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Julia Gillard knifed the budget as well

By David Leyonhjelm - posted Monday, 22 June 2015

The ghost of Julia Gillard has returned to our TV screens, and her tales of past glories and dramas fill the pages of a recently released memoir. But the ghost of Julia Gillard is also haunting another set of recently released books, called the budget papers. And in these you will find some truly scary reading.

In 2012, Gillard made the politically popular decision to allow universities to offer as many government-subsidised courses as they wish. This enabled them to increase student numbers and, in turn, the number of government subsidies and concessional student loans. Gillard made no attempt to pay for this increased burden on the taxpayer. It was a matter for the years beyond the end of her budget reporting period, and after the 2013 election.

The chickens have now come home to roost, with the budget papers outlining sky-high government university subsidies and concessional loans next financial year. When Christopher Pyne's plan to reduce university subsidies per student returns to the Senate, I suggest to my crossbench colleagues that we should not see this as a disruption to a long-standing system that has stood the test of time. Instead, we should see it as fixing a system that was tinkered with only a couple of years ago and is heading for the skids.


Gillard also applied her penchant for unfunded feel-good politics to schools funding. Her Gonski reforms can be criticised for their Canberra-centric meddling, their proliferation of bureaucracy and their failure to deliver on the goal of fairness. But they can also be criticised for their astronomic impact on the budget.

The reforms they bring will increase real Commonwealth government funding per school student by 4.3 per cent each year for the next decade. Like the tertiary funding issue, Gillard transferred its funding into the never never. So when the Coalition committed to only four years of Gonski-esque funding growth, the ghost of Gillard could be heard in the moans of protest that followed.

Gillard's cash splash on matters educational also extended to toddlers. She invented a new role for the Commonwealth government by funding state government preschools. The non‑means-tested childcare rebate was increased from 30 to 50 per cent of childcare costs. And she ramped up these childcare costs by requiring childcare centres to hire only certificate, diploma and degree-qualified childcare workers to look after the kids.

Another long-term, federation-eroding and bureaucracy-inducing promise was made in relation to funding of hospitals. Gillard's desire to concentrate spending just beyond her budget reporting period is plain to see – she committed the Commonwealth government to fund 45 per cent of the growth in public hospital costs to 2017, but then ramped up this commitment to 50 per cent thereafter. The Coalition government's decision to undo this arrangement from 2017 drew predictable cries of protest. Now, its decision to merely increase hospital funding in line with CPI and population growth is being characterised as the height of austerity.

But Gillard's piece de resistance must surely be the National Disability "Insurance" Scheme – a welfare plan that adds Commonwealth public servants and red tape to existing state-based bureaucracies and expects an outcome different from the chaos we have seen from Commonwealth takeovers in health and education. Once again, Julia Gillard put the spending beyond her budget reporting period, such that the cost of NDIS implementation has only become apparent in this year's budget.

Over the next four years, Commonwealth government spending on the NDIS will exceed $21 billion. Only $2.5 billion of this will be funded by the NDIS levy, which Gillard tearfully introduced as if it were a significant step towards sustainable care for the disabled. So even with the pretence of funding her promises, she fell well short.


Like a bitter army retreating from the field of battle with no regard for the civilians left behind, Gillard buried land mines throughout the budget for future ministers and taxpayers to negotiate.

The Abbott government has a responsibility to extract the country from its budget hole. It should not make excuses and say that it is all too hard. Regrettably, that is exactly what it is now doing.

But we need to remember who got us into the budget hole in the first place. Bill Shorten's windy budget reply speech – heavy with spending on free university degrees and increased research and development – shows us how well the ghost of Julia Gillard lingers on.

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This article was first published in the Australian Financial Review.

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About the Author

David Leyonhjelm is a former Senator for the Liberal Democrats.

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