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Federal

Apr 24, 2014

Who shares the burden in Hockey's morality play?

Joe Hockey says the burden of repairing the budget will be shared by everyone. His government's decisions suggest that's not the case.

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“Do as I say, not as I do,” was the key message from last night’s speech by Treasurer Joe Hockey on his budget challenge.

The speech, given at an event hosted by a media outlet whose name I couldn’t quite see properly on the backdrop, laid out the basis for “hard savings”, “difficult decisions” in the “national priority” of “an ongoing and relentless focus on fiscal discipline and economic reform”. All fair enough.

But Hockey went beyond the usual cliches of the fiscal hair shirts and declared that fixing the budget had a “moral dimension” — indeed, it was a “moral imperative” because we don’t want to “squander our children’s future” like Spain and Greece did.

Implicit in such rhetoric, obviously, is that your opponents are immoral for their fiscal strategy in government. But the problem with a politician invoking morality is that it puts them on a playing field that is not, by and large, their natural turf.  That’s not meant in some populist, all-politicians-are-crooks way — in my view most people in federal politics, barring some exceptions, are there to serve what they believe is the national interest. Rather, invoking morality as a policy justification is problematic because so much of the political contest is fought with compromise, hypocrisy, inconsistency and deception. Politics, being about the pursuit of power, is amoral. Once you start throwing morality around, well, you can be terribly exposed.

For one thing, it’s hard to see the intergenerational morality in repealing a working, successful carbon pricing scheme and replacing it with a piece of climate change “policy” widely acknowledged as garbage designed to cover up the Coalition’s climate denialism. What will you tell your grandchildren when they ask you if you did anything to stop climate change, Joe? Will you tell them you actively worked to undermine genuine action to stop it? Because the longer you help delay action on climate change, the more future generations will have to pay, in higher prices, higher insurance premiums, higher taxes and lower economic growth in a world damaged by rising temperatures and more extreme weather.

And, one wonders, where was the “moral dimension” and “relentless focus on fiscal discipline” when Hockey was in opposition and Labor was trying to cut middle-class welfare spending? Hockey either opposed many of Labor’s savings measures outright or said nothing and let Labor cop the heat. The Coalition fought cutting back the private healthcare rebate to high-income earners tooth and nail and still vaguely “aspires” to restore the rebate to its former, exorbitantly expensive glory. Hockey was reported as calling Labor’s freezing of the indexation of family tax benefit thresholds “the politics of envy”, while Tony Abbott described it as “class warfare” — like many other things Labor did in government.

Still — “moral imperative”/”class warfare” — you say to-may-to, I see to-mah-to, yeah?

If Hockey had entered government and immediately begun acting according to his “moral imperative”, we could have put all that down to ordinary hypocrisy and the needs of opposition. But in November, Hockey abandoned Labor’s plan to reduce extravagant tax concessions enjoyed by superannuants earning over $100,000 a year, costing himself billions of dollars. He restored a fringe benefits tax rort — an actual tax rort — for novated leases, that Labor had moved to close, again costing the budget billions. He’s committed to dumping the mining tax as well as the carbon price. Hockey is talking to us about the “moral imperative” of fiscal discipline while handing billions to large companies, wealthy retirees and tax rorters.

Then there’s yesterday’s F-35 announcement — over $12 billion for planes that may or may not be delivered at some point, and may or may not have working software, assuming they’ve fixed the cracks in the turbine blades that grounded them all. At least the $5-odd billion Tony Abbott wants to spend on paid parental leave to show off his feminine side will stay here in Australia; the $12.4 billion that enabled him to play Tom Cruise with a fake jet yesterday will be dispatched to Fort Worth, Texas, although most of the other $12 billion that it will cost to run them will stay here.

But then the PPL scheme, and its quite remarkable generosity to women on high incomes, isn’t subject to the moral imperative either. Nor, apparently, is the $8.8 billion gifted to the Reserve Bank for no reason beyond faking up a budget black hole narrative.

The F-35 announcement was a little confusing. Now, try to follow me on this: Defence Minister David Johnston claimed that really the F-35s wouldn’t cost anything because the money was already “in the budget” in the years beyond forward estimates and been “building up”. Johnston appears to seriously think there’s a sort of “JSF account” somewhere in Defence with $12.4 billion in it that’s been earning interest. Instead, it’s a notional allocation in the government’s defence spending guidance over the next decade that doesn’t even have the status of forward estimates.

Except, anyone with a memory longer than five minutes should recall that just three weeks ago, Hockey was complaining there was a “massive increase” in defence spending beyond forward estimates and that it was a budget boobytrap, a fiscal “tsunami coming across the water” created by Labor.

Still, you say “tsunami”, your colleague says “it’s been building up and it’s in the budget.” To-may-to, to-mah-to.

Hockey says that everyone is going to have to share the burden repairing the budget. But the government’s decisions show how the burden will actually be distributed: big companies, the military-industrial complex, no matter how bad their products are, rich superannuants, high-income earners, tax rorters — they’re exempted from the whole “moral imperative” thing.

I still think Hockey genuinely wants to wind back unnecessary spending, which is laudable in a politician, and his long-term aim of budget sustainability is unarguable. You can forgive the rank hypocrisy of demanding now what he opposed in opposition, just as Labor has now reversed itself on some cuts it backed in government but now, from the convenience of opposition, doesn’t support. But you can’t forgive decisions that are dramatically cutting revenue, by up to $15 billion, while Hockey complains about the budget mess he has to fix. You can’t forgive claiming all will share the burden while the government’s favourites get a handout. And you can’t forgive a politician dressing all that up in morality.

