Scott Morrison’s 2016 budget got copious praise from Peter Martin, at least in terms of the processes used.
Not so much from his Fairfax mate, Ross Gittins, who said it looked as though it was pulled together with a checklist, but did next to nothing in terms of economics or reform. It was a political document.
Ben Eltham at New Matilda had a similar view. A political document, but economically a holding pattern at best.
Ian McAuley thought it was an intergenerational disgrace. Spend now and let the kids pay.
Alan Kohler in the Oz (paywalled) said it took a bit off the superannuants and gave it to small business, and took a bit of smokers and gave it to those earning $80K. What shocked him, though, was the growth trajectory for “Social Services”, health and education. They grow faster than revenue, and within 20 years will “munch up the entire tax base”. That along with assumptions about the performance of the economy and revenue which he described as “complete rubbish”.
The large ticket item was actually the future projections for company tax relief, which would see all companies paying 25% over 10 years, which would by then cost $18.45bn each year. Morrison had no obligation to say where he’d find the money after four years, and he didn’t.
Stephen Koukoulas says that over the last 43 year, Labor clearly does budgets better – more growth, more investment, more jobs. The LNP will say that Labor is about “spend and tax” while they are about investment and growth, but take a look at this:
- Unfortunately for Morrison, the track record of the Coalition on private sector investment is horrible. According to the Australian Bureau of Statistics private capital expenditure data, investment has fallen 23% since the Coalition’s 2013 victory. This is the sort of data usually seen in nasty recessions. The investment expectations data for next financial year are for additional falls of around 10%.
Morrison’s budget is big on spending, but ironically everywhere there are cuts to programs. For example:
- Alan Kohler pointed out that the Government will talk to universities about funding. However, in anticipation of the talking, funding has been cut by $2 billion in the forward estimates.
- Larissa Waters told RN that the budget had kept “many of the cuts to community sectors, to women, to housing to the environment that that infamous 2014 budget had.”
- Waters also pointed out that the Government has not extended the national partnership agreement on homelessness which is due to expire next year.
- Thirdly, $1.3 billion has been taken out of clean energy funding.
- Shorten pointed out that a person earning $1 million gets tax cuts of nearly $17,000, while a family on $65,000 is going to lose a net $3000 in family tax benefit payments.
- Foreign aid has been cut by a further $200 million, making us the worst in the OECD.
- A program that has increased the number of university students from lower socio-economic backgrounds by one third has been cut by $152.2m in the budget.
- John D cited the example from the Courier Mail where a sole parent on $40,000 was $2,390 worse of compared with a sole parent on $125,000 who was $315 better off. You had to earn more than $80K to be better off.
- I think pharmacy scripts are going to cost $5 more and medicare payments to GPs remain frozen. this will make bulk-billing very rare.
That will do for now. I haven’t had time to read the 69 articles at The Conversation.
- Unfortunately, most of the debate is based on perceptions which are framed around mistruths and distortions about economic issues. What makes this a problem for voters is that when politicians distort the facts, make things up or outright lie, they are seldom if ever held to account by the interviewer.
We’ll see what happens in Shorten’s budget reply speech and subsequent interviews.
3 thoughts on “What ScoMo didn’t tell us”
A few bits I forgot to mention.
There is going to be, again, a ‘productivity dividend’ on the public service. It probably applies to the ABC also. This year it is again 2.5%.
Research done in the 1990s showed that of all the methods of downsizing, the ‘salami slice’ method was the worst. Some good people will just give up and leave and there is general demoralisation of those who don’t.
New arrangements to assist child care have been deferred again.
I think that when people and groups look at the budget there will be widespread disappointment as cuts made over recent years are not restored after lots of lobbying. Legitimately the Government can say we have to live within our means, but the company tax cut plan is a submarine-scale commitment.
What the budget misses is that economic growth depends on market growth, not tax concessions for small business. Small business is not going to invest or employ more people if they see a government that is taking money away from their customers.
Some business will of course benefit from making the rich richer but I suspect most depend more on the spending power of people who earn less than the magic $80,000 p.a.
I also worry about treasurers that see managing a country as being similar to running a household.
Given the failure of reserve banks worldwide to stimulate economies by reducing interest rates and giving money to banks perhaps it is time for governments to do the very things that stimulate inflation and reduce the value of the currency. Things giving money to the poor and running with budget deficits that are paid for by printing money instead of borrowing?
On the whole a fine speech by Bill Shorten tonight. People have a choice as to whether they want to return to a decent society or stick with what Turnbull is offering.
I thought Leigh Sales interview was quite pathetic. One of her main points seemed to be that the better off shouldn’t be expected to contribute to services for the poor. And raising the mining tax was a waste of space.
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