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Keane: Hockey robs from the poor — but not the rich — in first budget

Joe Hockey’s first budget as Treasurer will hurt the poor — not the rich. So what’s the gain from all that pain, asks Crikey’s politics editor from Canberra?

Well, in time-honoured budget style, we were promised The Texas Chainsaw Massacre, but it’s more like The Barber of Seville ­ — except if you’re on the government’s list of enemies or can’t fight back.

In broad terms, this budget doesn’t do much to address any fiscal emergency. The path back to surplus isn’t noticeably shortened, and at this rate we won’t be back in the black until well into the government’s second term. That’s partly because of exactly the same problems that beset former treasurer Wayne Swan have confronted Treasurer Joe Hockey in his first budget — a tepid economy, low nominal GDP growth (I’m still sceptical of that — let’s keep an eye on what actually happens there, because 2013-14 has already been revised up), revenue write-downs and the problems of finding big savings that can build up over time rather than inflict a big hit on public demand while the economy is still below trend.

Without Hockey’s deficit levy and petrol excise indexation, revenue would have yet again seriously underperformed, leaving the return to surplus further away than ever.

But if Labor occasionally inflicted on the poor some unwarranted fiscal pain — delaying increases in overseas aid, refusing to lift Newstart even when business declared it was too low, punishing single parents by shunting them off parenting payments — the Coalition has built its entire response to its fiscal dilemma on going after low-income earners and those it deems unfriendly, while ensuring its key supporters are looked after.

Thus, jobseekers in their 20s will be denied Newstart for periods of six months, including a “waiting period” to get on it, during which young people will presumably subsist on charity and the muscular goodwill of anti-welfare hairshirts. On the upside, this will save taxpayers over $300 million a year.

Students will be asked to repay their loans sooner, and face a higher interest rate while doing so, bringing forward billions in revenue. The foreign aid budget will yet again be slashed as the Coalition abandons the Millennium Development Goal target on aid, saving the best part of $8 billion. We’ll all pay more, both to access GPs and to buy medicines; those without any alternative about their transport use — usually lower-income earners — will have to pay more petrol excise.

Meanwhile, all corporations but the largest companies will get a tax cut, as will mining companies; the staggering cost inflicted by high-income earners and wealthy retirees on the tax base via superannuation concessions will dramatically expand — from over $30 billion next year to $50 billion in 2017-18 — without the government lifting a finger to stop it. Remarkably, the lunatic school chaplaincy program will be pumped up with $250 million of new funding — an urge to impose religion on the rest of society is one thing, but when it costs a quarter of a billion dollars, it starts to look like an obsession.

What’s the gain for the pain, particularly when the pain has been so disproportionately distributed?”

The only concession to equity is a temporary, and small, “deficit levy” for very high-income earners, and some cuts to middle-class welfare like Family Tax Benefit B, where the threshold will be dropped to a $100,000 income, and the pausing of indexation of other benefits payments. When Labor froze the indexation of cut-off thresholds several years ago, it was “class war” and “the politics of envy”, according to the Coalition, and savaged by News Corp. How times change.

The ABC and SBS (the latter as collateral damage) will be docked 1% of funding with the promise of more to come — with a public demand from Communications Minister Malcolm Turnbull that it somehow not affect the ABC’s actual content, presumably as a warning not to consider shutting inefficient and costly regional services.

The upshot of all of which is, this is an inequitable budget, in which low-income earners bear the burden of fixing the deficit while the Coalition’s favourites in the business sector and among high-income earners are, at worst, asked to make a token contribution, and in which the true culprits of an unsustainable budget continue to enjoy fiscal indulgence.