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63 thoughts on “Who shares the burden in Hockey’s morality play?

  1. Yclept

    The Libs treatment of asylum seekers shows they have been morally bankrupt for a long, long time now.

  2. 64magpies

    Somehow we have managed to find ourselves in a supposedly Christian society where wealth equals morally superiority, and poverty bestows a judgement of moral deficiency. Go figure?

  3. klewso

    Joe Shonkey v Toady Rabbott. It’s like watching Cosjello fight Honest John Howard, all over again?
    A hard “The sky ids falling” budget now – and a soft one to buy votes to win the election, two years down this Yellow Prick Road?
    He was part of the Howard government that laid the foundations for this crisis.
    He can’t reverse the waste that was Iraq (for a FTA), and those F-35’s that Howard, Hill and co committed us to, to supplement the US economy, have to be paid for.
    But he can reverse the tax cuts the government Hockey et al were part of under Howard.
    But of course that would cost him, and they, power.

  4. klewso

    You say you can forgive his rank hypocrisy; I say screw him.

  5. David Hand

    Come on Bernard, you can do better than this. Introducing the F35 decision to Hockey’s narrative of fiscal conservatism and tossing words like “Hypocrite” and “Do as I say, not as I do” around reduces you to the sort of insight one would expect from the letters section of the SMH or the Age.

    At least you didn’t mention politicians’ pay.

    Though the numbers are tedious to get hold of, I believe that health, education and social welfare suck up about 75% and rising of all government spending at state and federal level.

    Hockey is talking about stopping that juggernaut destroying our future prosperity. Argue about the policy detail if you like but do you have a view about his central narrative?

    If so, you forgot to put it in this article.

  6. Honest Johnny

    Well written with some great lines.
    I am a bit suspicious of Coalition Ministers saying things like “people shouldn’t expect to get things (a visit to the GP) for free”. Everyone knows that taxpayers with income over $20,542 (or $32,279 for Seniors) pay a Medicare levy of 1.5% on their taxable income. Indirectly this levy pays for our visit’s to the Doctor, with the more money we earn, the more we pay. If the proposed $6 co-payment is aimed at those who go to the doctor for free, then they are talking about seniors, pensioners, students, and those on low or no income. Where’s the morality in that?

  7. Graeski

    David, I think Bernard’s view about Hockey’s central narrative is pretty clear: the adverse impacts of Hockey’s strategy fall almost exclusively on the most vulnerable members of our society while leaving the rich and powerful unscathed; this is immoral; a claim to a moral imperative is therefore hypocritical.

  8. David Hand

    Graeski,
    You’ve go to love the moral high ground so beloved of the left. Here’s how it works.

    a) Introduce a carbon tax at $23 a tonne as a pay off to the Greens for services rendered.

    b) Hand most of it back to Labor voters in the form of a “family assistance package”. This bribe to Labor voters is actually greater compensation than the actual cost to them of the carbon tax.

    c) Run a slick PR campaign that “the polluters are paying” even though said polluters are actually adding the carbon tax costs to their process in the same way they do with the GST.

    d) Scream loudly that Hockey is a hypocrite who looks after, how did you put it? “the rich and powerful” even though the bribe to Labor voters will be retained should the carbon tax be revealed.

    e) Identify recipients of the vast majority of the public spending of multi billions of taxpayer dollars as “most vulnerable”

    f) Call Hockey a hypocrite when he points out with unassailable logic that the growth in social spending is unsustainable and dismiss his observation that we are robbing future generations.

    It’s a pretty good methodology except it has been repeated so much middle Australia can see it for the vacuous propaganda that it is.

  9. Bill Hilliger

    And with observation of the above Mr Hand will one day get a pat on the head from that immoral shyster Hockey.

  10. Honest Johnny

    David Hand, your political view is so uni- dimensional it would shatter in an instant. Take the repeal of the MRRT for example. You would argue that this is necessary because we should support those mining companies because they bring wealth to the country and employ 17% of the workforce. Even though it will be done at the expense of other (non-mining) businesses that employ 3 times this number, not to mention inter-generational issues (robbing future generations) involved with mining and most of the wealth being sent offshore.

  11. David Crikey30

    Oh Mr Hand, I am just waiting for your justification of reinstating the novated lease rort

  12. David Hand

    No Johnny,
    I support the repeal of the MRRT because it was a super profits tax dreamed up by Wayne Swan and justified in the rhetoric of greedy billionaires and class warfare to fill his own vast fiscal hole.

    As the coal and iron ore businesses it was designed for are all making losses now, there are no profits for normal taxation let alone super profits for super taxation.

    The MRRT is an extra tax over and above normal company tax and it is absurd to suggest repealing it penalises other industries.

  13. David Hand

    Hey DC,
    I don’t support novated leases at all. They’re just a tax dodge to subsidise the car industry.

    I challenge any of you to address the actual substance of Hockey’s narrative – that social welfare spending is growing too fast for our economy and not addressing it will burden future generations with debt inherited from us.

  14. Honest Johnny

    David, the MRRT has raised over $400m since 2012, even though the mining companies are still making billions of profits (not losses as you say). Although you lack attention to detail, you should know that repealing it will penalise non-mining companies when the associated legislation is repealed along with it. This is a reality, not an absurdity. Tax-loss carry backs, accelerated depreciation, increased instant asset write-off threshholds, etc, all measures to help the non-mining sector, (the one that employs more than half the national workforce) will be repealed along with the MRRT.

