Junk Explained: What We Think About The 2014 Federal Budget
If you're a ballerina or a school chaplain, you're in luck. Too bad, everyone else.
It says something about the cartoonish brutality of the 2014 Federal Budget that it was still an ambush… even after the tough talk, the Commission of Audit, and the general air of pantomime villainy exuded by Tony Abbott and Joe ‘Fat Cat’ Hockey.
The long explanation follows below, but here’s the quick version:
- Most budget-related election promises (no change to pensions, and no cuts to education, health, the ABC or SBS) have been broken.
- All supposedly necessary funding cuts and tax increases (increased fuel excise; the delightfully euphemistic ‘deficit levy’) have in fact offset wholly discretionary funding increases and tax cuts elsewhere (increased defence expenditure, company tax reduction).
- Less expenditure on welfare, healthcare, education, the arts, and foreign aid — aka, the ‘pinko portfolios’.
- More expenditure on defence, and the newly-created Australian Border Force — aka, the ‘blokefolios’.
- It’s a shit time to be old, young, sick, unemployed, or in any way vulnerable.
- It’s a good time to be a ballerina or a school chaplain.
A political philosophy, of sorts
The Abbott government’s policy decisions thus far have largely been motivated by cynical fear-mongering and spasmodic outbreaks of populism. Somewhere underneath all that, though — cleverly obscured by buzzwords, shouting, and obfuscation — has lain dormant a fairly orthodox conservative political philosophy: small government, privatisation, free enterprise, lassez-faire capitalism, and a belief that absolutely everything improves when you introduce a profit motive. In other words, the whole Rumsfeld-ian enchilada.
The problem is that this is Australia, and through our oscillations from left to right, we have never gotten anywhere near the Ayn Randian fantasia advocated by leading US neocons like Donald Rumsfeld, Mitt Romney, Wolf Blitzer… Wolf Blitzer… Wolf… Blitzer… Sorry, where was I?
My point is that the radical reconfiguration of the role of government that the Coalition clearly craves is pretty hard to justify amidst the sort of economic stability that Australia has enjoyed under both Labor and Liberal governments over the last twenty years. As most of the developed world recovers from the Eurozone crisis, we enjoy a relatively low unemployment rate of 5.8%, sustainable GDP growth of 2.8%, and a net debt that sits at 10% of GDP. By way of contrast, the US unemployment rate sits at 6.3%, GDP growth stalled at 0.1% in the first quarter of 2014 (though it sits at an annual rate of 2.3%), and net debt is a touch over 100% of GDP. This stability has been maintained through numerous financial crises and without any significant damage to the social safety net — the minimum wage, universal health care — that has protected us from extreme, US-style social inequity.
The LNP really want to do it anyway, though. This is why, in keeping with their overarching strategy, they have just blamed everything on Labor: in this case, concocting a budgetary emergency and blaming it on the wild, gluttonous, spendthrift ways of the bleeding heart set. This emergency is now being used as justification for a raft of radical, largely unnecessary, wholly discretionary changes that have set fire to large sections of that safety net.
This is all in line with the coalition’s naughty fetish for a bit of hot, spicy neocon roleplay, and the seemingly sincere belief that the value of public expenditure can be carefully quantified. What’s really interesting, though, is the amount of different ways in which the budget contradicts that brave rhetoric. As Ben Eltham has observed, Joe Hockey will spend $415 billion in the 2014 Budget — which is precisely the figure that former treasurer Wayne Swan had projected at this time last year. As for revenue, Hockey’s budget will bring in $391 billion, down on Swan’s estimate of $411 billion. The only difference is in the identity of the winners and losers.
The big news in the welfare component of the budget regarded ‘Newstart’ (aka, the dole). Anyone under 25 is no longer eligible. Any unemployed person under 30 who applies for Newstart will have a mandatory six-month wait before they can start receiving benefits. Better still, they will only be eligible for Newstart for six months, after which time they will once again be cut off for six months. That means that if you survive the first six months, you get to spend the next six months BELOW THE FUCKING POVERTY LINE, and then the next six months homeless, and then you’ll probably never be heard from again, which is obviously preferable to being a scrounger (no one likes a scrounger).
This plays into the ‘If you can’t get a job, then you’re not trying hard enough’ attitude so beloved of those who have never known hardship or existential uncertainty. Also, I can’t help but wonder whether the secondary cost of condemning tens of thousands of young people to such a precarious existence would outweigh the immediate savings — but my abacus can’t process such abstract notions, so never mind, I guess.
The good news is that the money that will be saved by cutting off all those Gen Y scroungers will go into paying $10,000 to any business that hires an over-50 Newstart recipient. This is great, but it’s also clearly a calculated attempt to offset the political damage from the raising of the pension age to 70. Oh, did I mention that the pension age is now 70, starting from 2030? Yeah, that’s happening.
Because Joe Hockey hates 20-somethings, he has also cut university funding by roughly 20% (indexed against projected GDP growth).
To assist universities in clawing back this funding shortfall, Hockey has generously allowed them to set their own tuition fees. The intention here is to create a more competitive sector, and it may well have that effect, but probably only in terms of — yep, you guessed it — employment outcome-oriented faculties such as commerce, law and engineering.