The government will attempt to disguise all this with its infrastructure investment and its “$20 billion” (in fact, $1 billion) medical research fund. The government’s infrastructure investment funding is mostly existing Labor-era programs re-announced, or new projects funded by the axing of public transport projects; the medical research fund is a mechanism under which patients paying more to access healthcare now will be (partly, and very slowly) funding health research in the future. It’s arguably a kind of intergenerational transfer within health research. Speaking of intergenerational transfers, the budget confirms that the widely ridiculed “Direct Action” program will be capped at “$2.55 billion over 10 years”, as the Budget Overview explains — the final humiliation for Environment Minister Greg Hunt, whose policy figleaf for climate denialism was touted as a $10 billion, 10-year program in 2010, before both climate denialists and climate action advocates spotted how useless it was.

If that’s a positive, there are others — the direct incentive payment for employers to hire older workers represents a legitimate attempt to drive away (or buy away) the stigma attaching to older workers. The return of petrol excise indexation is a big, brave move by the Coalition — it’s almost forgivable that the government is pretending it will be hypothecated to roads spending.

Curbing the generous indexation of pensions is overdue, and probably took a Coalition government to do, given pensioners tend to be rusted-on Liberal voters. Policy bravery of this kind deserves to be applauded, even if the Coalition refused to show any such thing in opposition.

But look at how the budget will still be in deficit in four years’ time. What’s the gain for the pain, particularly when the pain has been so disproportionately distributed? Joe Hockey could return the budget to surplus much earlier if he lopped off even a fifth of super tax concessions that flow to high-income earners. But they’re somehow considered untouchable, while low income-earners, the young, poor foreigners, pay for the alleged “budget crisis”.

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  • 1
    Kel S
    Posted Tuesday, 13 May 2014 at 8:50 pm | Permalink

    What do the libs think young unemployed people will live off for those 6 months a year? I honestly can’t understand the rationale behind such a policy. It seems to go beyond the worst of political rhetoric to a point that it will put some of the most vulnerable people in society into harm’s way.

  • 2
    drsmithy
    Posted Tuesday, 13 May 2014 at 9:11 pm | Permalink

    A bold budget indeed. They’re making a move towards some big neoliberal wet dreams, from dismantling publicly funded healthcare, through forced labour for the poor, to putting a good education further out of reach.

    I become more and more convinced every day that the far right believe they have reached the endgame, and it’s no longer even necessary to maintain a facade over their ugly ambitions for society.

  • 3
    drsmithy
    Posted Tuesday, 13 May 2014 at 9:16 pm | Permalink

    I honestly can’t understand the rationale behind such a policy.

    It’s not difficult if you’re starting from the absurd and paternalist conservative dogma that anyone who wants a job can get one, and only lazy ne’er-do-wells are unemployed.

  • 4
    klewso
    Posted Tuesday, 13 May 2014 at 11:44 pm | Permalink

    Abbott’s Class Warfare”?

  • 5
    fredex
    Posted Wednesday, 14 May 2014 at 1:03 am | Permalink

    Liberal Party’s Class Warfare.”

  • 6
    MJPC
    Posted Wednesday, 14 May 2014 at 7:30 am | Permalink

    BK, thank you for a comprehensive critical assessment, something lacking in the mainstream media at present.
    KelS; the youth will be forced into mindless, soul destroying jobs to make a wage, any wage (or into crime). The next attack, after the cigar smoke settles from the budget, will be a return to work choices; elimination of penalty rates, no minimum wage et al. Smokin’ Joe and his LNP mates are so transparent.
    The true indictment of this sham of a government is the savage cuts to the CSIRO; if Rabbot ever talks of Australian innovation tell him he’s kidding! But it’s ok, we’ll have a well funded military to stop those boats with $35B jet fighters (if all the faults can be ironed out).
    Smokin’s budget speech made me vomit, patriotism is indeeed the last refuge of the scoundrel.

  • 7
    Kel S
    Posted Wednesday, 14 May 2014 at 8:07 am | Permalink

    Changing the age at which one qualifies for Newstart is class warfare. Making it so jobless people are without any money for 6 months a year goes well beyond that.

