This is not the horror budget we saw last year but it’s still a bag of sugar and poison. Indeed some elements of it are the work of a government wanting to keep its options open for an early election.
Still not a fair budget
But it’s still not a fair budget. For instance the Government’s determination to cut Family Tax Benefit Part B will hammer low income families, and in particular families with stay-at-home parents unable to take advantage of the enhanced child care arrangements.
A better approach would have been to keep and enhance family payments which would give families greater options in how they manage the care of their children.
Nor is the tougher assets test fair for older Australians on a part Age Pension because, in the current uncertain economic climate, many of these people have conservative investments with modest returns so they’ll be forced to draw down their capital at an unacceptably fast rate. Apart from being unfair to the affected pensioners, the Government’s Budget change is also a disincentive to super.
A better approach would have been to address the shortfalls in the superannuation system, for example reintroducing the tax on withdrawals especially for wealthier retirees.
Another example of the unfairness of this budget is the prohibition on employees receiving both government and employer paid parental leave. This is entirely at odds with the Government’s prior encouragement of workers to negotiate additional benefits, and the fact that they are now normally enshrined in workplace agreements. For the Government to now brand such workers as fraudsters and double-dippers is appalling behaviour.
A better approach would have been to not demonise such workers in the first place. Remember their workplace entitlements comprise a package and which, in aggregate, had been deemed to be fair reward for their labours.
The unfairness of the Budget is as much in what’s missing as what’s included. For instance before the Budget the Australian Council of Social Service identified about $6bn in critical additional expenditure being urgently needed, but yet virtually none of it has in fact been picked up by the Government. For example there is a pressing need for government pensions and payments to be increased, especially for youth, the unemployed and aged; for the supply of affordable housing to be increased; and for last year’s cuts to social services to have all been restored.
Also missing from the Budget was any attempt to restore overseas development aid to a reasonable level, and eventually achieve Prime Minister John Howard’s pledge of aid reaching 0.7 per cent of gross national income. This is a moral imperative for Australia in addition to all the ways a stable and prosperous region is in our security and economic best interests.
Nor is it a sensible budget
Nor is it a sensible budget because the problem is one of revenue, rather than spending, but yet it almost completely fails to address this. Yes it raises some money from reforms to foreign investment. But it ignores any of the big potential revenue measures like removing superannuation tax concessions for wealthy people and introducing a super profits tax, for instance on the banks. The Australia Institute has done some good work on how revenue might be bolstered significantly in a fair way but it was completely ignored by the Government.
Little joy for Tasmania
Tasmanians are inevitably hit hard by unfair budgets because of our isolation, soft economy and relatively large number of disadvantaged people. Every budget shortfall that hurts mainlanders will hit Tasmanians even harder. For instance any cut to the Pharmaceutical Benefits Scheme will be very difficult for Tasmanians. And the Federal Government’s continuing intention to cut $80bn from health and education funding for the states over 10 years will cost Tasmania about $2bn.
The Budget does include $202.9m for extending the Bass Strait Freight Equalisation Scheme to international outbound freight. But the extra money doesn’t start flowing until next year, and there is no sign of an effective subsidy scheme being expanded to all inbound and outbound people, vehicles and freight. The cost of Bass Strait remains the biggest brake on the Tasmanian economy and this budget is another missed opportunity to fix it.
The Budget does include a Commonwealth contribution of $60m towards the $120m rail revitalisation project. But this is half of what was originally promised because the State Government has halved the scope of the project – it was originally $240m – to save itself money even though this has effectively cost Tasmania $60m in federal funding.
The Budget does say that the $16m Cadbury money will still be spent in Tasmania. But it makes no mention of it being spent in Glenorchy where the need for such economic stimulus was identified.
Nor is there mention in the Budget of the $400m needed by the University of Tasmania for deep restructuring. This is a dreadful omission by the Federal Government which fails to understand how this project could help turn around the Tasmanian economy and greatly bolster the community, especially in disadvantaged areas.
UTas also remains at serious risk from the Federal Government’s continuing intention to deregulate tertiary education. This will increase the cost of fees for students and that will hit disadvantaged students especially hard. And it will call into question the viability of the Burnie and Launceston campuses which are currently cross-subsidised by the Hobart campus. UTas and many other universities will also have to weather the substantial cut to the Sustainable Research Excellence grant program.
Funding for CSIRO and AAD seems to be holding up. But this is disappointing because both organisations have suffered significant shortfalls and cuts, under this and the previous federal government, and are in desperate need of much greater funding.
A problem remains with federal funding for public dental services in Tasmania. Money for adult services has been extended by 12 months, but it is only 12 months which means continuing uncertainty, while money for child services will reduce over time due to a change to its indexation.
On a positive note the federal funding for the Hobart Airport runway extension is in the Budget.
Nor does a first analysis of the Budget show an adverse outcome for medical research and the Menzies Institute for Medical Research in particular, nor call into question the final $70m contribution towards the rebuild of the Royal Hobart Hospital.
Andrew Wilkie, Independent Member for Denison
