28 January, 2021

Blog

Australia At Crossroads With The Budget 2014

By Laksiri Fernando

Dr. Laksiri Fernando

Dr. Laksiri Fernando

Australia’s traditional welfare system or what more appropriately called the ‘caring society’ is definitely at crossroads with the new budget of the (conservative) Liberal Party, 2014/15. The party is liberal by name, but in essence it is outright conservative, more to the far-right than any time in the country’s history before. The budget may reminisce John Howard’s budget in 1996/97 in some sense, but far far to the right and conservative, very openly saying that the ‘Age of Entitlement’ is over.

This evening, the Treasurer, Joe Hockey, presented the budget in Parliament in Canberra, outlining the measures to bring down the budget deficit from 50 billion to 30 billion, an effort which could have been appreciated if not for the way that it was done by burdening particularly the middle and low income earners, while pleasing the big corporate sector in the country.

To please the big corporate sector, the abolition of the Carbon and the Mining taxes was announced.

To reduce the budget deficit, expenditure on schools, hospitals, pensions and foreign aid were drastically slashed (80 billion) and new taxes on fuel, medicare and incomes were newly introduced, but in different names. If there was any innovation in the budget then that was in respect of semantics or nomenclature as follows.

  • Temporary Budget Repair Levy
  • Fuel Exercise Index Adjustment
  • Medicare Co-Payments

All the above are new taxes, but not in name. The reason for this acrobatic gesture was the promise given by the Liberal Party leader, now the Prime Minister, Tony Abbot, to the voters at the last elections that he would not impose any new taxes. Therefore, those are not taxes but levies or co-payments! He has also said, criticizing the last Labor administration, that what is bigger is not the ‘budget deficit,’ but the ‘trust deficit.’ This has been the major theme of criticism by the Labor opposition in Parliament today criticizing the government and their ‘Broken Promises.’ Among the Australian voters, accountability is usually valued high. If a government willfully or blatantly breaks promises, then that would be the end of their political credibility.

There is obvious bias towards the big corporate sector or the big business on the part of the Liberal Party. This is understood by the general public. But in the past, as a responsible democratic political party, the Liberal Party also used to cater to the general public and the ordinary voters. Compared to the Labor Party, the Liberals also had some credibility as good economic managers. Therefore, after a period of Labor administration, there has been a tendency on the part of the voters to prefer a Liberal administration, ‘to fix the economy’ so to say. But this budget is undoubtedly well beyond that and in fact might destroy the economy instead of repairing it.

There was no doubted that the Labor governments were running deficit budgets in the recent past and as a result there has been an accumulated national debt up to around AUD 300,000 million. But compared to other developed countries the debt ratio in Australia as a percentage of the GDP has been one of the lowest. In 2013, the debt ratio was only 27 percent (the highest in years), whereas in other developed countries the average is considered to be around 90 percent of the GDP. There is no ‘debt crisis’ or ‘debt trap’ in Australia. To talk about such is merely to peddle an anti-welfare agenda. In addition, Australia has a triple ‘AAA’ credit rating throughout years.

On the other hand, it was thanks to the government spending particularly in stimulating industries and employment and also consumer confidence that the Labor administrations managed to avoid an international financial or economic crisis in Australia during 2008-2012. Of course as a result, there is (some) debt and a legacy of deficit budgeting and those have to be gradually erased without upsetting the overall health of the economy. This budget has slashed industry assistance amounted to $ 845 million previously which was necessary to stimulate the industries facing the challenge of a financial/economic crisis.

There is sort of a housing bubble or boom at present in the economy. Of course some buyers are foreign but considerable number comes from the high (professional) income earners. Now a 2 percent budget repair levy is imposed on these income earners and this might affect the ongoing housing boom in the country adversely in the coming future.

Likewise, after a long long period, the consumer confidence was regaining in the country. The consumers are the ordinary people whose newly imposed medicare levies, fuel surcharges and cutting down of various other benefits would affect their consumer confidence. Equally or more damaging might be the cutting down of annual pension increases, newstart allowances for the under 30 years age unemployed until six months and various other family benefits. These are in fact inhuman measures to satisfy an obsession on the part of some politicians to have a balanced budget.

Yet the budget is not balanced! There is still a 30 billion deficit hole. It is not yet clear where the spending are going to be. It is said that what is extracted as fuel surcharge would go to road development. That may have a logic. However, it is also said that what is extracted from the sick patients as medicare co-payments who go to see a GP would be invested in medical research! That is obviously a funny way of funding ‘medical research’ to say the least. As one critic remarked, this is might be the beginning of the end of the existing ‘universal healthcare’ policy in Australia.

