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Aug 4, 2014

Think of the children: govt grasps at straws to sell budget

A desperate government won't get much help from the Business Council when it comes to intergenerational issues.

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There’s desperation, there’s clutching at straws … and then there’s the Abbott government’s attempts to save its budget.

The government has tried pretty much everything. It has tried insisting that the budget is fair. “[T]he load is fairly shared because that’s the Australian way,” the Prime Minister insisted just days after the budget was released, saying “the fair go principle, which is very important for our country, continues in this budget”. It tried insisting there was no alternative and that the budget would be passed no matter what. It tried leaving Treasurer Joe Hockey, whose popularity with the electorate has suddenly plummeted, out of its sales pitch. It has tried to convince voters of a budget emergency. It has tried a charm offensive with the eccentric mob of crossbenchers who now hold the key to legislation in the Senate. It — or at least Hockey — tried darkly suggesting if the Senate didn’t like the budget, cuts would be found elsewhere.

And, usually, it has tried all or most of those things at the same time, reflecting the confused nature of a budget that emphasises punishment without economic reward. The latest strategy, David Crowe reported today, is to bring forward the next Intergenerational Report in order to help convince voters, and maybe crossbench senators, of the dire fiscal circumstance in which Australia will find itself in decades to come. Oh, and by the way, what’s the bet the report won’t mention the burden of addressing climate change that we’ve dumped onto our kids?

That’s less a straw to be clutched at than a carbon nanotube. And to the extent that the report — population, productivity, participation, etc, etc — enters into the public consciousness, it won’t help the government: voters already believe there’s a need to get the budget back to surplus; the problem is that they dislike how the government has proposed to do it, believing it to be fundamentally unfair. It’s the fairness issue the government needs to address, not the need for fiscal discipline. But, of course, making the budget fairer would require more substantial measures against high-income earners and companies than a temporary, small rise in income tax for very high-income earners. And this government is in the business of looking after high-income earners and companies, not hurting them.

The head of the Business Council, Catherine Livingstone, meanwhile, made her own contribution to intergenerational issues by telling Fairfax she thought “there are too many people going to university” and not enough got a vocational education.

Coming just days after she revealed a major new report and an economic vision for Australia, you’d assume Livingstone and the Business Council had explored this issue of too much book-learnin’ in detail in preparing its, ahem, “visionary” Building Australia’s Comparative Advantages. Peculiarly, Livingstone mentioned education just once in her speech, to argue that international education was an area of comparative advantage for Australia. Otherwise, education didn’t get a guernsey. The paper itself discusses vocational education, but only offers motherhood statements like recommendations to “better integrate the VET system with other parts of the education system and with industry”.

Nor does the original report on which the paper is based discuss the balance between university and vocational education. In fact, the only detailed discussion education got from the Business Council last week was about how Australian higher education was a great export earner and one of our few areas of comparative advantage that we should concentrate on.

So, shorter Livingstone: university education is great, but only for foreigners so we can generate export dollars. Not, you know, that this is about picking winners.

As Livingstone might know if her consultants or the BCA’s staff had bothered to do some research, university education is associated with significantly higher lifetime earnings (and thus higher tax payments), better health outcomes, lower transfer payments and more civic engagement. But the issue shouldn’t be whether business figures, or governments, should arbitrarily decree that too many people are going to university, but providing an education system that enables students to choose what works best for themselves, whether it’s vocational education, university education or a mix of both. That includes more effectively integrating vocational training into secondary schools — something the previous government had a strong focus on via trades training centres, but which the Coalition reflexively dislikes — and minimising  educational disincentives, like fee payment systems that will actively deter low- and middle-income students from choosing courses they might otherwise take.

It also includes more effectively targeted education spending to improve outcomes and address disadvantage — something that was at the heart of the Gonski recommendations that the government has now abandoned in favour of its traditional obsession with looking after private schools.

All of these areas have significant implications for the long-term impact of an ageing population: a more skilled, healthier, higher-earning workforce that lifts economic growth and tax revenue, and the identification and early remediation of educational disadvantage that lifts participation and lowers transfer payments. But chances are, when the Intergenerational Report does appear, you won’t hear any of that over the cries of “budget crisis”.

Bernard Keane — Politics Editor

Bernard Keane

Politics Editor

Bernard Keane is Crikey’s political editor. Before that he was Crikey’s Canberra press gallery correspondent, covering politics, national security and economics.

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