May 13, 2014

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?

Bernard Keane — Politics editor

Bernard Keane

Politics editor

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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24 thoughts on “Keane: Hockey robs from the poor — but not the rich — in first budget

  1. Kel S

    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

    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

    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

    “Abbott’s Class Warfare”?

  5. fredex

    “Liberal Party’s Class Warfare.”

  6. MJPC

    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

    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

    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

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

  10. AR

    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.

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