  15. zut alors

    Well said, BK. I especially concur with the comments on the environmental debt being bequeathed to future generations.

    The Paid Parental Leave generosity leaves me breathless – & confused. All is well while on leave but what happens when the mother is due to return to work & requires day care for the up-to-now well-funded child? This lavish plan of Abbott’s operates for six months and then hits a brick wall. Typically short sighted.

  16. Interrobanging On

    Hockey is not being straight. As if he every would be – he has the Liberal Disease of trying to make a case by deceit, rather than the facts and consistency (just look at the claim that the money for the JSF has been put aside over the last decade – a deliberate distortion, but it got the megaphoning ABC headline they wanted at least).

    While the rolled gold PPL is on the books, any Liberal talk of fiscal responsibility is a sham.

    And as BK points out, they are cutting revenue. Hockey continues to maintain the fiction that there is only a spending problem, not a revenue one. Add to this the retention of carbon price tax cuts after their funding mechanism is gone. They effectively become handout tax cuts.

    They are running stimulus in their road building (Hockey has used the ‘s’ word. Hypocritical, of course, but that is par for the course. They have to fund this extra stimulus spending, while cutting revenue.

    By gall and repetition, Hockey et al. are trying to frame the issue only as *public* measures (public health, public education, pensions etc), rather than other bleeding budget sores like super tax concessions, negative gearing and the private health rebate. This is ideological – public anything is anathema, it seems.

    Other favoured groups, such as those ‘struggling’ big miners aren’t going to asked for much, either.

    Soon enough, super tax concessions will exceed the pension, but much will be concentrated beyond where it effectively reduces the pension, so the money has no effect.

  17. Jaybuoy

    even a soft interviewer at the observer was to much for Hockey…

  18. David Hand

    Johnny,
    The mining companies make billions of dollars profit because they are global enterprises operating in dozens of countries, producing a vast array of minerals.

    The MRRT is levied on coal and iron ore mines in Australia only.

    Every single thermal coal mine in Australia is making a loss. The metallurgical coal mines are faring better but still struggling because coking coal prices have tanked. Iron ore prices have held up better but are still dire.

    While the price of coal remains around $77 per metric tonne, you can expect mine after mine to close this year as companies rail and port contracts expire.

    But stick to your class warfare if it makes you feel better. Hey, why don’t you watch an evil corporation movie. There’s plenty of them around.

  19. Waste of Time

    Interrobanging On is spot on, and John Hewson, who has always struck me as too honest for his own good, agrees. Anyway, I reckon this budget might do the current government in – the rich are getting richer, and the poor will get the picture…

  20. AR

    Yes it was hard to discern the name of the event’s sponsor.
    I could see a P and and A but no I.
    Perhaps it was the desiderata of that sinecured, sheltered workshop for undead thatcherites in Britain, the longest published ‘zine in the anglosphere, like my grandad’s axe, only had half a dozen new heads and several shafts but hey, Nu-Rite is always going to be the OLD-WRONGS.

  21. PaulM

    Bernard,
    WHy does no other journalist write of these matters. Hockey’s hypocracy has been obvious from September 9. Keep writing on. Maybe one day a larger audience will hear you. perhaps if you could throw in some mindless pap about the third in line to the British throne, people might read you and become educated.

  22. PaulM

    Hey, David Hand, the last time I looked, BHP and Rio were doing quite well out of iron ore, thank you very much. Gina Reinhart has jsut secured funding for her Roy Hill iron ore project. I doubt that would have happened if iron ore was an uprofitable business.

    The big miners neutered the original Mining Super Profits Tax,and got a MRRT that suited their needs down to a Tee.

  23. Ian Brown

    According to Mr Hand: “Every single thermal coal mine in Australia is making a loss”

    Therefore they won’t have to pay MRRT. So where is your argument?

  24. David Hand

    Ian,
    They aren’t paying the tax mate.
    The tax is an utter failure. All it has done is blow out the budget deficit as Labor locked in social welfare payments to Labor voters but got trapped by the collapse of commodity prices.

    You can quibble about this tax or that tax if you like but Hockey’s narrative is that the truly massive blow out of social welfare payments under the Rudd / Gillard governments has placed the country on a path of unsustainable deficits. There is nothing hypocritical or immoral about wanting to change that.

  25. CML

    You are an idiot, David Hand. Sure the budget is in structural deficit, but who started this nonsense? You need to do some research – it certainly wasn’t the Rudd/Gillard government.
    The huge problems of middle (and upper) class welfare began under your great friend, John Howard. It is arguable whether the six years of Labor government added to it, or it happened because of what Hockey is now banging on about. That is, the natural growth of the various rorts as set up BEFORE 2007.
    And I just wish people like you would stop your boring comments that we cannot afford social welfare payments. Like Hockey, you only ever talk about the SPENDING side of the budget. There are tens of billions of dollars in lost REVENUE by way of said rorts, which funnily enough advantage the wealthy. Tax concessions on super, capital gains tax (reduced by Howard/Costello), private health insurance rebate, car lease tax concessions, family trusts, negative gearing, funding private schools, etc. etc. Plus the handouts to the business community.
    Despite popular opinion, we are NOT a high tax country. As far as I’m concerned, let’s close some of those loop-holes mentioned above, and give everyone a better quality of life.

  26. CML

    Sorry Bernard, forgot to say what a great article you have written. Many thanks!

  27. David Hand

    Structural deficit. Ah yes, not an actual deficit of course. Dang awkward that.

