Apr 30, 2014

Budget Leaks

(For my American readers, Labor = Democrats, Liberals = Republicans)

God, I hate the week before Budget Day. All those orchestrated "leaks", and the government "refusing to rule out" the "rumored" cuts. All a strategy to drip-feed the painful bits to us so that no one is too shocked on the day and the government can hit back on criticism with messages they have practiced.

Aaargh - just give us the damn budget already!

And the whole malarkey both sides of politics play, known by everyone, played by everyone, annoying everyone on all sides equally:

  • Current government [whoever it is at the time]: "Your side stuffed everything up; we're trying to fix it, but we're still dealing with the legacy of what you did"

  • Opposition government [whoever it is at the time]: "How come when we tried to do [thing] you opposed it and now you're doing [same thing]?"

  • If the Labor government attempts to introduce means testing for benefits, Liberals call this "class warfare".

  • If the Liberal government attempts to introduce means testing for benefits, it is called "being responsible".

Liberal and Labor are different. They have different philosophies and they govern differently. But the people in charge of the economy on both sides are not too dissimilar in their basic economic beliefs, these days. Everyone knows and agrees that economies have to be lightly managed and vibrant, that business and entrepreneurship have to be encouraged, that growth is necessary, that everyone is better off when interest rates are low and business is booming. 

Everyone has been in broad agreement for some time that we have a deficit and it has to be brought under control. 

Everyone has been in broad agreement for some time that the tax system is too convoluted, there are too many transfers, and "middle class welfare" has got a little bit out of control.

Labor didn't ignore the deficit. They were unable to do much to fix it because (a) GFC required massive stimulus requirement, (b) their every move was thwarted by a hung parliament, and (c) internal in-fighting. 

Liberals accuse Labor of reckless spending and mismanaging the economy.  Labor for some reason (maybe because it does have a tendency to spend?) is terrible at refuting this argument, even when it is wrong and grossly unfair. 

Does no one remember 2008? After the GFC it was the mantra of every central bank and economist in the world: Spend! Spend! Stimulate the economy!

Unfortunately, Labor happened to be in power when that happened. Hence the horrific home insulation debacle (in which three contractors died), and the ridiculous "Building the Education Revolution" which has left every school everywhere with a state of the art building awkwardly placed and of indeterminate functionality. 

(Labor is its own worst enemy most of the time. Speaking of class warfare: Comrades, can we please agree not to use words like "revolution" perhaps?)

So Labor spent all that money because CRISIS and STIMULUS and GFC. And Liberal would have done the same thing, though no doubt would have spent the money differently.

One does leave oneself open to charges of "mismanaging the economy" when one's remit is based around social equity instead of trickle-down economics, I suppose.

So back to the Budget.

What do we have so far?

  • Deficit levy:  a tax for four years on a scale based on taxable income, to pay off the national deficit. This one won't hit me with my current pay packet, so I'm going to mark it REASONABLE.  We are in debt after all, and everyone (earning more than me) has to chip in! (Heh heh...)
  • Aged Pension: possible raising of the qualifying age from 65 to 70 (though more seems more likely now in a future budget). Has been talked about for some time, an evil we all knew was coming at some stage. Everyone my generation and younger expects to be working until they're eighty anyway. Very bad for people approaching retirement age now, and for workers like my husband who do back-breaking physical jobs. I'm calling this one HARSH BUT INEVITABLE.
  • possible cuts to "middle class welfare" such as Family Tax Benefit, Schoolkids Bonus, Carbon Tax Offset, Childcare Rebate etc. Speaking personally, my family only just became eligible for these and now we may lose them. DAMN
  • possible cuts to REAL welfare, such as Newstart, single parent payments, carers' pensions, etc. This is BAD. These benefits ceased being any kind of a loafer's gravy train years ago, and their recipients are on the poverty line. These are people who really need that support, and the payments go right back into the economy after all - not too many of these people socking their wealth away or sending it offshore. 
  • Medicare co-payment: $6 to be paid for bulk billed doctor visits. WRONG. Undermines everything about what Medicare is and opens the door to effectively ending it. (Americans, imagine the OPPOSITE of your fears about Obamacare!). Instead of doing that, governments should make bulk billing means-tested.
  • possible removal of private health insurance rebate: BAD. The rebate exists to encourage people to have private health insurance and reduce drain on the public purse for health. I guess it is debatable to what degree it actually achieves this though. Still, you remove this, you will see even more people jettisoning their private health cover, which is bad news for public health costs. 
  • paid parental leave scheme: Do you know, I've come round a bit to this one. On the face of it it sounds a bit outrageous, but I have a feeling that it's one of those things that five years down the track I'll be embarrassed I didn't support. And it will mostly be funded by business, so it isn't that expensive to normal taxpayers. And women should be supported to take adequate maternity leave and to return to work. So that's all good. But if heavy cuts are going to be made to pensions, carers' pensions, the national disability insurance scheme and welfare payments, then I have to say the previous high threshold on this one was looking a bit on the nose, so I had pegged this one until this morning as DICEY.  But now it's been announced that the means-test threshold has been reduced to $100,000, which is better. Higher-paid women are most likely being given this by their employers anyway, and the main beneficiaries of this scheme will be lower-paid women, which everyone seems to forget. So this is now OKAY.

