As we live through the economic revolution caused by the pandemic, it can be hard to spot the historic shifts underway unless they directly affect us — like working from home.
Another one was in the budget papers: not merely has Australia entered an era of colossal deficits, but of dramatically bigger government. After the government spends more than a third of GDP this year, it is also committed to spend around 27% of GDP a year to the end of the forward estimates — more than two points higher than the level it has managed in recent years and one point higher than the highest level of Kevin Rudd’s stimulus spending.
Few people have a problem with that given the pandemic but it means that, over the medium term, the government is about 10% bigger than it has been, giving it tens of billions of dollars of borrowed money to spend.
And this government has made clear where it wants to spend that money: on fossil fuels and extractive industries, select manufacturing industries, dams and irrigation infrastructure and roadworks. It also used the budget to direct more funding into home care packages, but residential aged care missed out, and the unemployed missed out, with Jobseeker set to revert to its below-poverty line level in 2021.
Sign up for a FREE 21-day trial and get Crikey straight to your inbox
On the receipts side, the government of course preferred tax cuts for middle and high income earners and accelerated tax rebates for business in its quest for a “business-led recovery” over more direct forms of economic support.
This is something progressives don’t think about when they call for a bigger role for government. Greater spending and a bigger government means government has greater power. And this is a government — the most corrupt federal government since the 1970s, and possibly much longer — that has constantly indicated it will reward its friends and punish its enemies, and use taxpayer funding — or, more accurately now, borrowed money — to serve its partisan agenda.
As the sports rorts affair demonstrated, it is also unashamed about it.
Industry superannuation, renewable energy, the ABC and universities are all enemies of the government; all have been punished or failed to receive anything like the support received by allies and supporters of the government — big fossil fuel companies, the mining industry, News Corp, irrigators and agriculture and high income earners.
As we approach the next election, marginal seats will also become a larger focus of the government’s largesse.
An expansion of government power is particularly problematic when a pro-corruption regulatory environment exists, as it does at the federal level. Weak and poorly enforced political donation laws that provide little transparency around who is seeking to influence policy; the lack of an anti-corruption body worthy of the name; a compliant, politically-directed federal police, an audit office being starved of funding; a lack of transparency around meeting and lobbying in Parliament House and the invulnerability of political staffers to parliamentary scrutiny.
This environment will apply when the benefits of successfully influencing decisions about where money is spent and what regulatory frameworks are imposed are greater than ever before.
As we’re seeing around zoning and purchasing decisions relating to Western Sydney Airport, opportunities for making a buck, or tens of millions of them, from influencing decisions attract not just low-rent spivs and shonks but extremely wealthy and well-connected figures with resources to deploy to get the political outcome they want.
Those opportunities have expanded along with the much-cheered size of government — and the opportunities for the government to use borrowed money in the service of its electoral agenda.
But the structural move toward bigger government that will persist at least into the mid-2020s and possibly well beyond is only one element of a larger shift underway.
Big isn’t merely a theme for government, it will be a key theme for our corporate landscape and the giant investment industry.
Is Australia heading for an era of more rorts and corruption? Let us know your thoughts by writing to firstname.lastname@example.org. Please include your full name to be considered for publication in Crikey’s Your Say section.
Tomorrow: bigger monopolists and mega-investment funds