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Hockey’s budget: the bucket list of a Young Liberal

By 14 May 2014 53

andrew-barr

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 .

Andrew Barr MLA
Treasurer

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53 Responses to
Hockey’s budget: the bucket list of a Young Liberal
dungfungus 5:36 pm
16 May 14
#31

damien haas said :

Swan promised us at least four surpluses, Hockey hasn’t even promised one. Clearly this makes Swan the better treasurer.

Oh, what wit.
The problem is that a lot of people (including Swan) would agree with you.

Masquara 8:40 pm
16 May 14
#32

Andrew Barr said :

It is a broken promise. I doubt many people who voted Liberal last year were expecting to get an increased fuel levy. It is a curious budget measure given their desire to abolish carbon pricing. I suspect it will pass the Senate though – the carbon tax you have when you’re not having a carbon tax.

You haven’t said what your own position is. Why don’t you ‘fess up like Andrew Leigh? The fuel levy should never have been kyboshed.

JC 11:37 pm
16 May 14
#33

neanderthalsis said :

JC said :

farout said :

JC said :

milkman said :

Absolutely. My neighbour owes $70k on his credit card, but I only owe $10k. Because I comparatively owe less I should keep on putting those dinners out, nice clothes and holidays on my credit card, even though I don’t earn enough to pay for it all.

Nope think you have your analogy wrong. Using yours as a basis it is like saying you should cut all spending so that you can pay off your $10K debt sooner, even though you can afford a $10k debit. As opposed to doing the sensible thing which is to pay down your debt down in a controlled and sensible matter.

Besides not sure if you noticed my post but the government is maintaining the status quo in relation to overall spending. All they have done is redistribute the spending down ideological lines and changed the income stream to ensure that those that can least afford it will be the ones paying.

I thought the analogy was spot on. The budget is not ‘cutting all spending to pay off debt sooner’, because as you yourself pointed out the overall spending remains at status quo. Given the debt and the projected increase in medicare and pension payments into the future, the budget appears to be doing what you suggest – “the sensible thing which is to pay down your debt down in a controlled and sensible manner.”

Still don’t see how the analogy is spot on. You said something about because your debt is low and someone else high that you can spend up big. Don’t understand that in the context.

As for the nation I guess your right the budget may well allow the debt to be repaid` in a controlled manner over time, but as overall spending is remaining constant why the need for all the ‘pain’.

The answer is of course simple, the budget is about a redistribution of government spending and income streams along ideological lines, but with the government blaming the previous government to pay down this evil debt the severity of which is in the imagination of the government.

But the figures don’t lie at the end of he day. Spending remains the same, income is lower, cuts everywhere for what? Ideology.

The analogy is fairly close, but needs to add in that the repayments on the credit card, the mortgage, the new car, the phone bill, the electricity and the weekly grocery bill all add up to more than the weekly wage, i.e. we have a structural deficit. So to fix it you need to earn more, spend less or do a bit of both.

And the Hockey budget is doing neither. He is spending the same, earning less, all the while pretending to fix the budget emergency (which is in their imagination but that then allows them to claim they have fixed it later) and shifting the cost and pain to those that can least afford it plus of course the states to encourage them to ask for a GST rise. This in turn will then mean those that spend most of their income on essentials (again the lower income earners) will be paying proportionally more of their income on GST compared to the wealthier who don’t spend as much as a percentage of income on purchases.

So as I said the budget is ALL about ideological redistribution rather than actually trying to achieve anything.

Masquara 8:07 am
17 May 14
#34

Andrew, do you agree with Katie Gallagher’s call this morning for a “fresh discussion” on the GST? Katie Gallagher has joined the call for GST “reform” – somehow managing to say that she is calling for neither an increase in the GST rate nor a broadening of the base. If neither an increase nor a broadening is on the table as far as the ACT Government is concerned, what sort of discussion would you and Katie have in mind? What possibilities besides an increase are there?

davo101 9:30 am
17 May 14
#35

Masquara said :

What possibilities besides an increase are there?

