Tax, Super+You. Take Control.

Tax 101

INTERACTIVE YOU MAKE THE DECISION

Fact sheetYears 7-12

3. Michael Cruz – State GovernmentI'm Michael Cruz and I work as a quantity surveyor for the State Government.

This state urgently needs a major new high speed rail link that can carry raw materials from inland regions to our recently approved world-class Super Port. Far-sighted, long-term investment is desperately needed to create our future as a global export, trading and manufacturing hub. We propose an ambitious five-year investment plan that will create a world-class facility which will not only benefit this state but also place Australia firmly on the international trading map.

We need $3.6b to start constructing the high-speed rail link right now and develop the required Super Port infrastructure.

Funding options

� don't fund � only fund improving the current rail

links $800m � fund only the rail link $1.7b � fully funded $3.6b

How does the government decide what to fund and for how

much? And where does the government find funds to finance

the budget? This interactive activity offers the experience of

making budget and financing decisions.

1. Brett Martin – Commonwealth Weather BureauHi, I'm Brett Martin. I'm an oceanographic scientist from the

Commonwealth Weather Bureau.

Oceanic buoys can be used to measure changes in sea

levels and ocean currents. If we invest $720m in a program

of automated deep sea buoys, sensors on the sea bed and

the surface will allow scientists to gather comprehensive and

up-to-the-minute information. They can use this detailed

data to model the impacts of climate change for Australian

farmers.

The benefit will be more accurate predictions on sea level

changes that can lead to coastal erosion and inundation

of low-lying coastal farming regions. It also helps with

long-range weather forecasting, a service that is becoming

increasingly important for Australian farmers.

Funding options

� don't fund � only fund a trial program in local waters $240m

� only fund buoys in the Pacific $480m � fully funded $720m

2. Dave Wilson – Cycling In2 the FutureHi, I'm Dave Wilson and I'm from Cycling In2 the Future.

Adding additional cycle lanes, overpasses and underpasses to every major city will make it quicker and safer to cycle. This will encourage people to cycle to work and will cut the number of cars on the roads. Dedicated bike lanes mean fewer accidents so it will reduce pressure on hospitals and doctors. Fewer cars on the road will mean buses can run easier, so this becomes a win-win for everyone, not just for cyclists.

We need to invest in bike lanes for every city – that's $610m for the whole country to make this a reality.

Funding options

� don't fund � only fund in Sydney and Melbourne $160m � only fund larger cities $360m � fully funded in every city of 200,000 people or more $610m

DECIDING THE NATION'S BUDGETThe Treasurer of Australia faces pressure about the best way to allocate government spending. Six people representing various organisations and government departments have made a special trip to Canberra to see the Treasurer. They want funding for specific initiatives in the forthcoming Budget.

You Make The Decision: Fact sheetPage 36

Tax, Super+You. Take Control.

4. Ling Chan – Future Forestry Associa-tionMy name is Ling Chan and I represent the Future Forestry Association.

As a building material, timber takes much less energy to produce than bricks, steel or aluminium. Investment in plantation forests of genetically modified fast-growing trees will help Australia meet an ever increasing demand for housing materials.

Genetic modification technology, when used commercially in forestry, produces high timber yields. In addition to producing construction materials, we can also take advantage of the high global demand for timber fibre. And, of course, we shouldn't forget that each timber product from a plantation forest will ease the pressure on our native forests.

We need $1.2b to establish four major plantations to provide all of Australia's timber needs and provide a resource of export-grade timber.

Funding options

� don't fund � only fund one major plantation $350m � funding two major plantations $650m � fully funded funding four major plantations $1.2b

5. Rachael Morris – Aussie Home SupportMy name is Rachael Morris. I am the treasurer for Aussie Home

Support, which is a not-for-profit organisation.

Our not-for-profit organisation is usually funded by the

generous donations from the community but, as our population

is ageing, there has been an increased demand for our

services. We desperately need funding to maintain our in-home

support services for the elderly and disabled in our community.

