The 2011 budget: Wishful thinking or a reasonable effort?

It is not enough to make life tougher for young parents, the long-term unemployed and many disability pensioners. This is despite the need to encourage them to make a greatera greater contribution, when possible, in accordance with mutual obligation principles which includes assistance and training.

Indeed, cuts to social welfare assistance may need to go much further in coming years, especially if the China bubble deflates for a variety of reasons that are virtually ignored by the Australian government, with its revenue projections and its reliance on commodity exports.

There are also new and added costs that the government must address, as indicated recently by natural disasters (the Queensland and Victorian floods), and the higher costs of running detention centres for asylum-seekers. Offshore processing now requires an extra $290 million this current financial year and $819 million in 2011-12.

As Australian governments struggle to meet a variety of old and new policy needs, all Labor can do is use its time in the sun to make sure it helps those most in need as best as it can. Yet, this will inevitably mean a juggling of priorities in accordance to the popular issues and demands of the day.

The 2011 budget increased spending for mental health and regional health, education and infrastructure, yet made cuts to other important policy areas. For instance, savings included $345 million from slowing the rollout of the National Rental Affordability Scheme and $211 million from aged care, at a time when greater infrastructure investment is needed.

Furthermore, significant concern has emerged in regards to the funding of important renewable energy industries, including upgrading the electricity grid to include new energy sources. $4.3 billion will be saved by cuts and savings measures from Defence over the next four years.

In the end, perhaps we ask too much of Labor. As Gillard notes, the 2011 budget's real spending growth of one per cent compares favorably with the three per cent average under the Howard government, although the latter did virtually eliminate Commonwealth debt by using some of the regular budget surpluses.

What is central for me from the 2011 budget, despite its timid approach to cutting outlays and its optimistic faith in the Chinese boom, is just how accepting Australians will be to future moves that streamline our welfare system in a fair way thus reducing assistance the more one earns.

If this policy move is undermined, then I am hardly confident that future policy reform will be conducted in a fair way, should budgetary pressures increase further and the growing reliance on China falters.