Budgets are about choices and the Commonwealth budget delivered last night reflects an economic and social strategy driven purely by ideology – the bucket list of a Young Liberal.
Aptly labeled ‘Black Tuesday’ by my Federal colleague Gai Brodtmann, the budget will cause one of the biggest economic shocks in Canberra’s history – with little additional support to offset the hard cuts to the public service, education and health. The so-called infrastructure budget’ delivers no infrastructure to the ACT. In fact, the number one infrastructure project our business community supports – the Australia Forum- was specifically knocked back by the Prime Minister. And the Canberra Liberals have the cheek to blame the ACT Government and business community.
The number of public service jobs that will go as a result of this budget is greater than the Liberal Governments previous commitment. The impacts will extend much wider than just to public servants; this will hurt retail workers, tradies, construction workers and small businesses.
The retraction of the Commonwealth Public Service will have a larger and more immediate impact than the automotive industry shutdowns in Victoria and South Australia, or the BHP closure in Newcastle, and without the transitional support that was offered to those states. Schools, hospitals and health services also bear the brunt of budget cuts, with a number of National Partnerships being cut and slower growth of spending in the longer term.
On top of this, Canberrans will also be slapped with higher fuel prices and a sick tax when seeing a GP, forcing more people into our Emergency Departments where the Commonwealth wants State Governments to tax them further.
These cuts are being done in the name of a budget emergency, although it’s not clear that we are in an emergency or mess of debt and deficit. Australia has a stable AAA credit rating. With an underlying cash deficit at 3 per cent of GDP (and falling) the big budget scare is without any basis in fact. There are longer-term structural challenges that need to be addressed but it seems sensationalist to call the current state of the Budget a crisis.
Everyone will not be sharing the pain of this budget. The Liberals have already handed back over $3bn of Labor’s structural savings to high-income earners and corporations. The high income earners debt levy is temporary while the cuts faced by pensioners, families, those with a disability and in need of health services, workers, innovative businesses, schools, universities and cultural institutions are permanent.
The Budget is hitting the most vulnerable and it isn’t preparing us for the future.
The cuts will not support economic growth. The OECD warned that “heavy front loading of fiscal consolidation should be avoided”. The economy is transitioning out of the largest ever resources boom and the Commonwealth Budget plays a key role in managing this transition. Cuts to research, services and local innovation will not encourage sustainable long-term growth. A medical research fund linked to GP co-payments is a form of budget bribery that is rather breath-taking. Cuts to education and higher ed are short sited and will hurt our nations future economic growth.
The Budget bottom line does not mysteriously improve because of policy decisions alone. In addition to policy decisions, the Budget is also influenced by the economic parameter assumptions and forecasts. And what about tax reform? Rather than encouraging jurisdictions to do the hard work of tax reform – as we have done locally – he is goading the states to beg for GST changes. Closer to the 2016 election, look for Treasurer Hockey to announce a small uplift in Treasury forecasts and estimates for GDP, employment and inflation in the coming years to magically improve the Budget bottom line .