The topic dominating the news over the last week has undoubtedly been the release of the Federal Government’s budget for 2015/16. This annual event always provides commentators with plenty of material to clog our airways and newspapers as each one presents the view of their respective special interest sector.
Please be assured that I am not going to waste this opportunity with yet another list of winners and losers and who will get what and when - I’m sure that if you were remotely interested, you would have had all that within 24 hours.
Over the years, I have become rather disillusioned with the real impact of “The Budget”. Yes, the numbers are big, yes it affects the lives of most of us in some way and yes, it sometimes facilitates aspirational goals. But at its base level, the budget is merely the government making financial decisions within the constraints of an environment where they have little control.
Commodity prices, international wages rates, the impact of technology etc have far more impact on the budget outcomes than a 1.5% reduction in tax rates for very small companies. Now I’m not suggesting that those cuts (or any other announcements) are good or bad. The government can only make decisions within constraints – just as we can.
Of course, for governments, the added constraint is electoral popularity. While politicians of all political persuasions will tell us that they “are making tough decisions for the good of Australia”, those decisions can cause the well-intentioned politician to undergo a career change after the next election. Avoiding the big issues is a simple survival tactic for a politician!
On a personal level, we also have to make financial decisions within the constraints of things we can’t control. Our advantage is that we can be far more flexible and make the big decisions without the fear of being voted out.
The down side for us is that we don’t have to be publicly accountable for our Budget so we can “not get around to” giving it the thought process it deserves and no one will know (or care). Having the knowledge to formulate an effective budget may also be a stumbling block.
Committing to the discipline of preparing a budget, with or without knowledgeable assistance, will ensure you allocate your resources in the best possible way – for you and your family. Even if the government changes the rules, the changes will (most likely) be incremental.
So whether you are a winner or a loser from this year’s budget, be aware of the real impact on your life. It’s unlikely to be life-changing and certainly not as important as the media would have you believe. Your personal decisions will have much more impact.