suggested that mandatory training be introduced for all installers in the wake of Mr Fuller’s death.

However, a briefing from his department titled ”Mandatory Training for all Installers” advised Mr Garrett against the move.

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Barrister calls for full inquiry into ATO’s ‘Keystone cops’

A decision to drop tax and money laundering charges against three high-profile Sydney businessmen is ”another humiliating defeat for the Project Wickenby Keystone Cops”, according to a lawyer close to the trio.
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Charges attracting jail of up to 25 years, laid against former CVC Limited chairman Vanda Gould, former Sunland chairman John Leaver and Swiss resident Peter Borgas, were withdrawn by the Commonwealth Director of Public Prosecutions in Sydney Local Court on Tuesday morning.

The men asked the court to order the Crown to pay their costs in defending the charges and a mention date was set for June 10.

They were arrested in October after an investigation by Project Wickenby, the joint Taxation Office-Federal Police taskforce that attacks the use of tax havens by rich Australians.

It was alleged they used a complex network of companies in tax havens including Vanuatu, the Bahamas and Singapore, to avoid millions in Australian tax.

Barrister John Hyde Page, who represented the companies in a related Federal Court civil case, said the amount of public money spent on Wickenby was a ”scandal”.

”Their contempt for civil liberties and due process is disgusting,” he said. ”At the very minimum there needs to be full public inquiry into every aspect of how this unit operates and in particular the people who run it.”

He declined to comment on the Federal Court case, in which a network of offshore companies associated with Mr Gould challenged Tax Office bills of about $40 million. Hearings are completed and the parties are awaiting judgment from Justice Nye Perram.

The ATO alleged the network of companies invested in Australian shares, including those of companies chaired by Mr Gould, and then sent the proceeds offshore without paying any Australian tax.

Mr Gould has long denied any wrongdoing or tax avoidance, saying the majority of the proceeds of the offshore network were distributed to charities in Australia, Africa and Asia.

The civil case also caused ructions in the relationship between Australia and the Cayman Islands when formerly secret company documents showing Mr Gould controlled two Caymanian companies were tendered as evidence despite a court in the Caribbean tax haven ruling they could not be used.

Mr Gould was on Tuesday reappointed as chairman of investment company CVC, a role he resigned following his arrest.

In a statement, Mr Gould’s solicitor, Justeen Dormer, said the charges had caused ”months of disruption to Mr Gould’s life”.

”I am pleased that the charges against Mr Gould have been dropped and he can now return to the work and philanthropic pursuits to which he has dedicated his life,” she said.

In addition, he was chairman of CVC spin-off CVC Property Fund and biotechs Cyclopharm and Vita Life Sciences.

Mr Leaver, who resigned as a director of CVC, does not intend to rejoin the board.

The ATO regards Project Wickenby as a success, boasting on its website it has raised more than $786 million in cash from targets.

However, it has been bitterly opposed by targets including actor Paul Hogan and music promoter Glenn Wheatley, and criticised by the Australian National Audit Office for taking too long and costing too much.

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High-income earners will pay more tax until 2017

Debt levy: The levy will be in place for three years and will affect high-income earners.Federal budget 2014: Full coverageFederal budget 2014: Interactive data explorerFederal budget 2014: Where will your tax dollars go?
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About 400,000 taxpayers earning more than $180,000 will pay an extra 2 per cent tax as the government breaks a pre-election promise not to raise taxes, with the introduction of a ”temporary budget repair levy” for three years.

The revenue-raising measure was first promoted weeks ago and forms a key part of the government’s message that everyone will contribute in what is a horror first budget from Treasurer Joe Hockey.

The measure will contribute $3.1 billion to the budget bottom line over three years from July 1, until June 30, 2017.

In his final budget reply speech as opposition leader, Tony Abbott pledged that, if elected, the Coalition ”will keep the current tax thresholds” and that ”no one’s personal tax will go up”.

But someone earning $200,000 will pay 2 per cent more tax on the final $20,000 of their income, which equates to $400. A person earning $300,000 would pay $2400 each year for three years, while someone earning $400,000 would pay $4400 of levy.

