Budget 2013 - lunge and riposte

Combined with the education reforms, though, it is doubtful that the states can afford this without further federal grants – or further state-level 'reforms'. (again: user pays infrastructure, or increased state taxes) Even the Liberal states had been arguing for federal tax reform in order to consolidate their fiscal position. (though of course they were Ideologically driven to demand a regressive increase in the scope and coverage of the GST, rather than fair reforms elsewhere in the tax mix)

The Gonski reforms have also been dramatically watered down - though they remain substantial. Combined with state funding the Commonwealth expects funding of $14.9 billion over six years – compared with the initial vision to expand education funding by more than twice that amount.

The Abbott response

In response to the Labor Budget Abbott talked of a "Budget Crisis' created by 'Labor mismanagement.' This might go down well with some people who don't want to scratch far beneath the surface. But the reality is that the high dollar has driven the Budget's deteriorating position. Abbott has shared the government's position of not intervening to lower the dollar in order to mitigate poor terms of trade, and the disaster for manufacturing. Arguably intervention is warranted in exceptional circumstances. And furthermore, Abbott's opposition to a more robust mining tax deprived the government of the funds that may have been employed to effectively subsidise affected industries in manufacturing and tourism especially – keeping them viable until the end of the mining boom, and a drop in the dollar. This was important to prevent skills and capacities being lost over the long term.

Abbott and the Conservatives have also been complaining about Labor's 'out of control spending'. They are talking about a 'simpler' tax system – which almost certainly translates into more regressive flat taxes (eg: an expanded GST) which redistribute wealth from the real 'battlers' to the affluent. For Abbott this kind of 'tea bagger Ideology' is a betrayal of his Democratic Labor Party past. While the DLP was not a friend of Labor, they were not neo-liberals and believed in social welfare. But Abbott will say and do anything to get the 'top job'. The Americanisation of Australian politics is a real threat: and the Liberal neo-conservatives seem to see the US 'ideal' of harsh social stratification as something to aspire to and emulate.

Also, Abbott's rhetoric proves to be hollow when subjected to scrutiny. As Tim Colebatch points out (The Age, May 15^th 2013) "Revenue this year is forecast to be 23 per cent of GDP, compared with the Howard Government's post-GST average of25.4 per cent. And spending levels are pretty much identical. And amazingly - in Melbourne's 'Herald Sun' Jessica Irvine was allowed to make the observation that Labor"inherited a structurally flabby Budget from the Howard Government, with too many cash handouts and unsustainable tax cuts." And: "The Budget would be in surplus today if personal income tax rates had not been cut [under the Howard Government) eight years in a row." (Herald-Sun, May 15^th, 2013)

Why is Costello's record therefore not examined more rigorously? On the Howard/Costello watch the housing bubble rendered home ownership an impossible dream for many. The privatisation of Telstra left subsequent Labor governments in a position of having to 'pick up the pieces' and pay a high price for access to Telstra infrastructure for the NBN. The benefits of the mining boom were squandered with unnecessary middle class welfare and unsustainable tax cuts.

Abbott has also attempted to rationalise his Parental Leave for the wealthy scheme by comparing it to annual leave. But while many Australians only get 2 weeks annual leave, Abbott's scheme will provide SIX MONTHS leave on FULL PAY for professionals earning $150,000/year. The ultimate effect is a redistribution from 'battlers' to the wealthy – as Abbott's largesse with Parental Leave will be mirrored by austerity elsewhere.

Other projected Abbott policies include more punitive welfare in the form of Work for the Dole, and the removal of the (threadbare) Newstart 'safety net' entirely for under 30s. A layer of desperately unemployed – a 'reserve army of labour' – will undermine workers' organisation and bargaining power.

We can also expect an inferior version of the National Broadband Network; as well as assaults on the rights of labour including organisational rights; cuts to welfare; and the rescission of superannuation co-contributions for low income workers.

Lessons for Labor

There are several areas in which Labor could have further minimised the deficit, preventing austerity and actually expanding the social wage.