We provide meals, domestic services, home maintenance and

other support services to those who need just that little bit of

extra help. Most importantly we are a regular visitor, a friendly

face at the door.

We now want to expand our program right across Australia,

particularly to reach those more isolated people in rural

locations. We need an additional $1.3b to help us extend our

services and help the more than 2 million carers out there.

Funding options

� don't fund � only fund a limited expansion of the current program

$300m � only fund major rural centres $600m

� fully fund coverage right across Australia $1.3b

6. Lena Costa – Protect Our Wildlife SocietyHi, I'm Lena Costa and I'm a vet from Protect our Wildlife Society.

Stray and feral animals pose a constant threat to our wildlife. Desexing our pets makes them less likely to wander from home and fight and, more importantly, will reduce the numbers of unwanted pets that become the stray feral dogs and cats that currently prey on our native animals.

The problem is that many people can't afford to get their pets desexed and microchipped. To address this problem, we want to set up a free mobile service nationally. To do this, we will need to purchase and modify 600 locally built panel vans. We estimate that the staff training, salaries, equipment and support services for this much needed scheme will cost $111m in total.

Reducing unwanted strays through desexing is necessary if we want to look after our wildlife as well as our pets.

Funding options

� don't fund � only fund a trial scheme $10m � fund a reduced scope $50m � fully funded $111m

You Make The Decision: Fact sheetPage 37

Tax, Super+You. Take Control.

FUNDING OPTIONS AND RESPONSES

1. Brett Martin – Commonwealth Weather BureauFunding options Representative's response

Don't fund That's really disappointing. Without accurate climate data, our Australian farmers won't be able to plan to meet this global challenge.

Only fund a trial program in local waters $240m

A trial program is always beneficial to any project, but we really had hoped to see a more long-term commitment.

Only fund buoys in the Pacific $480m

Thank you. Funding buoys in the Pacific will help us gather important localised data to improve our understanding of climate change.

Fully funded $720m That's such great news! Gathering a comprehensive range of data will help Australian farmers to manage the challenge of climate change.

2. Dave Wilson – Cycling In2 the FutureFunding options Representative's response

Don't fund Without any funding, lives will continue to be lost on our roads. The need to provide safe paths for cyclists and care for the environment are issues that won't go away.

Only fund in Sydney and Melbourne $160m

Limiting funding to just two major cities to manage a country-wide problem is less than ideal, but at least it's a start. It's better than where we are now and will begin to save some lives.

Only fund larger cities $360m Thank you. Your decision will provide cycle lanes to the majority of Australians, but I urge you to not forget our smaller communities.

Fully funded in every city of 200,000 people or more $610m

What an excellent outcome! The benefits of this program will make a huge impact right across Australia.

3. Michael Cruz – State Government for high speed rail linkFunding options Representative's response

Don't fund We urge you to reconsider this decision. The long-term benefits to our state and the nation will outweigh the investment for years to come.

Only fund improving the current rail links $800m

Our current railway lines do need improving, but this level of funding won't help us to develop the Super Port we need.

Fund only the rail link $1.7b The high speed rail link is a good outcome and there will be notable benefits. We still believe, however, that investment in the Super Port is needed.

Fully funded $3.6b This is the best possible result; Australia's place as a world-class exporter, manufacturer and trading hub is now assured.

4. Ling Chan – Future Forestry AssociationFunding options Representative's response

Don't fund Your decision doesn't support the need in Australia for a viable forest industry able to meet local and global demands for timber. The rural communities will be hardest hit by not funding these plantations.

Only fund one major plantation $350m

Funding for only one plantation will really diminish the scientific and commercial outcomes of the project.

Funding two major plantations $650m

Thank you; two plantations will get this project off to a good start.

Fully funded $1.2b We are extremely pleased with this vote of confidence in our work.

You Make The Decision: Fact sheetPage 38

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5. Rachael Morris – Aussie Home SupportFunding options Representative's response

Don't fund Our ageing and disabled populations need our support and we need funding to continue our work. Please reconsider your decision.

