Budget Leaks and Wrecking Balls

As May comes around the chatter amongst economists and interested people regarding the Budget begins to build steam and this year it appears to have started to have happened quite early. With the background being the global financial crisis (or GFC as some have named it- sounds better) this means that many items on the ALP wish list will be placed on the chopping block.
Here are some of the items that have been considered;

• paid maternity leave (min 6 weeks)
• upgrade to the aged pension and unemployment benefits
• increased funding for universities
• continuation of 'Education Revolution'
• whether the incentives for first home buyers should be continued
• environment incentives e.g insulation
• tax cuts (which were introduced as part of election campaign in 2007)
  

However with unemployment heading towards 7% (which obviously increases transfer payments), company and income tax revenues down it is obvious that a number of these items will be merely wishes. At the least Australia is heading for a Budget deficit of $30-50 billion.

Compare these issues to this article from the SMH (by Jonathon Pearlman) regarding defence spending. What are your thoughts on defence expenditure and where the funds could/should go???

Illustration by Rob Homer , SMH.