  • 8
    Electric Lardyland
    Posted Wednesday, 14 May 2014 at 8:18 am | Permalink

    Yes, of all the things that I found objectionable about the budget, the six months off, six months on, six months off, model for unemployment payments for under thirties, is the measure that got me the most. It is a move that abundantly shows why the modern neo-con shouldn’t be let anywhere near government, as it combines both their bizarre, Pollyanna-ish view of a world that they imagine tallies perfectly with their favourite economics text books, and a genuinely psychotic, arrogant, bullying over-reaction. It is a move that seems to think that there are no genuinely unemployed people below the age of thirty. It is a move that doesn’t quite coordinate with the conservative state governments slashing of TAFE budgets. And it is a move that imagines that the young unemployed have no bills to pay and are perfectly capable of living on nothing for six months.

    But hey, there might be winners from this move. I’m sure that people who like to sit at home, watching news broadcasts filled with video footage of 7/11s being robbed and late night brawls, will have an increased amount of clips to confirm their view that, ‘It wasn’t like this when we were young’. Also, people who make a living providing security services will find an increasing demand for services. But maybe the big winners from this budget move, will be the people who feel the need to buy the sexual services of homeless youngsters.

  • 9
    Yclept
    Posted Wednesday, 14 May 2014 at 8:31 am | Permalink

    Isn’t it obvious folks, this is all Labor’s fault!

  • 10
    AR
    Posted Wednesday, 14 May 2014 at 9:36 am | Permalink

    Totally excellent to ensure that the young can’t gouge welfare - let them take their proper place at the bottom of the greasy ladder.
    As noted above,DrS, the ultimate apotheosis of neocon phantasy, hobble the lower orders, exclude them from higher education and basic health care so that they are biddable to anyone offering an escape, even if it is only scarffing up the crumbs from Master’s table.
    A Budget for growth in the sex industry and security (as MJPC opined), esp. blokes fizzing with hormones wanting to get onto the first rung.

  • 11
    graybul
    Posted Wednesday, 14 May 2014 at 9:38 am | Permalink

    Father” Joe and Cardinal Abbott’s Budget is an economic diversion concealing an ideological imperative:
    Off-load to States an indigestible meal ie Health/Education . . receive back a “stalking horse” demanding increase in GST!
    Promise no cuts to ABC INDEPENDENT voice . . deny broken promise, receive back reduced capacity for that voice to be heard.
    Reward Big Business with hefty tax cuts . . shift costs/cuts to expensive, voiceless Pensioners/pesky, outspoken students!
    Commit to “Big” Infrastructure projects . . steal message and monies previously committed. For “Afters”, strip Local Govt. of monies to maintain invisible local/regional roads!
    Re-imburse Miner(s) for support . . keep on-side maintaining Diesel fuel rebate!
    The unabridged, undeniable truth of “Father” Joe and “shape shifting” Cardinal . . is they have positioned themselves perfectly to re-cast Nation’s values(?) and we the People’s “place” within. They have “Claimed the Message”!!
    But the real “bite” . . is not in this Budgetary diversion. As Father Joe hinted . . this is a beginning … When we the Electorate have forgotten, post next Election, and Cardinal’s second term . . then shall we see, the real, unadorned, gloveless, steel, ideological fist!!!

  • 12
    Phillip Monk
    Posted Wednesday, 14 May 2014 at 10:15 am | Permalink

    I’m guessing that Phase 2 of the End of the Age of Entitlement (Phase 1 being the six-month delay in Newstart for the young) will be an increase in funding for correctional services that will be needed when there is a surge in crimes committed by the impecunious young unemployed.

    Never mind that it will probably cost far more than the money saved off Newstart, or that much of it will go to private contractors. We are America now.

  • 13
    Electric Lardyland
    Posted Wednesday, 14 May 2014 at 11:14 am | Permalink

    Yes, AR and Phillip, that’s largely what I said, but unfortunately, my comment is still stuck in the awaiting moderation pile.