    Definition of structural deficit: Conceptual invention of some lefty economist to label the Howard government as being in deficit even though it’s not actually spending more money that it receives in revenue. But it gives Howard’s opponents the opportunity to say, “Aha! Johnny is really in structural deficit but is hiding it from you!”

    Increasing taxes is another way of getting rid of the deficit. There is this view that the well off are sitting with chests of gold under their beds that can be raided do fund the disadvantaged. The problem with this view is that next year’s GDP that some people would like to redistribute doesn’t exist yet. It needs to be created by ordinary Australians getting up every morning and going to work, generating income and wealth.

    An unfortunate law of nature for the left is that people who create wealth in this way tend to feel entitled to hang on to it as much as possible. On this matter, Marx was wrong and Adam Smith was right – self interest is a powerful vehicle to create wealth.

    I share your views about some of the distorting effect of certain policies such as negative gearing but the heart of Hockey’s message is that there are too many people living off social welfare payments funded by a shrinking force of taxpayers and it would be good for the country and for beneficiaries of all types if those who can work and make a contribution do so.

    And though I say it myself, I’m not an idiot. I just have a different view to you and there’s nothing wrong with that.

  28. max steinman

    The morality of the Liberal party is to make the rich richer and the poor poorer, it’s so simple and happening so clearly.

  29. max steinman

    Structural deficit is what happens when you cut taxes at the peak of a boom, when the boom finishes you have a deficit thanks to the structure of cutting taxes at the peak of a boom.

  30. CML

    Right on, Max (at #29)! Just hope David reads this comment. I attempted to say this, but obviously, didn’t quite make it clear enough. This is EXACTLY what Howard did, and buggered up the structure of the budget right up to the present day.
    Mind you the Libs and their supporters would rather blame everyone else but the actual culprits – Howard and Costello!

  31. David Hand

    Max & CML,
    The Howard government gave taxes back because they were in surplus. More revenue was coming in than they were spending, unlike a deficit where less money is coming in than you are spending. I point this seemingly unnecessary fact because “structural deficit” is a lefty piece of doublespeak that means the same as “surplus”. It justifies the appalling orgy of spending that followed under Rudd and Gillard, and we are doomed to suffer from the massive social spending they have committed us to over the next 10 years.

    Your suggestion that a deficit would appear at the end of the resources boom is so obvious it hardly needs mentioning. It does not however explain the meaning of this vacuous term “structural deficit”. And the dismal performance of Swan to manage anything responsibly can in no way be blamed on Howard. Instead, Rudd inherited the most fiscally sound economy any incoming government has ever had. Economic policy can change when the economy changes. That’s what governments do.

    “Structural deficit” is merely a vehicle for lefty
    Howard haters to criticise what was an impressively competent economic performance by his government. Tell me what else it is.

  32. CML

    David Hand – you are still an idiot!
    Let me spell it out for you, in words of ONE syllable, so to speak.
    During the latter part of the Howard government era, revenue was “$1000”, due to the mining boom and other factors. Now, Howard didn’t just “..(give) taxes back because they were in surplus”. He committed future governments to do the same thing. However, in the meantime revenue decreased to around “$800”, largely due to the slow-down in mining activity, and a little thing called the GFC.
    The Rudd/Gillard governments cut spending in many areas,(especially in the latter part of the Gillard govt) but they obviously weren’t going to commit political suicide by restoring all of the tax cuts that Howard dished out. Maybe they should have. As I said before, Howard started this nonsense because he wanted to keep on winning elections. Swan inherited the fall-out.
    So it is Hockey’s turn now, so we will see how brave he is in the next couple of weeks. I predict that the axe will fall on ANYONE who they think doesn’t vote for them. And all the hard stuff will be shoved off into the dim distant future. A repeat of history, one could say?

  33. Rpinglis

    David Hand – Howard’s Australia (after all we knowingly voted time and again for their spending policies) spent a lot and saved a little from the boom.
    Norway by comparison saved a lot and spent a little.
    That goes a long way to describe why the two countries are in such different positions.
    Also, if we saved a little of the unprecedented boom, we spent all of the unprecedented assets sell-offs. We could have done things differently but we didn’t and hence we have the structural deficit that Howard started and Norway a structural surplus.
    So far there appears to be a recent precedent for the current government and that is the Fraser government of the mid 70’s to early 80’s.
    Fraser inherited structural deficits, didn’t have a boom and had to deal with external shocks (oil crisis). Fraser and a supportive media railed against the profligacy of the Whitlam government(which also had external shocks to deal with)and the pressing need to repair the budget. Yet Fraser spent all what they saved from Labor priorities on their own and Fraser opened up astounding levels of tax rorts that cost the budget dearly. Fraser couldn’t stop the rorts in large part because Coalition luminaries and supporters were significant users and beneficiaries. The result was that the budget was in the same position when they left office as it was when they entered it. Fraser also crippled Medibank as a universal health insurance by a process of death by a hundred cuts. They introduced a public service wage freeze and not only allowed industry to become moribund their policies actively worked towards that. We were to work to our national strengths, mining and farming and await a mining boom to save us. Shipbuilding collapsed (we used to make giant ships and such at places like Whyalla in SA), Even BHP almost collapsed. A few years later the Hawke gov gave BHP a gift (yes gift, not a loan or an investment) of billions from the taxpayer to stay viable. Remember the BHP “We’ve turned the corner” adverts on telly in the 80’s? No mention that taxpayers paid for that turn-around.
    I’ll be watching the federal budget to see where the Abbott-Hockey government are on the spectrum from a quality government that meets their budget-emergency rhetoric in an equitable way or at the other end, an echo of the Fraser-Howard government. A government that to put it mildly, underachieved.