Only fund a limited expansion of the current program $300m

Whilst any funding in this sector is welcome, $300m just isn't enough to cover our growing needs.

Only fund major rural centres $600m

Reaching those isolated in rural locations will be a great achievement.

Fully fund coverage right across Australia $1.3b

What a wonderful result! This funding will give immediate help to the elderly and disabled right across our community.

6. Lena Costa – Protect Our Wildlife SocietyFunding options Representative's response

Don't fund The impact of this decision will soon be apparent in our dwindling wildlife numbers as the feral population grows uncontrollably. We need something done before it's too late to save our wildlife and pets.

Only fund a trial scheme $10m A trial scheme will only scratch the surface of this problem.

Fund a reduced scope $50m Thank you, we will be able to make a real difference with this level of funding, but would of course prefer more!

Fully funded $111m Fantastic! This scheme will make immediate and dramatic improvements to our native wildlife and the safety and security of our pets.

Financing optionsCompensating actions will be required to raise finance to pay for the initiatives.

Compensating action Revenue

Increase GST on goods and services to 10.5%. $2.5b

Reduce eligibility for youth allowance. $500m

Reduce tax-free threshold by $1,000. $1.5b

Increase company tax by 1%. $1b

Increase income tax rates for incomes over $100,000. $500m

Reduce overseas aid spending by $500m. $500m

Deciding on what to fund, how much to spend and

how to finance the budget are decisions governments

have to make.

You Make The Decision: Fact sheetPage 39

Tax, Super+You. Take Control.

Implications of financing optionsA. No financing option:

Your choices are important. Think about what you are being asked to fund, how important it may be now and in the future, and the benefits to the community.

B. Only one financing option

Compensating action Revenue

Increase GST on goods and services to 10.5%. Choosing only one way to fund these projects might seem easy but is this the best way? What other options might you consider?

Reduce eligibility for youth allowance. If you make this your only choice, think what might happen to those who need the Youth Allowance. Should you re-examine your decision?

Reduce tax-free threshold by $1,000. How might this decision affect your community? Is there a better way? What could you do differently?

Increase company tax by 1%. Taking this as the only option might create other problems. Could this be true? What might happen? Is there another way to fund these projects?

Increase income tax rates for incomes over $100,000.

How might this decision affect your community? Is there a better way? What could you do differently?

Reduce overseas aid spending by $500m. Some countries are in desperate need of assistance; this option will not help them. Would this choice be better than other options you have?

C. Two or three financing options

Minimum Maximum

Major overspend -$601m By spending more than you have, this may complicate your future budget position and the services you can afford to fund in the future. Go back and re-examine your choices what can you change to produce a better result?

Minor overspend -$600m -$201m How close can you get to balance your budget? Can you do something differently?

Balanced -$200m +$200m Well done. Balancing the budget is about making choices and decisions to fund services for the community. It's not always easy, but you've done a pretty good job!

Minor underspend +$201m +$600m How close can you get to balance your budget? Can you do something differently?

Major underspend +$601m You have more money available to fund more community services. Is there anything else you would like to fund?

D. Four financing options Think for a moment about what your decisions may mean for the community. Are there other ways to balance your Budget?

E. Five financing options Your decision means there are lots of changes. Ask yourself who is affected, what does it mean to them and how will you explain it to your community? Is there a better way? F. Six financing options You've managed to fund your choices by changing everything. Is this the best way?

You Make The Decision: Fact sheetPage 40

Tax, Super+You. Take Control.

Worksheet

Years 7-12

YOU WILL: � explore the process of funding and financing of government

budgets for community services � create criteria to make and evaluate decisions about

funding and financing community initiatives � review financial decisions in light of calculations and new

information � participate in discussion and critique of others’ budget

decision-making

YOU WILL NEED: � Fact Sheet: Interactive - You make the decision

TASK 1MAKE THE DECISION Tax 101 Interactive You make the decision

DECIDING THE NATION'S BUDGET

Setting the sceneAs Treasurer of Australia, you and your team face pressure about the best way to allocate government spending. Many people have strong views about where and how much of taxpayers' money the government should spend.

