Crikey Says

May 13, 2014

Crikey says: malicious budget defers the tough decisions

There are things to admire in Tony Abbott's first budget, says Bernard Keane. And plenty, as Joe Hockey correctly stated, to criticise. Our crack team delivers their verdict: Keane, Paddy Manning, Cathy Alexander, Richard Denniss and Tom Burton ...

There are some things to admire in the Abbott government’s first budget. The media routinely bags contemporary politicians for lacking the policy bravery of the political giants of the 1980s and '90s. Well, Joe Hockey has brought back the petrol excise indexation abandoned by John Howard. The government has boldly -- although it refuses to admit the obvious -- broken an election promise about not raising taxes. It has even taken on its own base, at least a little, in curbing pension indexation. These are measures to be applauded. Ultimately, however, this budget fails two keys tests. It refuses to really embrace the challenge of long-term fiscal sustainability. The restoration of fuel excise indexation is welcome, but at the same time as that measure is garnering hundreds of millions of dollars in years to come, superannuation tax concessions will be expanding by billions of dollars a year. The cost of encouraging superannuation saving will hit $50 billion in 2017-18. It is a figure that will by that point be far in excess of the cost of pension and Defence spending, and be beginning to rival health spending. It should give any government pause for thought. But not this one. This budget also fails the equity test. It is difficult to cut government spending without harming low- and middle-income earners, who rely more on government spending than high-income earners or corporations (at least, healthy, viable corporations). But an air of malice hangs over this budget, in its targeting of the unemployed, its targeting of students, its targeting of people in developing countries, its targeting of the general community through petrol excise and Medicare co-payments. All these groups must contribute, while high-income earners, and particularly wealthy superannuants, make at best a token contribution. And most corporations get a tax cut. Whatever the merits of such an inequitable distribution of the fiscal burden, it is bad politics: any economic or fiscal reform is much harder to sell to voters when it looks unequal. And finally, Joe Hockey tonight presented us with "a budget that delivers a sustainable future for your children, and the generations beyond". Yet his budget speech doesn’t mention climate change. Climate change is notable in the budget for its absence, with even the silly "Direct Action" figleaf capped at a mere $2.6 billion. However much this government refuses to accept it, there is no sustainable future for our children, and future generations, if we don’t address climate change. Ultimately, budgets like this may prove very costly indeed.

Free Trial

You've hit members-only content.

Sign up for a FREE 21-day trial to keep reading and get the best of Crikey straight to your inbox

By starting a free trial, you agree to accept Crikey’s terms and conditions


Leave a comment

6 thoughts on “Crikey says: malicious budget defers the tough decisions

  1. Lyn Gain

    Why is curbing pension indexation to be applauded? Am I missing something??

  2. Lyn Gain

    Apart from that (which I fired off in mid para) – this is a clear and succinct overview. Well done.

  3. klewso

    I admire the courage it takes to call the electorate dills because they can’t tell a real promise from a hole in the ground? …. Fancy mistaking “little Right lies” for promises?
    And it was nice to see all those women and Julie Bishop mustered behind him while he delivered it?

  4. klewso

    Ultimately, how much have Howard-Cosjello “tax-cut/revenue-emasculating budgets” cost, even now?

  5. klewso

    Compare the imposts on the proportion of income of a family trying to make ends meet on the minimum wage/welfare : to someone on 100 grand a year, let alone twice that?
    “Heavy lifting”? Only one of them can afford a fork-lift – and it’s not “Shonkey’s Soylent Green”.

  6. Electric Lardyland

    One thing that some of our lightweight media talking heads seem to be allowing Abbott and Hockey to get away with this morning, is the well worn spin of, ‘we made these promises before the election, but when we got in, we found that the budget was in far worse shape than what we expected, blah, blah, blah’. What these alleged interviewers are repeatedly failing to point out, is that for the previous few years, the Coalition have been screaming, ‘budget emergency, budget emergency, budget emergency’. So all their broken pre-election promises were made, when they were apparently already convinced of the need for drastic corrective action, to fix the alleged budget emergency. If anything, the figures that they received after the election, shows that the budget was in better shape than what they claimed and that it took a bit of creative accounting to make it look worse. So in this light, the breaking of a range of promises, should be seen as even more cynical and manipulative.

Share this article with a friend

Just fill out the fields below and we'll send your friend a link to this article along with a message from you.

Your details

Your friend's details