Mr Hockey said the levy would ensure his budget – which will scale back family tax benefits, introduce tough earn or learn requirements for the unemployed, and cut into education and health spending – shared the pain around.

”We are asking higher-income earners to pay a temporary budget repair levy,” he said.

”It is only fair that everyone makes a contribution. This includes members of parliament.”

To that end, Mr Hockey said a one-year freeze on the pay of MPs and senior public servant salaries would be put into effect.

”And the gold pass entitlements will be wound back for former and current MPs before the scheme is abolished. As I said, we all must contribute.”

In recent weeks, Mr Hockey and Mr Abbott have variously argued that they have not broken a promise by introducing the levy and that the most significant promise the Coalition made was to fix the budget – and by implication, that the levy could not be avoided.

Several Coalition MPs have already spoken out against the introduction of the levy, questioning the political wisdom of the measure and pointing out that it contributes relatively little to the Coalition’s plan for fiscal consolidation and debt reduction. The government has watered down its original idea of imposing a 1 per cent levy on people earning more than $80,000. And the possibility of the 2 per cent levy beginning at $150,000 was also not adopted because a new tax bracket would have had to be created.

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Household debt climbing, but we can take it

Australian households have a well-deserved reputation for taking on large amounts of debt – and recent numbers show why.
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According to the Bureau of Statistics, household debt has now increased to $1.8 trillion, or $79,000 for each person in the country.

After adjusting for inflation, this is higher than it’s been at any time in the last 25 years, despite the global financial crisis causing consumers to be much more cautious.

The ratio of debt to disposable assets has also started to climb again, and is at a three-year high of 148 per cent. Debt to total income is also higher than in a bunch of wealthy countries including the UK, US, Japan, Germany, Canada and France.

What is more, the ratio of debt to assets has been steadily climbing for the last 25 years, nearly doubling to just under 20 per cent at the end of 2013.

Scary stuff, right?

They are certainly big numbers, and Australia’s debt habit shouldn’t be ignored. Some of the more pessimistic investors see it as a serious weak spot in the economy.

But before being carried away, these figures need to be seen in context of whether we can afford the debt. And on this front, things are a bit less worrying then they may seem.

Perhaps most importantly, recent trends suggest Australian households are taking a more conservative approach to borrowed money.

For one, we are no longer increasing our borrowing at a quicker pace than our income as we did between 1993 and 2007 – something which was clearly unsustainable. In the last few years, debt has been growing at 2 per cent per person, which is slower than average pay.

Second, low interest rates make it easier to pay off the bank more quickly. The total amount of interest paid by households has fallen to 7 per cent of disposable income, down from the record high of 12 per cent around the global financial crisis.

Finally, economists reckon that debt would only become a serious concern for the country if people were unable to meet their repayment obligations. The most likely cause of this would be a big rise in unemployment – but that doesn’t look likely.

Indeed, the Reserve Bank last week even floated the prospect of unemployment starting to decline – though that’s far from certain.

All up, we should be alert to the rising debt load but it looks less concerning than it did a few years ago. Further gearing up would be a bad idea, but it seems many of us are getting the message.

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Bank of Queensland delicately placed

  Photo: Glenn Hunt  
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Bank of Queensland is a significant second-tier bank which, unlike some of its big four cousins, is trading well below its pre-financial crisis highs. This week’s chart, produced by Mark Umansky, a councillor with the Australian Technical Analysts Association and a certified financial technician, plots the progress of BoQ over seven years using monthly intervals.

We see that after an all-time high closing price of $18.10 in October 2007 BoQ, along with the rest of the market, fell almost 64 per cent. It reached a low of $6.55 in February 2009, a price last seen six years earlier. This level then became a support for almost six years and has not been tested for some time.

Institutional investors saw the share price almost double between February 2009 and April 2010, and there were two attempts to breach $12.07, which has emerged as a major resistance level. Since then, BoQ has basically traded in a congestion band bordered by $6.55 and $12.07.

Recently BoQ broke out of the congestion pattern to the upside at point 3 on the price chart. However the breakout was shortlived, with the stock falling back into the congestion band causing what looks at the moment like a failed breakout.

