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An unbalanced budget

By Bruce Haigh - posted Tuesday, 12 May 2015


The Liberal Party has always claimed superior skill in managing budgets to the Labor Party. The last Coalition budget put paid to that myth. In monetary terms it was a shocker. It relinquished revenue for ideological gain but in the process promised voters future pain. The government lost significant sections of the electorate which they need if they were to get re-elected. Retaining the carbon and mining taxes would have materially assisted the bottom line in the current financial climate.

Proposals to raise university fees and charge for Medicare were equally wrongheaded. Cutting spending on scientific research, mental health, the proposed but subsequently aborted Abbott Paid Parental Leave scheme, the now ditched medical research fund were all indicators of a government that had little idea on what it wanted to achieve, other than to 'expose' the Labor Party's perceived shortcomings.

Opposition to the mean spirited and negative budget was widespread. The fact that the government was surprised at the reaction showed how out of touch it was with mainstream Australia. The fundamental fact of the election had not sunk in, Labor was voted out, the Liberal National Party was not voted in.

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Spooked at the negative reaction and concerned for their prospects at the next election the Coalition are indicating a budget to please all on 12 May. It will not, primarily because the government does not have the wisdom or guts to place the nation above their own petty agenda. This is a narcissistic government (and opposition) bent on spinning a line in order to gain time, rather than mapping an agenda and developing an honest dialogue to take the Australian people with them. The people will accept short term pain if they see long term gain, such as borrowing for wealth creating infrastructure, education and health care.

Creative and lateral thinking, nurturing resources and a positive vision for the future are swamped by the negativity and fear generated by the government's deliberate over reaction to the threat of terror. In the short term it is a vote winner, in the long term much of it is money misdirected or not well spent. Fear of the future is a commodity peddled by both sides of parliament and finds expression in disproportionate defence and security agency spending, including on hosting US defence facilities in Australia.

Given the need to stimulate the economy, cuts to defence and immigration spending should be a first priority. Stopping the boats is a mantra as hollow and as unattainable as balancing the budget. For how long can the boats be stopped? It would be much better and cheaper by a long shot to process the poor souls, who in any case have shown they make good citizens. They represent a far better economic and social investment than 417 visa holders who, unlike resettled refugees, take home whatever skills they have gained in Australia.

The last budget was slated to deliver lower debt. It did not, primarily due to the confusion and indecision of the government on where it wanted to go, evidenced by the general opposition of the cross benches and the public to many of the government's 'policy' proposals.

The forthcoming budget is said to be a 'dull budget' and with Hockey as Treasurer that prediction is likely to be fulfilled. The budget will be framed with an eye on the next election. It is unlikely to contain measures necessary to stimulate growth.

Seeking the Holy Grail of a balanced budget will ensure Australia continues the drift toward recession. Although not serious the forthcoming budget is predicted to have a further debt of $14 billion over the forecast figure of $31 billion. By hitching their political and economic credibility to reducing debt the government appears to has failed one of its core election promises. It would be better if it could show that it has delivered on health and education, but it can't.

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For the first eighteen months of his Prime Ministership Abbott spoke of a budget crisis, when polling showed this to be a negative and research showed it to be untrue, Abbott declared the crisis over - the very best of Monty Python. There is no budget crisis, compared to other OECD countries Australia is doing alright – for the moment, but it needs to spend on stimulating future growth, jobs and the means of production and that means in research and infrastructure for the agricultural and manufacturing sectors.

Leaks from the unleakable government, inform us that childcare relief for 'working parents' (?) is likely together with tax cuts for small business. What is small business? Some might argue that all business paying tax in Australia is small, the rest avoid their tax by sitting offshore. They are big business, the unethical and voracious side of the capitalist equation that the Abbott government encourages and supports. They are the mining and energy companies which small business often has to fight in order to survive, particularly if they are farmers or country town traders.

'Dull budget' is code for tinkering at the edges of required social and economic stimulation and change. This will be a budget devoid of courage and vision, this will be a budget to serve the interests of the governing Coalition in seeking re-election; it will not serve the interests of the people of Australia; it will rather aim to spin and deceive. Don't be fooled don't succumb, serve it back to them, they are after all using our tax dollars to achieve their political goals.

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About the Author

Bruce Haigh is a political commentator and retired diplomat who served in Pakistan and Afghanistan in 1972-73 and 1986-88, and in South Africa from 1976-1979

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