In this post I’ll highlight some of the features of Joe Hockey’s big-spending budget. Tonight our little family celebrates a birthday. After that I might try to round up some of the commentary.
The 2015 budget began and ended by misleading. As expected Hockey cited his inherited deficit as $47 billion, whereas, as explained last week, it was actually $30.1 billion. That makes his 2015 deficit of $35 billion look like progress. It’s actually a modest deterioration in the $31.2bn deficit forecast in the Mid-Year Economic and Fiscal Outlook (MYEFO) last December.
At the other end a return to surplus is still forecast in 2019-20, but this is only achieved if you take into account the $80 billion cuts to hospitals and schools, which are still in there. Also the budget outlook is based on some fairly heroic assumptions about economic growth in the out years.
On the latter, Chris Bowen told Leigh Sales that the assumptions on which the budget was based were the Treasurer’s, whereas he, if he ever gets to compile a budget, will use assumptions from the Parliamentary Budget Office.
Overall, the speech was a catalogue of budget ‘spends’, whereas the ‘saves’ were glossed over. It sounded like a pre-election budget. Spending, according to Alan Kohler, had blown out to 25.9% of GDP, or two percentage points more than last year. Kohler pointed out that this level of spending matched the Swan 2009 budget, which was designed to stimulate the economy in the face of the GFC.
Ian Verrender called it a “cash splash” as against an austerity budget last year.
Whether such spending should be undertaken (the difference is over $30 billion) when forecast growth is 2.5% is a very moot point, but the government needs to boost business and consumer confidence, along with its own stocks.
The big ticket items seem to be a $5.4 concessional loan facility to encourage infrastructure development in the nation’s north, a small business package worth about $5 billion in all, and a $4.4 billion revamp of childcare.
Childcare enhancements are of course tied to saving on Family Tax Benefit B, which is now planned to cut out when a child turns six rather than 16. Chris Bowen called it a “ransom note” and said Labor won’t be voting for it.
The Greens won’t either. Di Natale:
- we need to raise revenue, that’s the key issue here. And we’ve got to stop this idea that the way to balance budgets is to take money away from one group of people, and in this case we’re talking about young mums, new mums, single parents
- The most disappointing thing here is that the budget’s silent on all of those revenue measures that are really low-hanging fruit. It’s ruled out changes to superannuation, it’s silent on things like huge diesel fuel subsidies. The issue of multinational tax avoidance is raised in the budget, but there’s not a cent next to it. It’s gutted the ATO, so I don’t know how they’re going to be able to prosecute the case when it comes to multinational tax avoidance.
Chris Bowen said they had two tests for the budget.
- But this budget fails both tests. It fails the test the Government set for themselves to reduce the deficit. Under this document, it shows that the budget deficit over four years has doubled compared to Joe Hockey’s budget just one year ago.
And it fails the test that we set for a plan for growth, plan for innovation and jobs for the future.
He also told Mark Colvin that the small business measures had applied under Labor, and were wound back under the LNP. Also Labor had proposed a tax cut which had been torpedoed by the LNP and the Greens in the senate.
Meanwhile more cuts to the public service have been flagged. Eight more major federal government departments and agencies will be up for “functional review” including the Departments of Foreign Affairs and Trade, Agriculture and the Environment. The unions believe privatisation is on the agenda. One hour rolling stoppages were organised for budget day:
- We are launching the largest round of industrial action the Commonwealth Government has seen in 30 years. On budget day, tax office staff will stop work before a number of agencies including Defence, Human Services, the Bureau of Meteorology, CSIRO and so on roll out rolling stoppages and action targeted at the community.
I wonder whether that’s why the ABC was interviewing out in the cold in the yard on budget night!