  • 14
    Lubo Gregor
    Posted Wednesday, 14 May 2014 at 11:14 am | Permalink

    Back in the communism in Czechoslovakia, everyone had to have a citizen ID a little book that looked like a passport with information about the person, their address and THEIR PLACE OF EMPLOYMENT. The police would stop people all the time, randomly (or targeted) and if a person did not have a place of employment they went to jail for a couple of weeks charged with ‘bludgery’.

    Just a little tip for the LNP government to haul cheap desperate workforce of under 30s that will accept any work and work conditions towards their corporate mates. It worked then, why not now.

    On a serious note though, I was really impressed by a talk by David Hood about “Blue Economy” - I’d like to draw Crickey’s and readers’ attention to it - it’s not the kind of blue you may think. http://blueaus.com

  • 15
    CML
    Posted Wednesday, 14 May 2014 at 11:50 am | Permalink

    drsmithy @ #2 Right on!! Scary, isn’t it?

    How do we get rid of this mob? Any hope of the Senate blocking supply????

  • 16
    Dogs breakfast
    Posted Wednesday, 14 May 2014 at 12:17 pm | Permalink

    Changing the age at which one qualifies for Newstart is class warfare. Making it so jobless people are without any money for 6 months a year goes well beyond that.”

    Also the content of other comments, pretty much nails this heartless initiative.

    It goes to the centre of the right wing fantasy that everyone who is doing it tough is to blame for their predicament. Nobody’s parents ever die when they are young.

    This policy is fine if you have parents to fall back on (that you are still talking to) but what happens if your parents are dead, or junkies, or so unwell and poor themselves that they can’t help you.

    I pay my taxes specifically so that I don’t have to meet beggars in the streets. Not that I judge beggars, but I do judge a society that doesn’t look after its weaker and more unfortunate citizens.

    Damn your righteousness, you right wing monsters. Damn your heartlessness.

    Joe and Tony, and your lib colleagues, I hope your children never suffer any misfortune. God forbid, your society won’t look after them.

  • 17
    Peter Bayley
    Posted Wednesday, 14 May 2014 at 1:22 pm | Permalink

    This budget is Tony Abbott’s psyche writ large. It is the “Hair Shirt” which he thinks we should all wear for our collective sins such as caring for people who can’t even pull levers on a machine.

    Abbott is a psychopath, completely lacking empathy, his short flirt with the priesthood standing as ample evidence that he realises he’s missing something. He’s a dangerous ideological throwback and has warped his party into passive collusion.

    The sooner he’s removed the sooner this country can start the long process of healing and nation and society-rebuilding.

  • 18
    Posted Wednesday, 14 May 2014 at 1:36 pm | Permalink

    #BlockSupply!

  • 19
    Stuart Coyle
    Posted Wednesday, 14 May 2014 at 2:14 pm | Permalink

    We’d be lucky if anyone in Labor has the balls to block supply.

  • 20
    gypsy
    Posted Wednesday, 14 May 2014 at 2:54 pm | Permalink

    A budget written by Gina Reinhart?

  • 21
    Electric Lardyland
    Posted Wednesday, 14 May 2014 at 4:05 pm | Permalink

    I dunno, Gypsy, I thought it was largely cobbled together from an examination of the tweets of Rupert Murdoch.

  • 22
    Andrew McIntosh
    Posted Wednesday, 14 May 2014 at 6:19 pm | Permalink

    Remember what Hockey said - this is the “first word”, not the “last word”.

  • 23
    graybul
    Posted Wednesday, 14 May 2014 at 6:25 pm | Permalink

    Andrew Mc . . Right on the button! Don’t look where Abbott points. Look where he does not point!

  • 24
    fractious
    Posted Wednesday, 14 May 2014 at 6:52 pm | Permalink

    @ cgraybul

    Or, as Bernard’s article of a day or so ago has it, cui bono?

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