There is obviously an ideology behind the budget. It is not about any reasonable economics. Perhaps some accounting is there in tallying and counting necessary numbers. It is like a bizarre right-wing Third World Budget. So much so, some of the utterances are also what we hear mostly in budget discussions in Third World Countries prescribed by the IMF and/or the World Bank. There is considerable talk about necessary ‘structural reforms’ to mean a neo-liberal or neo-con agenda. It is also like the austerity measures that became promulgated in Portugal or Spain aftermath of their financial and economic bankruptcy in late 2012/13.

The model that Liberal Party appears to follow undoubtedly is the old fashioned Uncle Tom variety. The current Treasurer, Joe Hockey, seems to be the primary advocate of this ideology even more than the Prime Minister, Tony Abbot. He asks the people to follow the ‘national interest and not personal interests.’ The vision he espouses is a ‘stronger Australia and a more prosperous country.’ But he is silent about the marginalized, the vulnerable and the needy sections of the society.

Mr. Hockey also intends to completely scrap the public funded university system in the country although eventually. Some of the measures in the current budget are the starting points. From now onwards, the university students or their parents have to shoulder a major burden on university education. The loans given by the government will be limited. From 2016, universities are supposed to have their own fee structures.

Some measures in the present budget obviously derives from the recently announced report of the Commission of Audit. But the budget goes beyond that. For example, the Commission has suggested to increase the retirement or the pension age to years 70 by 2050. This suggestion is taken as a ‘divine rule’ in the budget and has advanced the implementation year to 2035. This is a bizarre and a discriminatory proposition by all means. Australia has already increased the retirement age to 67. That may be reasonable. Increasing it by another 3 years is unjustifiable by all means.

It is good that if we all can engage in some productive work until our demise. That however is a personal choice. Some may prefer more leisure. Especially those who exert physical labor obviously cannot go on working for long years. All indications are that in Australia, people find it difficult to obtain gainful employment even by late 50s. The most bizarre and anti-social nature of the budget is revealed also by this proposal.

Australia definitely is at crossroads. The future directions of the country will depend on how effectively the opposition and that particularly means the Labor Party would take the challenge of the budget and educate and prepare the people for alternative policies. There is no question that necessary rationalizations might be necessary in any welfare system from time to time. Perhaps this was delayed or neglected in Australia in the recent past for various reasons. But there is no rational in dismantling the welfare system altogether. The system is one of the best in the world and should prevail. The beauty of Australia is the caring nature of its society. It should prevail. It is not only an Australian task but also a universal task.

Print Friendly, PDF & Email

Latest comments

  • 1
    0

    Government is fixing the mess created by Labor party, that’s the bitter truth. Why is Labor jumping up and down when a “levy” is introduced to reduce the debt when they themselves introduces the infamous “carbon” tax?? what needs to be understood is that there are lot of people in the system who live on “easy” money.. you may call it welfare system.. have you ever asked yourself why “pokies” places are crowded when the pension day arrives or have you see all those people on drugs waiting to collect the centrelink payments? Asutralia has one of the highest personal tax rates as much as 46.5% compared to 33% in US..I don’t agree with all the spending cuts but all in all its a good budget!

    • 0
      0

      “have you ever asked yourself why “pokies” places are crowded when the pension day arrives or have you see all those people on drugs waiting to collect the centrelink payments? “

      you must be a person with a stone heart ,in Oz most of the pensioners live a very miserable /lonely life away from their loved ones , their only way of getting some sort of entertainment is going to pokies/Bingo and most of the old people really looking forward to this day and certainly they deserve it , don’t you think so ? it’s not surprising that Abbot led racist government can’t see the human side of it , but you ?

  • 0
    0

    The Budget is good. Those who are used to be dependant on welfare are not happy. It is not a broken promise as said by Bill Shorten. Abbot & Hockey saw the damage only after they took office. The two of them with others in the Party have acted in the best interests of the country. If a double dissolution take place they have risked their future. This alone is sufficient to judge them. These are genuine people and not selfish like Gillard & Co who brought the carbon tax to please the Greens to stay in power.
    Ram

  • 0
    0

    “These are genuine people and not selfish like Gillard & Co who brought the carbon tax to please the Greens to stay in power.”

    Tony Abbot is a genuine person ? according to Abbot’s 5 star democracy , SL is a functioning democracy ………….

    • 0
      0

      Abbot has supported srilanken govt lately only because they are worried of flow of boat people being human smuggled from srilanka all these few months. All these moves and his participation to CHOGM were all were dependent on their advatnages. This everyone would get it easily, but Rajapakshes would not. That is the reason why they goes on even for casino deals between two countries.

