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Is this a real Labor Budget?

By Tristan Ewins - posted Monday, 16 May 2011


Federal Labor's 2011-12 Budget is framed by a variety of political and economic imperatives: fear of being outflanked by the Conservatives on the populist right with welfare and refugees; fears of inflation and increased interest rates as the economy picks up; and the symbolic drive for a surplus by 2013 – regardless of natural disasters at home and abroad which have impacted upon our economy. I intend to consider the high points and low points of the budget, with some views on how it may have been improved, and what progressives ought be aiming to achieve in the future.

Firstly, the high points:

The $1.5 billion in new initiatives for mental health is both welcome and necessary. 'The Age' has observed there are an estimated 600,000 Australians "with debilitating mental illness", with the most severely affected second only to indigenous Australians in mortality rates, (presumably including suicide) http://www.theage.com.au/business/federal-budget/new-services-to-benefit-mentally-ill-20110510-1ehin.html.

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The emphasis on 'early intervention' for young people is notable – as surely prevention is better than cure – most importantly in terms of preventing human suffering, but also for the budget bottom-line. Though more resources should be devoted to improving social participation and reducing social isolation.

Meanwhile some of Labor's savings make good sense. The practice of parents using children for purposes of 'income splitting,' in relation to the low income tax offset on unearned income, will be cut back severely to $416 per annum. Tighter superannuation contribution caps for the over-50s demographic comprise an attempt to stem an effective tax-minimisation strategy, and reduced concessionary arrangements for upfront payment of HECS debt by students will save $480 million over four years, affecting mainly higher income groups, http://www.news.com.au/money/federal-budget/the-budget-what-it-means-for-you/story-fn84fgcm-1226053524859.

Also very notable was the government's announcement that it intends to enact separate legislation to means test the Private Health Insurance Rebate http://news.ninemsn.com.au/mobile/article.aspx?id=8247906&_sp=2045&noid=6303&_s=eb0745b1-ffdd-4839-b584-91e50ee86c21.

These savings are targeted for fairness, and are welcome insofar as the alternative may have involved further cuts to health, welfare, education, or crucial infrastructure. They are welcome in providing the scope to increase income support for families with teenagers studying aged 16-19, as well as 'bringing forward' the Low Income Tax Offset to apply to workers' weekly pay instead of being accessible only with their end-of-year tax return http://www.abc.net.au/news/stories/2011/05/09/3210940.htm.

In relation to the government's skills policy, Treasurer, Wayne Swan had observed that: "skills shortages could constrain our economic growth and mean missed opportunities for Australians" http://www.smartcompany.com.au/economy/20110510-federal-budget-2011-3-billion-workforce-training-and-participation-projects-to-combat-skills-shortages.html.

In this context the government has committed $3 billion in new money over six years, including a National Workforce Development Fund (industry-based training with 130,000 places over four years), support for new apprenticeships, and incorporating a renewed commitment to skilled migration. This is the Budget's true centrepiece http://www.smartcompany.com.au/economy/20110510-federal-budget-2011-3-billion-workforce-training-and-participation-projects-to-combat-skills-shortages.html.

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There are also some bright spots amidst a largely disappointing welfare agenda. Employer subsidies aimed at helping the long-term unemployed and the disabled to re-enter the workforce are welcome: as is a restructuring of Disability Support Pension eligibility enabling the retention of some payments up to a maximum of 30 hours a week. For some disability pensioners – for instance those suffering mental illnesses – this is welcome on the basis that such peoples' capacity to work fluctuates irregularly http://www.jennymacklin.fahcsia.gov.au/mediareleases/2011/Pages/b05_10052011.aspx.

Single Parents will also face incentives to work, with an easing of means tests http://www.theage.com.au/business/federal-budget/tough-love-work-rules-20110510-1ehi8.html.

Finally,a record $4.3 billion is being provided for the regions, targeting areas like health, infrastructure, and vocational and higher education. An emphasis on skilled migration - with 16 000 places allocated to the Regional Sponsored Migration Scheme - will prove crucial to regions facing critical skills shortages in areas such as health services http://www.minister.immi.gov.au/media/cb/2011/cb165287.htm.

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About the Author

Tristan Ewins has a PhD and is a freelance writer, qualified teacher and social commentator based in Melbourne, Australia. He is also a long-time member of the Socialist Left of the Australian Labor Party (ALP). He blogs at Left Focus, ALP Socialist Left Forum and the Movement for a Democratic Mixed Economy.
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