The recent rise on the chart is supported by a series of higher peaks and troughs as the price progressed through points 1, 2 and 3. However, there has been a negative indicator since November 2013 with stochastic oscillator turning down, creating divergence with the share price. A similar divergence occurred in 2009 and 2010, presaging heavy falls in the share price.

The stochastic oscillator expresses the closing price in relation to the high-low range over a set number of periods. It measures the speed or momentum of changes in price.

So BoQ is sitting in a delicate position. Traders wanting to profit from a breakout to the upside could buy in once the stock goes through point 3 on the price chart with a stop loss set at the bottom of the trough formed by the new share price spike.

If the price continues to fall, those with open positions could close them and wait till a new trend emerges. Short sellers could also enter the market with protected positions in case of a turnaround.

Surmising likely scenarios in advance gives investors strategies that can be deployed immediately, preventing loss of opportunity through analysis time lags.

BoQ recently raised $400 million at $10.75 a share to finance its purchase of a loan book and other assets from Investec Australia. However, the daily price was trading well above that, at around $12, at the time of writing.

This column is not investment advice. [email protected]南京夜网, ataa南京夜网.au

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Little to lean on for Victorians

There was more pain than gain in this budget for Victorians – a fact Premier Denis Napthine will be acutely aware of heading to November’s state election.
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Joe Hockey described us as a ”nation of lifters, not leaners”. Those waiting for a train, visiting a doctor, or finding themselves unemployed will have little to lean on in Victoria.

This was never going to be a great budget for us – we share the pain more evenly than we share the cash from Canberra.

Victoria carries a heavy load with GST, paying more than it gets back. This burden is not reflected in the state’s share of infrastructure spending.

NSW and Queensland had almost twice as much committed for infrastructure investment – western Sydney had its own infrastructure plan with expenditure in the forward estimates of $1.2 billion.

The cuts are heavy in this budget; money will missed from everywhere – local government, health, education.

”Our economic action strategy is not about cutting government spending; it is about spending less on consumption and more on investment so we can keep making decent, compassionate choices in the future,” the Treasurer said.

Some of those compassionate choices are likely to occur in a federal budget closer to the next election.

This was a tough budget, and some of the most vulnerable in society will be hit hardest.

Mr Hockey said ”the age of entitlement is over. It has to be replaced, not with an age of austerity, but with an age of opportunity.”

Those under 30 will have to wait six months before getting unemployment benefits. Does this take away the opportunity for people to eat and have a roof over their heads?

And what will it mean allowing universities to set their own tuition fees? The Treasurer said ”some course fees may rise and some may fall”. Few will fall.

The Abbott government has lived up to its commitment to be a roads government, with billions of dollars for road projects around the country.

What is not clear is the impact of federal funding on projects such as the $14 billion to $18 billion East West Link or the $11 billion WestConnex motorway project in Sydney.

There is little doubt federal cash makes the projects more attractive to investors and speeds up construction – but would roads such as the tolled East West Link have been built anyway given the federal government is providing only about 20 per cent of the expected cost?

Can the same be said for major rail projects that have been snubbed?

There is no money for the Napthine government’s $8.5 billion to $11 billion Melbourne Rail Link from Melbourne Airport to Southern Cross, South Melbourne, Domain and South Yarra.

The state government has committed just $40 million to this project before the election and $830 million in the following years. Can the public have confidence the project will proceed when tens of millions of dollars were spent on planning the now abandoned Metro rail tunnel project?

The last major rail project to get off the ground in Victoria was the Regional Rail Project. It received billions of dollars in federal funding and enjoyed bipartisan support.

It is hard to see where the other $10 billion for the Melbourne Rail Link will come from.

Infrastructure Australia considered the Melbourne Metro rail tunnel beneath Melbourne’s CBD a ”shovel-ready project”.

This time last year the Gillard government was committing $3 billion for the tunnel.

Much changes in a year. Gillard is gone, the money is gone, the project is gone and now the budget papers reveal the Infrastructure Australia Council will be gone, replaced by a new Infrastructure Australia Board.

