Recently I suggested policies for the 2012 Federal Budget. A few weeks after I ask the question: Was this a 'battler's budget'? And have there been missed opportunities?
The following features were notable:
Firstly there was a threadbare surplus of $1.5 billion – with over $30 billion of savings – but nonetheless a surplus. Whether a surplus was actually necessary or desirable at this point is open to question. On the southeast coast there appears more of a need for stimulus rather than austerity. Bringing forward infrastructure projects there would therefore seem advisable. Certainly achieving a surplus has loomed as a political imperative for Labor, and despite recent (and rare) questioning of this in the media, past coverage had consolidated the misimpression that consistent and continuous surpluses were equal to "sound economic management".
On the other hand a balanced budget over the course of the economic cycle is generally desirable; but with debt servicing also weighed against growth, improved capacity and productivity stemming from social investments. These can all contribute to the real sustainability of temporary deficits and need to be taken into account.
Some of the largest savings were made from Defence – "Cut by $5.5 billion over four years"; with $1 billion saved through cutting superannuation tax concessions for income earners on over $300,000/year. The superannuation measure was welcome, but arguably did not go far enough.
Indeed the Australia Institute has argued that the cost of superannuation concessions has blown out to about $30 billion a year; and Richard Denniss specifically has claimed that $10 billion of this goes to the top 5% of income earners. Setting the 'high income benchmark' at $300,000/year is being far too generous for many who are on ridiculously high incomes: and yet single parents are singled out to be pushed on to the Newstart Allowance if they do not find work – with the welfare of their children cast into serious doubt. The rationale is not to upset so-called 'aspirationals' – but arguably there is more to gain electorally by consistently and visibly assisting low to middle income groups.
(See: http://www.abc.net.au/news/2012-05-08/swan-scrapping-company-tax-cut/3998784 ; http://www.tai.org.au/?q=node/277 ; and http://www.abc.net.au/pm/content/2012/s3499255.htm )
A key theme for Swan was 'spreading the benefits of the boom'; and yet the mining tax was not expanded in scope or degree. Previously the Greens had been on record claiming that the cost to the Budget bottom line, here, was in the vicinity of $100 billion over ten years. This begs the question:What kind of social and infrastructure investments could have been gained through a revision of this policy? And what kind of effective cross-subsidies could have been provided for manufacturing, retail, tourism, education – all sectors struggling in the wake of the high dollar driven by the mining boom? (See: http://greens.org.au/content/mining-tax-needs-review-ensure-revenue-australias-future )
The projected cut in Company Tax has been deferred – but should have been shelved entirely. Again: by 'trumping' Abbott with a similar 1.5% levy on big business as planned with his own Paid Parental Leave scheme, Labor could redirect that money to further initiatives in Aged Care, mental health or additional cost of living relief for low and middle income Australians. This would 'back Abbott into a corner', making it hard for him to justify his priorities; and making it difficult for him to impose a further Company Tax levy on top of Labor's levy.
Resources could also be committed to achieve future social finance and ownership of transport, energy and other infrastructure – with the savings from lower borrowing costs, productivity agreements with unions, and a non-profit footing – delivering very significant savings for consumers.
Other crucial policy areas included $1 billion over four years "to kickstart the National Disability Insurance Scheme (NDIS)" ; "$577 million over five years to help aged Australians remain at home" and additional payments "of up to $210 a year for unemployment and similar benefits." ('The Age', May 8 and 9 2012)
The Federal Budget also "includes a $515.3 million dentistry package" with "$345.9 million…used to treat patients on long waiting lists and providing other vital services to adults." See: http://theconversation.edu.au/what-the-budget-means-for-dental-care-in-australia-6792
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