  34. CML

    Good comparison, Rpinglis.
    And who was Fraser’s treasurer at the time? One John Winston Howard!! He never was much good at dealing with money issues, so it is surprising that the Howard era myth of best at running the economy, still survives in some peoples’ fantasies!

  35. David Hand

    CML,
    I’m not idiotic enough to argue that the Howard government’s policies were bad because of the GFC. The GFC occurred over a year after the Coalition lost power and I am sure a Coalition government would have changed policy in response and run a deficit.

    You notion that the Rudd Gillard government’s cut spending in any meaningful way is fatuous nonsense. Swan attacked the non social welfare 25% of government spending such as defence but would not go near his hand outs to Labor voters.

    Rpinglis’s reference to the Fraser government is interesting and quaint.

    And irrelevant. But if it makes you feel better…..

    Norway’s massive sovereign wealth fund is something to admire. That’s not to say it is the only way. The Australian policy of putting the wealth from the mining boom into taxpayers’ hands has merit as well. I’m ambivalent about the best way. After all, Norway’s money is in the hands of public servants.

    And when are you guys going to get over John Howard? Your attitude to him is juvenile and irrational. He led Australia for a time. He did ok. He made mistakes. Just like Hawke or Keating.

  36. klewso

    Don’t you long for the return of the good old days when it was perfectly all Right to be a “Gillard gutter” or a “Rudd reviler”? Nowadays you criticise Howard’s profligate legacy and you’re a pejorative-laden “Howard hater”?

    Of course we can’t continue this welfare so many of us in an otherwise affluent economy (with it’s market forces on the cost of existing, let alone living) on it’s current level, with revenue being at it’s present level. So we either have to increase revenue or let all these people fall through the cracks – and then blame them for their own circumstances – with the cost of that pursuit.
    We wouldn’t be in this Hockey/Limited News Party black hole we are today if it wasn’t for Howard, aided and abetted by that epitome of fiscal rectitude that was his Treasurer Cosjello, pissing the proceeds of the passing mining boom up against the sides of ballot-box, in a steady stream of tax cuts, that undermined infrastructure investment and the deficit, to buy popularity, while some of us queried such short-sighted waste and wanton regard for the future?
    Labor could have reversed them to fund their GFC stimulus spending, but why should they, to risk such political back-lash?
    I’d like to see Conservatives take off that political eye-patch and agitate for a reversal of those tax cuts. We can’t reverse Howard’s “Iraq all the way, for an FTA” (that cost billions and how many lives); or renege on those “Fantastic F-35s”.
    If conservatives like Andrew Neil can question the policies of his side of politics (for the accountability and the greater good) and risk their exposure to negative PR, why can’t the apologists of the likes of Murdoch’s “Right-Hand Mass Debaters” ditch their hymn book?

  37. CML

    David Hand – I don’t ‘hate’ John Howard. I just don’t think he or Costello were any good at running the economy, despite the myths persisting in the community. Of course, it is easy to see why people think that way – after all they received tax cut after tax cut while the LNP were in government.
    What is not acknowledged is that, giving all this money back to the taxpayer, left a very large gaping hole in areas such as infrastructure, health care and education, to name a few.
    The Labor party attempted to correct this, and also to roll back the middle and upper class welfare. Things like means testing the private health insurance rebate and family tax benefit, stopping the fringe benefit rort on cars and changing the superannuation tax laws for the wealthy, but ALL were opposed by the LNP in opposition, or removed/restored (or promised to be so) by this government.
    So much for the budget ’emergency’! What should be acknowledged here is that Abbott/Hockey et al, are cleaning up the mistakes of the Howard government, NOT the Rudd/Gillard/Swan management of the economy, which every economic guru in the world says was first class.
    What Klewso says is quite correct. Howard could have had an NDIS up and running a decade ago (for example), if he hadn’t piss+d the money from the mining boom up against the proverbial wall.
    So, far from hating anyone, I just would like to see the record set straight, and a bit of reality emerge.
    Sorry for calling you names – I should not have done so.

  38. Bort

    Bludging pensioners. war orphans and disabled should do the heavy lifting so that Joe doesn’t have to undertake the unpalatable and unpopular task of taxing our brave miners.

  39. bushby jane

    Did you see the cartoon of Julia Gillard in the background at hockey’s press conference? Still in nasty opposition mode.

  40. drsmithy

    The grotesque hypocrisy of a Liberals Government trying to present their standard “give as much help to those who don’t need it, and as little as possible to those who do” policy would be breathtaking, were it not so predictable.

    Not a single cent should be removed from welfare programs for the needy until the expansive welfare (and “welfare”) programs for the rich are disassembled. Negative gearing, superannuation tax concessions, PPL, pension eligibility for multi-millionaires, private healthcare rebates, novated leasing, etc, etc.

    Transparent attempts to privatise and convert into “user-pays” publicly funded services like education and healthcare should be met with equal amounts of disgust and contempt.

    The last thirty to forty years has comprehensively demonstrated that the greed of the already wealthy is insatiable, and that they will lie, cheat and steal in ways normal people can not even conceive, just to get a little bit more.

    Of course, neoliberal sycophants like David Hand will always be there to lionise the selfish and greedy, and condemn the weak. Peddling absurdly false notions about how “high” taxes will stop people “getting up in the morning” as if they’d be something the average person (who really does have to get up in the morning and do a hard day’s work) had to face, rather than a miniscule percentage of the population. Or that other great right-wing lie, that there are huge numbers of lazy dole bludgers living large on their few hundred dollars a fortnight, and all the incentive they need to go and get a (non-existent) job is to be beaten just a little bit harder.