The budget infrastructure report quoted the Productivity Commission’s draft report on public infrastructure that identified poor project selection and inadequate planning as major constraints on building infrastructure in Australia.

Without a full business case for the East West Link released, it is hard to see how this issue has been tackled by the federal budget.

The one bright light on a grim day was news of a $20 billion medical research future fund. Melbourne must be in the box seat to get a big slice of that funding given its world class medical researchers.

But the good news was swamped by the bad.

Buried deep in the budget papers there was a $215 million saving by ”not proceeding with funding for the General Motors Holden next generation vehicles project following Holden’s decision not to proceed with the project and to cease vehicle manufacturing in Australia by the end of 2017”.

The Cuban cigars will not be burning in Spring Street tonight.

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Energy disconnections on the rise as gas prices surge

Surging energy prices have pushed electricity disconnections to record levels, with the planned increase in gas prices expected to undermine the longstanding cost advantage of gas over electricity, a forum was told on Tuesday.
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The NSW pricing regulator, the Independent Pricing and Regulatory Tribunal, has flagged price rises for regulated gas users of 17.6 per cent from July 1, although the increase will be less if the carbon tax is removed.

The planned price increase will put more pressure on households, which are already struggling to pay their energy bills, as signalled by a surge in electricity disconnections. As many as 17,051 households were disconnected in the six months to December, according to data from the Australian Energy Regulator. The full year to June figure is set to top 34,000, a senior policy officer with the Energy and Water Ombudsman NSW, Chris Dodds, told the public forum into planned gas price rises on Tuesday.

This is substantially more than the 24,800 disconnections recorded in the year to June 2013. Another 2695 households were cut off from gas supplies in the half.

At the same time 20,798 households received government assistance in paying their bills as of the end of December, the most recent data. Additionally, moves by the government to shift the number of households on to the Newstart allowance from other forms of welfare, will see cuts to their benefits, which will push up the number of households unable to pay their gas and electricity bills, Mr Dodds said.

”These are real and significant price increases,” he said, as domestic gas prices move closer to levels where gas will lose its advantage over electricity for home and water heating.

Pushing gas prices higher is the development of a number of gas export projects in Queensland, which are lifting domestic prices to international levels.

Some lobby groups have called for gas to be set aside, or reserved, for domestic users, which would help to insulate them from the surge in gas prices.

However IPART chairman Peter Boxall said any such policy would not be ”cost-free”.

”If export opportunities arise … if business doesn’t take advantage of that, that’s income forgone,” Dr Boxall told the forum.

”To put in place [a reservation policy] is not cost-free.”

Any such policy decision is for government to make and beyond the powers of the tribunal, he said. ”We cannot solve everything.”

Gas retailers were also told that the surge in prices could lead to a ”death spiral” for the industry if households were forced to move away from using gas as it became less competitive with electricity.

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Malamay’s Chinese feast back on menu

Amy Tran: “We want everyone to get in there and get messy with the dishes.”
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Lobster tail in aged wine, chicken oil and rice noodles. Photo: Graham Tidy

Malamay restaurant, Barton. Photo: Supplied

Lobster tail in aged wine, chicken oil and rice noodles. Photo: Graham Tidy

It’s designed to be a scene out of a National Geographic special – dozens of villagers gathered in a courtyard, tucking in to noodles and big communal dishes. That’s the premise behind Malamay’s special ”Family Feast” dinner later this month, anyway.

Though instead of a courtyard, the dinner will take place in the slick interior of the restaurant at the Burbury Hotel in Barton and instead of Chinese villagers, it will be the restaurant’s Canberra clientele. Dressing up for the event is strongly encouraged.

It’s a repeat of a similar feast that was held last October at Malamay. That time the Chairman Group, which owns Malamay and Chairman and Yip, flew in a chef from its Hong Kong restaurant, also called the Chairman, to cook for the Canberra crowd. And he’s coming back this year.