What do you think about the upcoming budget?


  1. The pension age is already scheduled to increase to 67, fully by the year I turn 65. :-)

  2. A mixed bag. I am still not convinced about the paid parental leave scheme. Even with the cut in the threshold higher earners get most of the benefit. Which is wrong. Or I think is wrong.
    I am appalled at the concept of changing the indexation of pensions. Linking pension increases to the CPI will mean that effectively the pension is reduced in terms of what it can purchase. And I notice that there is no suggestion that Parliamentary pensions be limited in the same way. Ditto on most of the other welfare cuts.
    Essentially, I want details rather than hints. And some action on climate change. And some compassion for asylum seekers. And yes, I am a dreamer...

    1. Yes! All good points. And I agree, I'd at least respect a govt that treated parliamentary pensions the same as ours. Why shouldn't they? Wrong, wrong, wrong!

  3. Really interesting. Thanks for this. I'll be writing lots of budget e-newsletters and fact sheets and the likes for some organisations, and the leaks/non-leaks/faux-leaks etc have been doing my head in to the point I'm tuning them out. I'll just sit and scrawl and type furiously come Tuesday night.

    I think PPL is a right-idea wrong-execution thing. I do think it started from the right place but I'm worried about its execution. And its actual purpose versus its stated purpose versus what it will actually achieve. I guess time will tell. (All that said, if I was still working full-time right now I'd probably be thrilled. There's nothing like having something benefit you directly to make you think it's brilliant!)

    1. So right Emily, the whole thing keeps changing faster than I could type up this post, and I only started last night! Already WAY out of date. It's all a bit ridiculous and we'll only know Tuesday.
      I tend to agree on PPL as right idea wrong execution. Last night I drafted this up as "I'm against it!" then this morning changed to to "I think it's OK!" but I misunderstood the change to $100,000 being the level at which it stops, whereas it is actually the level at which it tapers off. On the other hand big business is already funding PPL privately for parents earning $100k (I got it myself with my last company), and they'll fund most of it, so...
      And it is important for lower-paid workers to get this benefit too, so I'm mostly in favour. But agree - it should be means tested a bit better.

  4. Agree with most of what you're saying but I'm really not for the PPL. Elitist twaddle, though the roll back makes it slightly, and I say slightly more palatable. With the Pink Batts saga, for the death (yes tragic) the benefits outweigh more than they are saying. People do die at work. Large quick roll outs of projects mean that corners are cut in training and OHS. It something I believe that is judged far too harshly.

    1. I think Labor was judged way too harshly for all the stimulus spending - but at the end of the day 3 guys died not under normal workplace conditions but because they were working for shonky operators encouraged by the government program. I have to say, even though Labor was in a hard position and had to try and stimulate the economy while also rolling out things they truly wanted to do (and so was forced to cut corners), it should have been very predictable that this kind of program would encourage rorting and shonky operators.
      But you're right as well, no one has really considered whether the pink batts rollout also produced some benefits.

  5. If you look at some of the facts, the batts roll out dropped carbon emissions markedly and thousands of people's heating and cooling bills went down. The facts are out there - just not publicised in the current Mainstream Media environment.

    1. OK -
      This piece in The Conversation about environmental benefits seems balanced: http://theconversation.com/pink-batts-not-a-scandal-but-not-as-good-as-claimed-10213

      This piece from Independent Australia is a bit too partisan/borderline hysterical for me, but gets the argument across: http://www.independentaustralia.net/politics/politics-display/we-really-must-talk-about-the-pink-batts,5622

      Mainstream Media... I actually sensed much of the mainstream media (not the Murdoch press obviously) was actually broadly sympathetic to Labor and Gillard, but frustrated at its weaknesses. It's the job of the media to critique government and I do think they do that - they're doing it now with the Abbott government too.
      And I think the criticism of mainstream media has made the media lift its game too. I hear better interviewing now and less inclination to let politicians get by on their soundbites.
      Then again, I have my biases. We all have our favourite journos and broadcasters, and there's no journalist or publication as insightful and unbiased as the one that agrees with you!

  6. I'd be happy if the upcoming budget included substantial cuts to the politicians outrageous pensions ($100s of thousands a year for life??? hmpf!) and immediate cancellation of their perks and rorts.
    Straightaway there'd be enough money in the coffers to better support our country and its people.

    1. Amen. Politicians awarding themselves generous super and pay rises while asking everyone else to "do their bit" is an outrage. The politician who tackles this will be a hero!

    2. Only if he keeps his promises.

  7. Jackie, in every country upcoming budget is not good for most citizens. In my country the pension age in the main problem we have to work to 67. Unfortunately politicians don't think about citizens. Just so true around the world.



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