    They inevitably try and argue that a country’s budget needs to be treated the same as a company’s or household’s. However, five minutes after telling you that expenses need to be cut to match lower revenues (never that revenues need to be raised to meet higher expenses, even though that’s the result most families and firms strive for), they’ll turn around and say that excess revenues should be thrown away (sorry, “given back”), rather than saved for times of future shortfalls.

    But the real kicker is that, after spending decades building policies and processes to transfer wealth from the majority to the minority, minimising the responsibilities of the strong, eviscerating the systemic protections for the weak, whittling away the public services and social fabrics that give even the weakest the opportunity for a successful and a fulfilling life, their response to being called out on this behaviour is to accuse other people of “class warfare”.

    Hockey and co. will gleefully squander most of the country’s future, just to ensure that a handful of people whose future is already assured, get a little bit more. Not (only) because they are morally bankrupt hypocrites, but because it’s the basis of their philosophy.

    I’ll believe Joe Hockey is prepared to make hard decisions when he stops shooting the fish in the barrel and gets out his flies.

  41. Barry Mcdonald

    So Mr Hand, rising expenditure on health and social welfare due to an aging population wasn’t predicted during the Howard government was it?

    If it had been, surely they would have set aside the proceeds of the boom times to ready the government for this inevitability rather than expanding the (middle class) welfare system or punching a hole in future tax revenues both of which would only magnify the problem 😉

  42. AR

    Jane – what else to expect from people in such a time/mind ward?

  43. AR

    ..or even a “warp”.

  44. danger_monkey

    And when are you guys going to get over John Howard? Your attitude to him is juvenile and irrational. He led Australia for a time. He did ok. He made mistakes. Just like Hawke or Keating.

    Well, sure, I’ll get over Howard at just about the time that Joe Hockey and Tony Abbot stop saying “Labor’s budget mess” and start admitting that the economic policies enacted late in Howard’s term put Australia on the path to structural deficit. So no, not any time soon.

  45. David Hand

    Barry,
    The economic philosophy that has driven every government since Hawke, apart from the recent throwback of Rudd / Gillard has been to recognise that if you want to redistribute wealth to the disadvantaged, you have to incentivise people to go out and create it first. This was what drove the Howard / Costello programme and they took the view that the benefits of the boom would deliver more for Australia if it was in the hands of taxpayers than if it was in the hands of a big government disciple like Rudd.

    The crises of the early 1980’s occurred when governments lost that ability to redistribute wealth because it wasn’t being created quickly enough. The stagflation years of the 70’s had just exhausted the command and control big government model followed since the war. A very large proportion of the companies that populate the ASX 100 today were publicly owned in 1980, run by public servants and run badly.

    Hawke and Keating were, in my view the most visionary administrations since federation and the benefits of their transforming work will last most of this century.

    Hockey’s narrative is that we need to enable more people able to contribute to wealth creation and fewer being subsidised by the taxpayer.

    I’m not going to defend many of the tax breaks given in what the left like to call “middle class welfare” although they are more akin to targeted tax cuts to people who already pay huge tax bills rather than welfare.

    But when you have 20% of the entire federal budget handed out as pensions to people, many of whom hide assets to qualify and you have approaching 1 million “disabled” people in Australia, the ability of the taxpayer is simply unable keep up.

    I simply don’t believe that there are 800,000 Australians of working age too sick to work and I don’t think Joe does either.

    Why should the rest of us keep paying people to do nothing when they can contribute?

  46. Barry Mcdonald

    “This was what drove the Howard / Costello programme and they took the view that the benefits of the boom would deliver more for Australia if it was in the hands of taxpayers than if it was in the hands of a big government disciple like Rudd”

    Sounds just a little too much like Reaganomics to me which led to the tripling of the USA government’s debt during the Regan years, a deep hole that still weighs heavily on the USA economy.

    Mt Hand, can the government get it’s money back now that the tax breaks and middle class welfare haven’t done the job of growing the economy and the tax take to provide for the pressing needs facing the government today?

  47. David Hand

    Reagan ran deficits. He gave tax cuts to the rich that were not in government coffers. Howard and Costello ran surpluses gave tax cuts from them. Lefties are reduced to complaining about “structural deficits” which are really surpluses.

    This government is about to start addressing the fiscal challenge it has. That’s what Hockey’s narrative is all about. You don’t seem to feel the need to acknowledge 6 years of the most profligate and irresponsible bunch of incompetents I’ve ever seen. Under the cloak of the GFC, Rudd and Gillard put our country on a truly spectacular explosion of spending, bribes to Labor voters, appalling waste and they ended by committing future governments to massive social welfare increases in the form of Gonski, NDIS and dodgy green ventures, all of which were either unfunded of funded through the disasters known as the mining tax and the carbon tax.

    There is no doubt that had Costello been treasurer when the GFC hit, the surpluses would have ended anyway. We are in the realm of high speculation if we tried to speculate how they might have gone. But it is just as speculative to say that their policies should have been different just because the GFC came along.

  48. drsmithy

    The economic philosophy that has driven every government since Hawke, apart from the recent throwback of Rudd / Gillard has been to recognise that if you want to redistribute wealth to the disadvantaged, you have to incentivise people to go out and create it first.

