Looking like a man in too great of a hurry: Treasurer Joe Hockey’s budget may fall short on fairness. Photo: Andrew MearesRarely has a federal Treasurer laid out so quickly and clearly such stark reforms to the Australian way of life. Rarely have voters been left wondering about the justification and asking, ”Why the rush?”
Dozens of changes to benefits, handouts and programs have been outlined, along with new taxes, curbs to health and savings on higher education.
There have been myriad broken promises. And many surprises.
Joe Hockey’s first budget speech builds a narrative of short-term pain for long-term gain; not by tightening the economy to the extent that a slowdown is imminent, but by drawing on a highly developed ideological framework.
This new user pays world fits snugly with what Mr Hockey admitted was the goal of ”reducing the government’s share of the economy over time”.
”The age of entitlement is over,” Mr Hockey declared in his budget speech, recycling a treatise he delivered in 2012 in London but conveniently omitted to stress during the 2013 election campaign. True, the Coalition in opposition promised to fix the budget, albeit not to raise taxes, or make excuses.
As a result many voters, and the Herald, backed Tony Abbott and Mr Hockey as best placed to embark on much-needed economic and budgetary reforms to end years of Labor dysfunction.
Eight months on and no one can accuse them of not having a red hot go at changing the nation.
The public can, however, ask whether the government’s zeal for shifting the burden of economic change risks jeopardising the sort of national unity needed if Australia is to accept many of the necessary reforms in this budget.
The Treasurer is looking like a man in too great a hurry.
No doubt he is gambling that an unviable opposition under Bill Shorten will pose little obstacle. Mr Hockey will have his fingers crossed that consumer confidence holds up, infrastructure jobs grow and the economy outperforms his relatively pessimistic assumptions. That way, voters who have been hit in the hip pocket through family payment cuts will forget any taint of unfairness in this budget by the time they enter the polling booths in 2016.
True, many of the most severe cuts affecting the middle class – as opposed to the easy targets of jobless youth – kick in after the next election or will be temporary.
But the so-called economic growth dividend from reform will need to come quickly to offset the unsettling 16,500-plus public service job cuts and the uneasy sense that it has suddenly become more comfortable to be a wealthy Australian than someone who needs a helping hand.
Mr Hockey’s narrative tries to keep voters engaged through a series of give-and-take deals. He pledges to recycle health savings and most funds from the new $7 co-payment for doctor visits into a $20 billion health fund. Government assets will be sold and recycled into new job-boosting infrastructure. A hike in fuel tax will be funnelled into road upgrades.
A welfare crackdown will be recycled into a better work culture and a more sustainable safety net for the vulnerable. Capped university fees will be recycled into a fee free-for-all, but with 20 per cent converting to scholarships for the poor.
Labor’s age of entitlement will be recycled into what Mr Hockey calls an ”age of opportunity” under the Coalition. But it all depends on voters replacing their ”age of self interest with national interest”.
”Doing nothing is not an option,” he says – to which some voters may ask, ”But why do so much?”
”Repairing the budget is necessary to protect living standards and prepare for an ageing population,” he says – to which some might ask, ”Explain why this can’t be staged more slowly and why you didn’t tell us at the election?”
”It will allow us to respond to future unexpected events” – to which some will say, ”But our debt position is still the envy of the world”.
To make room for future tax relief and pay it forward – to which many will say, ”At whose cost?”
Many of the easiest ways to reduce budget spending by means testing upper-class welfare or reducing tax breaks for the wealthy on superannuation, capital gains and negative gearing are conspicuously absent from the budget. What’s more, voters must be confused about the need to act so strongly now.
Although the Coalition told Australians before the election the economy was dire, it is now showing signs of recovery. While the prices for our exports remain subdued and may fall further, interest rates remain low, lifting household spending.
Even Mr Hockey says, ”Now is not the time to talk our country down but to talk the facts” – to which many angry at broken promises and policy surprises will respond, ”We aren’t sure we can trust you to tell us.”
Such a potential disconnect between a new government and those who elected it is distressing given the positive aspects of this budget. With more explanation and less aggression, Mr Hockey could have made a strong case for medium-term adjustments to government programs with the burden shared by all.
As it stands, the danger is the necessary pain in Mr Hockey’s plan will become embroiled in the politics of backlash.
The Herald believes Australians do need to realise that the return to budget surplus is a valid goal.
That super tax breaks and other lucrative perks created long-term structural flaws in the budget just as governments should have been banking the proceeds.
That privatisation of some assets is a useful way of freeing up funds for roads.
That indexation of fuel excise does need to be reintroduced especially as the government shrinks the tax base.
That pension assets and income tests do need to be toughened over time in concert with the rise in the retirement age.
But the Herald also believes increased equality of opportunity for education is an investment not a cost and that early intervention will save money on health.
What’s more, a temporary tax on those earning over $180,000 is a poor replacement for removing structural programs that support those who need them least.
Granted, Mr Hockey had to make tough decisions. But if the Treasurer had said no to more Australians who could afford to hear the bad news this would be a better and fairer budget – and it would have a greater chance of gaining acceptance among a rightfully cynical public.
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