Students engaged in the HELP scheme will also have to pay a higher percentage of their tuition costs (up to 55% from 40%), and at a higher rate of interest.
Perhaps the most audacious move was Hockey’s tentative first step towards the dismantling of Australia’s universal healthcare system, with a mandatory $7 Medicare co-contribution for all appointments.
In another one of those clever pre-emptive swerves of his, though, Hockey explained that $5 of that $7 charge was to go towards a $20 billion ‘Medical Research Future Fund’. Again, it’s not really government revenue, because you’re buying ‘future health’ from the Medical Research Future Fund. Everyone just chill the fuck out, okay?
In all seriousness, the funding of medical research is terrific, but again, it puts a disproportionate burden on the sick and the poor, who are very often one and the same. The benefits are also largely offset by massive cuts to funding for hospitals (and schools), and the unpredictable knock-on effects of discouraging people from visiting their GP on a precautionary basis. These may yet be addressed by a mooted plan to empower the states to determine their own health expenditure, but as it stands it’s mostly pain and diffuse gain.
Really? Must we? Okay, well, the ‘Prime Minister for Indigenous Affairs’ (his words) has just announced that funding for Indigenous programs will be cut by $500 million over four years, and over 150 programs will be consolidated into just five programs. Indigenous legal aid funding will be cut by $15 million over four years. Also, the new pension age of 70 actually exceeds the average life expectancy of Indigenous males.
To be precise: foreign aid will be significantly reduced, and the ABC’s soft diplomacy initiative, The Australia Network, will be scrapped altogether. Given Abbott’s pledge to leave ABC funding alone, this may equate to a broken promise. Foreigners are mostly just scroungers though, so I’m fine with it.
Here’s the bit where the whole ‘less taxes’ mantra falls apart completely, with a fuel excise increase that will equate to 4 cents per litre for consumers.
It’s not a major increase, but as with all flat consumption taxes, it is regressive in that it taxes lower income earners at a proportionately higher rate than higher income earners. When combined with a reduction in the family tax benefit period to six years, designed to get mothers back into the workforce as soon as their child reaches school age, it makes the 2014 budget a bit of a shit sandwich for families, and a politically audacious one for Abbott and Hockey.
For what it’s worth, these hardships will be balanced out by the deficit levy, which will only affect those earning over $180,000 a year.
The public sector
Abbott did promise to cut red tape, and now we’ll find out if they bleed: 16,500 red tapes are set to lose their jobs in the public sector as part of a massive reduction in the number and scope of government departments. Hopefully most of those red tapes are over 30.
Arts funding will be reduced by $87 million over four years. I’d love to give you the specifics, but I’m too bummed out right now.
Okay, fine. Screen Australia’s funding will be cut by $25 million over four years, with a further $10 million being clawed back with the dissolution of the Australian Interactive Games Fund.
Happily, Hockey resisted the temptation to wipe out community radio, as had been proposed. Instead, the approximately 360 community stations currently being funded will continue to receive federal support.
Remember the budget emergency? Well, it’s apparently pretty serious — but not as serious as defence, which will receive a large proportion of the money that that the more credulous among us assumed was earmarked for said deficit reduction. Put simply, we’re still getting our awesome, flawed, over-budget, overdue fighter jets. What’s more, we’re going to slowly grow defence expenditure until it’s 2% of GDP (it’s currently at approximately 1.7%).
We’re also getting a new Border Force, which will be an amalgamation of the customs and immigration departments.
Transport and infrastructure
No surprises here. As pledged, the Coalition has prioritised road projects, and Melbourne’s East-West Tunnel, Sydney’s WestConnex project, and Queensland’s Toowoomba Second Range Crossing will be underway before too long. Still, the wonderful Katherine Murphy estimates the Coalition’s actual commitment in terms of new infrastructure funding at approximately $5 billion, which is well short of the $40 billion figure that had been proudly and disingenuously trumpeted.
No hoverboards, either.
No, seriously. Rather than clawing back the deficit created by those kamikaze Labor zealots, the tax revenue reaped from the deficit levy and the increased fuel excise will go straight into covering the cost of a 1.5% reduction in the company tax. No, seriously!
Like the infrastructure largesse, the company tax cuts are designed to create jobs and stimulate growth as the mining boom slows, but it’s still a shitty look.
In a dire arts funding landscape, the Australian Ballet School have bucked the trend, receiving $1 million to fund the construction of a boarding house at their Melbourne campus. Similarly, while the Federal Government has washed its hands of responsibility for education funding, Abbott has somehow managed to locate a spare $243 million to fund his school chaplains program over the next four years. Just a reminder that Indigenous services funding will be cut by $500 million.
If the 2014 Federal Budget seems like a vengeful, cowardly attack on the most vulnerable (read: least productive) members of society, try to remember that there was a budget emergency and that it was all Labor’s fault. Then think of the fighter jets. And the company tax reduction. Then think of any tradie that you know, and picture them working at age 69.
Then consider emigrating.
Edward Sharp-Paul is a writer from Melbourne. His words can be found at FasterLouder, Mess+Noise, Beat and The Brag, or on Twitter at @e_sharppaul.