    Ignoring the absurd implication that there has been any meaningful difference between the policies of Labor and Liberals for a decade or more, the fallacy be put forward here is that people need to be specially “incentivised” to go out and create wealth.

    People are already “incentivised” to go out and create wealth. How ? Because being poor – despite the most vehement and hypocritical declarations of conservatives to the contrary – sucks.

    I’m not going to defend many of the tax breaks given in what the left like to call “middle class welfare” although they are more akin to targeted tax cuts to people who already pay huge tax bills rather than welfare.

    Yes. And those “huge tax bills” are what funded the public services that now “cost too much”.

    Is the connection obvious enough yet ?

    But when you have 20% of the entire federal budget handed out as pensions to people, many of whom hide assets to qualify and you have approaching 1 million “disabled” people in Australia, the ability of the taxpayer is simply unable keep up.

    So the obvious solution is to punish the poorest and weakest, rather than the wealthiest and most powerful, right ?

    I simply don’t believe that there are 800,000 Australians of working age too sick to work and I don’t think Joe does either.

    Neither do I.

    But the lie being peddled by Hockey and his ilk is that there are 800,000 people who aren’t working because they don’t want to, and if only we treat them a little bit worse (sorry, “incentivise them”), they’ll go off and find jobs.

    We don’t have an unemployment problem because people don’t want to work. We have an unemployment problem because there isn’t enough work to do.

    Further, this problem is only going to get worse as robotics ramps up. We are within a generation – two at the most – of nearly all unskilled work, and a fairly non-trivial chunk of low-skilled work, as well, being completely eliminated.

    Reagan ran deficits. He gave tax cuts to the rich that were not in government coffers. Howard and Costello ran surpluses gave tax cuts from them. Lefties are reduced to complaining about “structural deficits” which are really surpluses.

    No, David, a structural deficit is when you commit future spending based on an increase in income known to be temporary. As Howard and Costello did, extensively.

    Since people like you love to try and equate things to the household budget (at least when it’s convenient), here’s an analogy: It’s like assuming you’ll always get the same annual bonus you did in your best year, and basing your mortgage and car loan on that income (not to mention buying a boat and a few overseas holidays on the credit cards as well). That is what Howard and Costello spent the better part of a decade doing.

    Finally, as always, you completley ignore the increase in private debt over the last thirty-odd years that makes the public debt you prefer to focus on practically a rounding error.

  49. drsmithy

    I simply don’t believe that there are 800,000 Australians of working age too sick to work and I don’t think Joe does either.

    How do you think Joe envisions we divvy up the 140,000 available jobs in Australia between them ?

    How do you think the million or so already “employed” people who want to work more will feel about it ?

  50. Barry Mcdonald

    you’re rewriting history Mr Hand, Regan’s tax cuts came first, the deficits followed, sound familiar?

  51. David Hand

    Doctor!
    I’ve pointed out before that the number of jobs available is not a fixed number. Australia received well over 100,000 permanent migrants last year. Getting a job grows the economy, pushing up demand for goods and services.

    Under-employment is a problem for us as well. Growing the economy is the most tried and true method. Getting some of those 1.8m people off welfare will make a huge contribution.

    Glad you understand what Joe is talking about.

  52. Barry Mcdonald

    “There is no doubt that had Costello been treasurer when the GFC hit, the surpluses would have ended anyway. We are in the realm of high speculation if we tried to speculate how they might have gone. But it is just as speculative to say that their policies should have been different just because the GFC came along”

    Mr Hand, you are confusing the P&L with the balance sheet, yes the surplus would have been diminished by the GFC downturn and also tax income but never to the same extent that we’ve seen today, just imagine if we were getting double the tax take on capital gains now if Howard had not cut it by 50%, that’s a 50% handout to the wealthiest who were already benefiting from negative gearing on investment properties

  53. drsmithy

    I’ve pointed out before that the number of jobs available is not a fixed number.

    It’s a long, long way from 140,000 to a couple of million.

    A simple fact of mathematics is that 140,000 jobs won’t satisfy 800,000 applicants.

    Arguing, therefore, that 800,000 are voluntarily not working is disingenuous, to say the least.

    Australia received well over 100,000 permanent migrants last year.

    Yes, our immigration is out of control. It’s a significant contributor to many problems.

    Getting a job grows the economy, pushing up demand for goods and services.

    So does just giving people money.

    Under-employment is a problem for us as well. Growing the economy is the most tried and true method. Getting some of those 1.8m people off welfare will make a huge contribution.

    Again, you peddle the lie that “1.8m people” are on welfare because they don’t want to work and need to be forced off it.

    No evidence – contemporary or historical – supports the premise that a meaningful percentage of the population chooses not to work (even when welfare benefits are substantially more generous than ours), when productive work is available.

    Yet, like most other conservative myths, it is a cornerstone of right-wing social and economic policy.

  54. David Hand

    Doctor,
    I have never suggested that people on disability benefits and unemployment benefits don’t want to work.

    The only point I want to make, that I think Hockey is making, is that it is good for our economy to move people off welfare and into productive work. Our economy is very capable of generating a lot od extra jobs with the right policy framework. By the way, immigration is a powerful creator of economic growth and jobs.

  55. drsmithy

    I have never suggested that people on disability benefits and unemployment benefits don’t want to work.

    “I simply don’t believe that there are 800,000 Australians of working age too sick to work and I don’t think Joe does either.”

    Your core position that people need to be “incentivised off welfare” (ie: they need an external influence) has as its foundation the premise that people stay on welfare voluntarily when productive work is available.