  • 0
    0

    It is surprising to see very first comments supporting the budget, I was under the impression that most of Asian migrants are anti-liberal..
    Laksiri,
    I guess we need to put most of these into numbers and time of implementation. Current fuel levy is 38c per liter, this goes up by 3c. If you put 200L, that is extra $6 per month… I don’t mind paying this if the Gov need this money and use it wisely..
    GP co-payment of $7 is good, free consultation doesn’t make sense, but all senior citizens should have been exempted completely.
    After reading ABC budget Winners & Loosers, I don’t see this as disastrous budget. (http://www.abc.net.au/news/2014-05-13/budget-winners-and-losers/5433178)

    • 0
      0

      AvB,

      This is politically a stupid budget. Take your two examples, fuel levy and GP co-payment. No much income is generated, yet the universal Medicare principle is attacked. The amount is equated to less than two middies! What a stupid statement on the part of the Treasurer. I have a GP friend here and she says (or laughs) now they have to collect the government tax to collect $ 7 from each patient. This is a mean ‘mentality of a petty trader’ to collect few dollars here and few dollars there. But the major cuts are in billions. Have you counted the numbers?

      I never assumed the ‘Asian’ migrants to be anti-liberal AvB. The Treasurer himself is a migrant. Some of them suffer from complexes when they become or pretend to be the ‘new rich’ without values in the new countries. Who are the Winners and Losers? Anyone can go through the link you have given for the ABC webpage and see it. John Howard (a former Liberal PM) has criticized the budget and several Liberal state Premiers are furious. Yet, some of our fellas are supporting.

  • 0
    0

    Dear CT readers.

    The budget in Australia is ok, will be ok and will balance itself out no matter what. Has always done so.

    More to the point is the Sri Lankan budget. Our countrymen will be twice as blessed in the so called ‘thrice blessed country’if only the humongous corruption can be brought down a few notches.

  • 0
    0

    Dr LF,

    As you have stated, the Medicare co-payment will not generate much by way of revenue but more to the point, as you have also stated, it signals an attack on the principle of universal health care. The Liberal Party has always been opposed to Medicare and would gladly be rid of it except that to attempt to do so would amount to undoubted political suicide. So, they do the next best thing – keep systematically and determinedly undermining its integrity. The proposed co-payment is but the thin end of the edge, a sign of things to come, and reflects part of the unmistakable shift away from concern for the least well off.

    What Abbott and Hockey are doing is to rip the guts out of Welfare – much like David Cameron has done in the UK, with such disastrous effects on the poor and the worst off sections of British society. Hockey was to say in his Budget speech that the Budget was based on ‘values’ – code for ‘ideology’, for that is what the budget tells us. It is driven primarily by ideology and the interests of Big Business. It does not take much effort to see the fingerprint of the Business Council of Australia and the Big End of town indelibly stamped across this budget.

    SARATH is simply echoing the government line when he says it is ‘fixing the mess created by Labor Party, that’s the bitter truth’. If fixing is indeed needed the government has also to repair the damage done by Howard/Costello and the profligacy of their administrations. They were, among other things, overly generous with giving the Health Care card even to the well off, they cut the rate of the Capital Gains Tax by half and granted a whole raft of concessions in respect of superannuation contributions and pensions paid out of those funds. Those who benefited most from these measures were the rich and the well paid.

    Those who keep talking of the ills of the last Labor government also forget how it saved Australia from the adverse effects of the Global Financial Crisis. In truth, the economy is not in such bad a shape as the government wishes to make out but that assertion provides a useful preface for a mean and harsh budget.

    Among the most telling expenditure cuts are the proposals to reduce funding to the States for Education and Health. The cuts to Education funding and the proposal to allow universities to charge ‘unregulated’ fees don’t augur too well for Australians who are not too well off. They will take the country back to the ‘dark days’ of the pre-Whitlam era when a university education was the preserve of the well to do. The ones who will be most affected will be the ‘ordinary’ White Australians. (The Asian and like migrant families will of course make every sacrifice and put their children through university).

    The proposed cuts to the Education and Health Grants seem to me to be an underhand way of getting the rate of GST increased or its range of application widened. The Federal government will not want to be seen to initiate such revision. But with little other option, the States may feel that is the only way out. So, Australians had better look out. They should be prepared to soon pay a higher rate of GST or to pay it on food and other items that are currently quarantined out of its reach.

Leave A Comment

Comments should not exceed 200 words. Embedding external links and writing in capital letters are discouraged. Commenting is automatically disabled after 7 days and approval may take up to 24 hours. Please read our Comments Policy for further details. Your email address will not be published.