Thoughts on the Budget

‘The age of entitlement is over. It has to be replaced, not with an age of austerity, but with an age of opportunity’.
Joe Hockey, budget speech to the House of Representatives, 13 May 2014

I would love for Mr Hockey to be asked when the age of entitlement he has referred to began, and hear if there is any evidence or logic he could point to as the basis for this epochal claim. One suspects, on the basis of Treasurer Hockey’s other public statements, that there is not, and that this is a term intended to obfuscate rather than shed light on what has happened in the past, and what is happening now.

In a world where words have meaning this can only be seen as a budget intended precisely to crush opportunity, and its author’s claim to the opposite is perverse at best and, at worst, an out and out lie.

Unfortunately, or perhaps one should say ‘depressingly’, the evidence suggests the latter interpretation is correct. This government, like its conservative predecessor of 1996, has come to power on the back of a great, big, unadorned lie – or set of lies. As many commentators have noted, this 2014–15 budget is the most ideologically driven since 1996, yet John Howard in 1996 campaigned purely on the basis of his party deserving a go, saying that it would make no significant budgetary changes.

Mr Abbott and Mr Hockey blatantly lied to the Australian public in the lead-up to the election – stating categorically there would be no new taxes, no cuts to health or education or the ABC or SBS – in the same breath as mounting a rhetorical campaign against then Prime Minister Gillard and her government for breaking promises to the electorate.

Unfortunately again, for the sake of democracy, there is quite a deal of evidence that these politicians are right to think the electorate won’t punish them for these lies as such – the bigger concern for most people will be the effects of the lies, which are unlikely to be very significant in terms of shifting voting patterns. Nonetheless, the credibility of this government must suffer substantially, even taking into account its many corporate-media backers: its opponents can very credibly point out that the Abbott government’s claims at election time cannot be trusted at all.

Meanwhile, opportunities for financial and social advancement will decrease for:

  • middle-income families, whose benefits will be frozen and tightened and who will face increased prices at the chemist, the petrol bowser and when visiting a doctor, and who will continue to pay relatively high costs for childcare while funding Prime Minister Abbott’s parental leave scheme, which mainly favours the wealthy;
  • unemployed young people, who will have to wait longer for payments and be eligible for lower payments when these are available;
  • people on disability support pensions, who will face tougher assessment and a lower rate of payment;
  • aged pensioners, who like those on disability pensions will have their payments indexed to inflation rather than wages; and
  • writers and artists, with cuts to Screen Australia and the Australia Council of $25m and $28m respectively.

Funding for health and education generally has been pledged to be massively wound back and for the first time in decades it will not be possible to visit a GP without paying. Crazily, the poor will be discouraged from visiting a doctor while the bulk of the new $7 GP payment will go into a medical research fund to solve tomorrow’s problems.

Higher education will become both more expensive – at more prestigious institutions – and cheaper – within a less regulated non-university sector – increasing the capacity of the wealthy to buy an education, and of cowboy operators to sell effectively worthless credentials to the desperate, in a context of overall-reduced funding and in which the university regulator, TEQSA, has had its funding reduced.

Major non- or semi-commercial media – the ABC and SBS – will have their base funding, and capacity to hold the Government to account, cut by 1 percent.

Ten percent of the public service is to be sacked: 16,500 staff will leave over the next three years, obviously damaging the capacity of government to act on behalf of the society to protect its interests against those of wealthy individuals and corporations. Anyone who has watched The Hollow Men and heard from insiders how scarily close to real life the program is can only wonder what effect these cuts will have on government’s capacity to plan or manage anything.

There has been a massive cutback to foreign aid, in spite of payments in this area that are already miserly, given the size of our economy (twelfth largest in the world in nominal GDP terms) and our position as one of the wealthiest nations. The government has abandoned Labor’s 0.5 percent of GDP foreign aid target, while remaining on track to achieve its unprecedented and extraordinary commitment to raise defence spending to two percent of GDP. (Perhaps they figure that, with our treatment of the rest of the world, we are going to need some extra weaponry.)

The shifting of costs to states is likely to mean that the states will have to seek an increase in revenue from their primary revenue source – the GST – enabling the Abbott government to act as if it is responding to necessity in proposing an increase to this fundamentally regressive tax.

In macro terms the budget is deflationary and thus can be expected to increase unemployment, in spite of infrastructure investment into – predictably – roads. (Why Australian conservatives regard the natural environment as an enemy is an interesting question but one I’m sure with an answer too complicated to answer here.)

Leaving aside the issue of why this cost-cutting needs to be borne primarily by the poor, the disabled, the old and the not-yet-educated, one might ask where Treasurer Hockey has gotten his idiosyncratic notion that the Australian deficit requires such urgent reduction. Australia has for most of its existence run relatively high current-account deficits. As Lawrence Abeln, Dean of the Business School at University of Adelaide noted:

There is no concern for a structural deficit in Australia and therefore no need for such repairs … Relative to our G20 competitor nations, Australia has one of the strongest economies in the world. Our inflation is relatively contained, our unemployment is low relative to Europe and the US and we have among the lowest public debt ratios to gross domestic product (GDP) of any industrialised country in the world. Our public debt is 30% of GDP. It is three times that in France and the UK, two and a half times in the US and seven times in Japan … Neither Australians nor big business are winners in this budget.

Abeln’s remarks are backed up by a recent report by the OECD, ‘How’s Life in Australia’, which a week out from the budget noted the general but fragile strength of the Australian economy and warned against the imposition of deflationary settings.

It is hard to avoid the conclusion that the Government’s determination to impose hardship and destroy opportunity, for most, is the product of an unhealthily limited social experience and a concomitant narrowness of imagination, amongst its leaders, which have spawned a dispiritingly closed, insular, reactionary and authoritarian vision of a good Australia.

Nathan Hollier

Dr Nathan Hollier is Publisher and Chief Executive Officer of Melbourne University Publishing and a past editor of Overland.

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