    At least, I’m assuming you believe productive work is available, given you imply 140,000 vacancies are sufficient to serve well over a million idle workers. That’d be pretty amazing, when even Silicon Valley high-end technology jobs from the likes of Google only create about 4-5 “other” jobs.

    No-one needs to be “incentivised” off welfare. As I said earlier, the incentive is already there – being poor sucks. Of course, if the option is a meaningless, shitty job that barely pays any better, then of course you’ll need an “incentive”. But the problem there is the low pay of the job, not the generosity of welfare.

    The only point I want to make, that I think Hockey is making, is that it is good for our economy to move people off welfare and into productive work.

    I have never met anyone who disagrees with this. So I’m afraid I don’t really understand why you think this is a “point” that needs to be made.

    Our economy is very capable of generating a lot od extra jobs with the right policy framework.

    Indeed.

    The problem is we have a country that’s been run for decades by people who think all we need to do is dig up dirt, swap houses with each other (more recently sell to foreigners) and swap each others compulsory savings back and forth while skimming a few % off each year.

    Punishing the weak and poor for being weak and poor, however, is not a recipe for success.

    “Incentivising” the wealthy and powerful to put their money into productive ventures would help. But the world (and especially Australia, perhaps beaten out only by the UK and US) is being run by people who think capital should have a free ride and labour should bear the cost of making them even richer.

    We are a country run by and for rent-seekers.

    By the way, immigration is a powerful creator of economic growth and jobs.

    Another neoliberal article of faith.

    How does adding more people to a pool of unemployed people create “economic growth and jobs” ?

    Immigration today is mostly about wage suppression (at the low end) and maintaining the property bubble (at the high end), with some token humanitarianism thrown in.

  56. David Hand

    How many times do you hear people say, “I’d get a job but I’d get less money that the benefit”. And bleeding heart lefties in these threads saying, “Joe Bloggsworth would work but would suffer an effective tax rate of 85%” as withdrawal of a benefit is conflated with tax.

    Immigrants bring economic activity. They buy food shelter and clothing. They buy services.

    This increased demand for goods and services grows the economy.

  57. drsmithy

    How many times do you hear people say, “I’d get a job but I’d get less money that the benefit”.

    Very rarely.

    Though I’m sure, as jobs become scarcer, and paid less and less, probably more frequently.

    But the “moral” solution is better paying jobs, not worse paying welfare.

    Of course, better paying jobs means a little less money funneled to the already wealthy, and is therefore unacceptable (sorry, “class warfare”).

    Immigrants bring economic activity. They buy food shelter and clothing. They buy services.

    This increased demand for goods and services grows the economy.

    Like I said, article of faith.

  58. David Hand

    I’m rewriting history, Barry? I find it tiresome to spend 20 minutes researching something that everybody knows. Reagan never had a surplus nor Carter before him.

    1977 $54b deficit Carter
    1978 $59b deficit Carter
    1979 $41b deficit Carter
    1980 $74b deficit Carter
    1981 $79b deficit Reagan
    1982 $128b deficit Reagan
    1983 $208b deficit Reagan
    1984 $185b deficit Reagan
    1985 $212b deficit Reagan
    1986 $150b deficit Reagan
    1987 $155b deficit Reagan
    1988 $155b deficit Reagan
    1989 $153b deficit Bush

  59. max steinman

    So Reagan tripled the deficit in three years…

  60. David Hand

    Reagan’s deficits.

    Yeah, stupid, eh?

    Especially as it went to the ultra-rich.

  61. Barry Mcdonald

    “I’m rewriting history, Barry? I find it tiresome to spend 20 minutes researching something that everybody knows. Reagan never had a surplus nor Carter before him”

    Mr Hand you are not only trying to rewrite history but have strangely also provided the data to refute your own argument….the deficit tripled/doubled under Regan going by your figures that I haven’t checked. Put this against your argument that cutting taxes on the wealthy would generate greater economic activity and therefore tax revenues, greater than the loss of revenue from the tax cuts would improve the government’s net position….doesn’t quite stack up Mr Hand and the USA has never recovered from that and neither did Howards similar approach to punch a long lasting hole through our governments revenues that magnified the issues we now face

  62. David Hand

    Barry, Barry, Barry.
    Howard and Costello cut taxes when they had a surplus. When more tax revenue was coming in than was going out.

    This is a simple, straightforward and undeniable fact.

    You can argue whether or not it was good policy and would a Norwegian style sovereign wealth fund have been a better option. It is reasonable for left / right political philosophy to differ on this matter.

    But it does not alter the absolute, undeniable fact that the Howard Costello government was reducing taxes when they had a surplus – when more revenue was coming in than was going out.

  63. Dogs breakfast

    Great article BK. Spot on.

    Yes, the basic problem is this, the Lib moaned about the fiscal nightmare while in opposition, but prevented Labor taking reasonable steps over the medical rebate, superannuation rorting and many other measures.

    Now in government they cry poor, but still are only looking at the little guy to fix the problems.

    David Hand’s analysis is chronically flawed, not seeming to understand the basic idea of a structural deficit, among many other faults.

    This is no more Labors doing than it is the Libs, they have both been playing the wrong game in opposition, and the demonisation of tax, as though companies and people get nothing for their taxes, is the very crux of the problem.

    I am almost too despairing to comment on the ‘incentivisation’ argument. Oh gawd. The fact is that there is not one person who did less work trying to accumulate wealth because of the tax rates.

    That is the biggest lie of all. Utter, utter garbage. People do not work like that, people do not think like that, people are not ‘rational’ players in the economy.

    Just the facts.

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