Amy Tran, who’s a partner in the business with Josiah Li, says the dinner is meant to evoke a traditional Chinese family banquet. The menu is being developed in the Hong Kong and Canberra kitchens and will include a vegetable plate featuring the four seasons in pickled vegetables. It’ll be followed by ”auspicious” Chinese-style tapas (think wontons). ”Next we’re doing long-life noodles from Chinese banquets and we’re sort of pimping ours out a bit with some lobster and shrimp roe, so very fancy longevity noodles.” And no banquet is complete without servings of pancakes. ”These are do-it-yourself pancakes that will go in the middle [of the table],” Tran says. ”We want everyone to get in there and get messy with the dishes.”

The brains behind the Chairman’s Hong Kong restaurant is Danny Yip (the Yip in Chairman and Yip), who is using the Family Feast dinner as an excuse to pop back to Australia and catch up with his Canberra mates. He says the dinner draws on communal dining. ”In Chinese villages, everyone knows everyone, often somehow related, with the same surname,” he says. ”They work, support, hang around like one big family. They can always find ways to celebrate something, to party and to dine together. Food is designed to share, to pass around, to be playful even, to have fun.”

Yip will be flying in with his Hong Kong chef in late May to put the final touches on the menu and test out the dishes they’ve developed with the Malamay chefs. Tran says the international collaboration is often a test. ”Everyone is always WhatsApping pictures of their dishes to each other.” They’ve been trying out dishes for several months, sending recipes and notes back and forth between Hong Kong and Canberra, and Tran’s looking forward to seeing the results soon – ”everyone in the same room at the same time, tasting the same food”. A bit like a family meal.

Details: The Chairman Family Feast is held from May 29-June 7. Tickets $98.50 in tables of four or more. Bookings 6162 1220, malamay.chairmangroup南京夜网.au

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No wallets spared in hunt for savings

It’s hard to find a hip pocket spared by the Abbott government’s first budget.
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Every motorist will pay more at the petrol bowser. More than two million families will be affected by a major overhaul of the family tax benefits system. High income earners will pay more tax. New charges will apply to GP visits and the purchase of medicines.

The government will raise an extra $2.2 billion over four years by re-introducing the biannual indexation of fuel excise. That will push up bowser prices by about 1 cent a litre next financial year, adding about $16 to the average annual fuel bill. If inflation rises in line with the official target for the next five years, motoring groups estimate that fuel excise will rise from its current rate of 38.143 cents a litre to 43.684 cents a litre, increasing the average annual fuel bill by about $81.

Expenditure surveys show filling up the car with fuel is the single biggest weekly purchase made by Australian households. Residents of outer suburbs will be hit harder than most because they tend to use much more. Then Prime Minister John Howard dumped fuel excise indexation in a bid to revive his political fortunes prior to the 2001 election.

Tighter eligibility requirements for the $19 billion a year family tax benefits system will hit millions of household budgets and exclude many upper-middle income families from the system altogether.

“Families who can support themselves will receive less assistance from the government,” the budget papers say.

The rates for family support payments will be unchanged until mid-2016 and the thresholds that determine the level of Family Tax Benefit Part A will be frozen until mid-2017. That means many families will receive lower payments as their incomes rise. Families with a single earner with an income over $100,000 will no longer be eligible for Family Tax Benefit Part B and it will no longer apply when the family’s youngest child turns six.

The effect on families from these changes depends on a household’s income and number of children but a Deloitte Access Economics budget specialist, Chris Richardson, said the reforms target middle Australia.

“Most of the heavy lifting is in the middle income range – that is families on about $100,000 to $150,000 a year,” he said.

“They have tried to protect the bottom end.”

The government has made a point of targeting high income earners with a “Temporary Budget Repair Levy”. That will lift the top marginal tax rate by 2 percentage points for the next three financial years. Those with annual earnings of $190,000 will pay an extra $200 a year, those on $250,000 will pay an extra $1400 and those earning $500,000 a year will pay an extra $6400.

Families will also have to find more money to fund their own health care. A new $7 co-payment for GP visits from July next year will cost a typical family of four $140 a year if each member visits the doctor five times.

Patients will also pay an extra $5 towards the cost of each prescription under the Pharmaceuticals Benefits Scheme from January 1 (or 80 cents if they are on a concession card).

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