You have worked extensively with Treasury advisers and at this point the Budget for the coming year is close to completion. Your advisers have recommended that the current state of the economy requires your Budget to be as close as possible to 'balanced', that is, revenue should equal spending.

Six people representing various organisations and government departments have made a special trip to Canberra to see you. They want you to fund a specific initiative in the forthcoming Budget.

Each project has a large number of supporters who are very keen for your government to accept their request. Most of the initiatives have been well publicised on TV and in newspapers and other media, so your decision will be widely discussed.

Your group’s taskIn this task, you will consider six proposals for public spending and decide what level of funding you will give. Your funding decisions will form a draft budget, which will need to be financed. You will next evaluate financing options and decide which option/s will fund the proposals. You will then need to review your funding for the proposals and funding options so that you arrive at a balanced budget.

Take notes: be prepared to share your thinking at the end of the task.

Evaluate informationFollow the instructions to complete the task.

Consider proposals

1. Read Fact Sheet: You make the decision.2. Consider each proposal and the four funding options for each. 3. Create criteria that will help you decide on funding options. Write them below:

Funding criteria

You Make The Decision: Task 1Page 41

Tax, Super+You. Take Control.

MAKE FINANCIAL DECISIONS4. Decide a funding option for each proposal and record these in the table below.

Representative and funding options

Enter your chosen funding value $

Brett Martin

1. $02. $240m3. $480m4. $720m

Dave Wilson

1. $02. $160m3. $360m4. $610m

Michael Cruz

1. $02. $800m3. $1.7b4. $3.6b

5. Study the financing options on Fact sheet – You make the decision.

6. Analyse one or more compensating actions.

7. Discuss considerations that need to be made when choosing these actions and record below

8. Decide which compensation action/s you will use to fund your budget and record in the table.

Compensating action Revenue raised Enter your chosen financing valueIncrease GST on goods and services to 10.5%. $2.5bReduce eligibility for youth allowance. $500mReduce tax-free threshold by $1,000. $1.5bIncrease company tax by 1%. $1bIncrease income tax rates for incomes over $100,000. $500mReduce overseas aid spending by $500m. $500m

Total $

Representative and funding options

Enter your chosen funding value $

Ling Chan

1. $02. $350m3. $650m4. $1.2b

Rachael Morris

1. $02. $300m3. $600m4. $1.3b

Lena Costa

1. $02. $10m3. $50m4. $111

You now have a draft budget. But will it be easily funded? Are you minimising opportunities to improve the community? Or have you been too ambitious? Do the funding tasks arrive at a balanced

budget that delivers community services?

You Make The Decision: Task 1Page 42

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9. Calculate your budget using the table below.

Enter your compensating actions total Enter your funding totalSubtract your funding total from your compensating actions total to determine your Budget

$ $ $

EVALUATE DECISIONS

Review budgets

10. Review your budget and make changes where necessary.

11. Evaluate your budget, by asking questions such as:

� Is this the best way? � What does this mean for the community? � Who is affected? What does it mean to them? � How will we justify our decisions to the community? � Is there a better way?

12. Test your final budget by considering the information in the section “Implications of financing options” in Fact sheet: You make the decision.

Share and evaluate budgetsHow good is your budget?

13. Participate in a class evaluation of all group budgets using the following steps:

� Present your budget and your decision-making criteria and considerations.

� Justify your final budget. � Listen as class members, ask questions

and critique your decisions. � Be prepared to use your criteria and

considerations to critique other groups’ budgets.

14. Vote on the best budget.

15. Participate in a general discussion about the complexity of government budgeting.

Go online. Try the

interactive version of this

activity: https://www.

taxsuperandyou.gov.au/

you-make-the-decision

Now that you can see the effects of your decisions, you may need to review your funding and financing decisions to ensure a balanced

budget. To balance the budget, you need to cut another form of spending, or raise more tax to gain the revenue required to fund the

proposed initiatives.

You Make The Decision: Task 1Page 43