A boost for small business at expense of foreigners in Australia's 2015-16 budget

Australians have been urged to reinvigorate the ecomony with spending after the release of Treasurer Joe Hockey's second budget was packed with sweeteners for small businesses, young families and farmers.

Indonesia, foreign property investors and overseas Australians will be worse off, however, with money clawed back to ease the size of the burdening deficit -- the eighth such deficit in a row.

Prime Minister Tony Abbott emphasized on Wednesday morning that Hockey's second budget, released on Tuesday evening, was continuing "a credible path back to surplus".

"We inherited a deficit of $48 billion (38.4 billion US dollars) and every year the deficit comes down by about a half a per cent of GDP. And I think under the circumstances that's a very good result," he told the Australian Broadcasting Corporation (ABC) on Wednesday.

He said a 1.5 percent tax cut to small business coupled with an immediate tax deduction for each small business purchase under 16, 000 US dollars would stimulate growth.

"We think that [small business people] are full of latent creativity and they want to get out and get things going. And we' re giving them the incentive," said Abbott. "We want the have-a-go people in our society to get out there and do just that."

The government now estimates there will not be a budget surplus until 2019-2020 -- by which time net debt will be well past 250 billion US dollars -- and the Opposition is critical that government spending will remain at 26.2 percent in 2015-16.

Much of the spending relies on bigger growth with GDP estimated to grow to 2.75 percent in 2015-16 and then 3.25 percent in the year after.

The budget deficit is 28 billion US dollars, dropping in the next two years by 8 billion a year.

Defence spending will push out to 2 per cent of GDP by 2023-24 while total spending on defence, national security and law enforcement will grow to 28 billion US dollars.

Young families also benefit with 2.8 billion US dollars earmarked over five years for a boost to childcare. That will come at the expense of families with older children, with the families tax benefit restricted to children under six years old, rather than 16.

The budget estimates 520 million US dollars in extra revenue can be raised from tougher enforcement of penalties for foreign investment breaches and a significant boost to application fees.

People coming from overseas on a working holiday will now pay 32.5 percent tax on every dollar they earn, with the tax free and first tier thresholds removed.

Further foreign aid cuts will be implemented to save almost 3 billion US dollars over three years with Indonesia and Africa the biggest losers. Indonesia will no longer be Australia's biggest aid recipient with a 40 percent cut to 292 million US dollars, while aid to sub-Saharan Africa will be halved.

According to Hockey, the cuts are not intended to antagonize Indonesia, with whom Australia has had recent frosty relations, but recognition of better economic growth, while the cuts to Africa come at a time where Australia is turning its focus to the Asia-Pacific region.

Australian overseas will not escape the burden with those with university debts required to pay back their loans despite being out of the country.

Cattle exports will be boosted with 80 million US dollars over four years promised to improve road infrastructure for cattle supply chains in the north of the country, while farmers nationwide can continue to access drought assistance.

As expected, the 'Netflix tax' will see digital products and services delivered to Australians subject to the 10 per cent goods and services tax from mid-2017, raising an extra 140 million US dollars a year.

Rich retirees will have their part-pensions reduced or removed when the government tightens the assets test for the age pension, delivering savings of 1.9 billion US dollars over four years.

No significant new spending will be introduced into the education sector, with more than 100 million US dollars cut from the department.

In the health portfolio, 383 million US dollars will be used to resuscitate the failing e-health system by transferring Australian health records from paper to electronic and enforcing an opt-out approach instead of opt-in.

Savings of more than 2.4 billion US dollars over five years will be made with cuts on the subsidies on medicines. Endi