Distribution.

Andrew Barr 2:26 pm
17 May 14
#36

Masquara – we (all States & Territories) are currently working with the Federal Government on reducing GST thresholds for online shopping. This would broaden the base of the GST somewhat but also level the playing field for local retailers.

There has also been discussion of a switch in taxation arrangements between the States and the Commonwealth whereby the States resume income taxing powers, “temporarily” handed over during WW2, and in return the Commonwealth takes back the revenue from the GST.

Australia is the only federation in the world where the states do not levy an income tax. Under the Constitution the states have income taxation power jointly with the commonwealth.

These, and other issues, will undoubtedly be canvassed during the forthcoming White Papers on the federation and tax reform.

Masquara 3:11 pm
17 May 14
#37

Andrew Barr said :

Masquara – we (all States & Territories) are currently working with the Federal Government on reducing GST thresholds for online shopping. This would broaden the base of the GST somewhat but also level the playing field for local retailers.

There has also been discussion of a switch in taxation arrangements between the States and the Commonwealth whereby the States resume income taxing powers, “temporarily” handed over during WW2, and in return the Commonwealth takes back the revenue from the GST.

Australia is the only federation in the world where the states do not levy an income tax. Under the Constitution the states have income taxation power jointly with the commonwealth.

These, and other issues, will undoubtedly be canvassed during the forthcoming White Papers on the federation and tax reform.

Good to know that Katie Gallagher is not supporting an increase in the GST rate or a broadening to education and more food products. She wasn’t clear about that this morning …

Masquara 7:40 am
20 May 14
#38

Andrew Barr said :

Masquara – we (all States & Territories) are currently working with the Federal Government on reducing GST thresholds for online shopping. This would broaden the base of the GST somewhat but also level the playing field for local retailers.

There has also been discussion of a switch in taxation arrangements between the States and the Commonwealth whereby the States resume income taxing powers, “temporarily” handed over during WW2, and in return the Commonwealth takes back the revenue from the GST.

Australia is the only federation in the world where the states do not levy an income tax. Under the Constitution the states have income taxation power jointly with the commonwealth.

These, and other issues, will undoubtedly be canvassed during the forthcoming White Papers on the federation and tax reform.

Katie Gallagher back on radio this morning – absolutely she is including an increase in the GST rate among the possibilities she would endorse. Easy to just raise taxes rather than run an efficient government!

VYBerlinaV8_is_back 8:42 am
20 May 14
#39

Masquara said :

Andrew Barr said :

Masquara – we (all States & Territories) are currently working with the Federal Government on reducing GST thresholds for online shopping. This would broaden the base of the GST somewhat but also level the playing field for local retailers.

There has also been discussion of a switch in taxation arrangements between the States and the Commonwealth whereby the States resume income taxing powers, “temporarily” handed over during WW2, and in return the Commonwealth takes back the revenue from the GST.

Australia is the only federation in the world where the states do not levy an income tax. Under the Constitution the states have income taxation power jointly with the commonwealth.

These, and other issues, will undoubtedly be canvassed during the forthcoming White Papers on the federation and tax reform.

Katie Gallagher back on radio this morning – absolutely she is including an increase in the GST rate among the possibilities she would endorse. Easy to just raise taxes rather than run an efficient government!

When the GST was introduced it was done so on the basis that it could only be changed if all the states agreed. If you were a state premier (or chief minister), why would you not support such a change? It makes your budget better, and you can blame everyone else for putting you in that position.

Despite being associated with Labor, Katy actually seems reasonably sensible. Her colleagues, not so much…

davo101 9:30 am
20 May 14
#40

Andrew Barr said :

Australia is the only federation in the world where the states do not levy an income tax.

Well, except for Mexico, Germany, Russia, and Malaysia (and Indian states can only tax agricultural incomes) that is*.

*Probably more but I can’t be bothered looking them up.

bikhet 10:54 am
20 May 14
#41

davo101 said :

Masquara said :

What possibilities besides an increase are there?

Distribution.

Decrease?

Andrew Barr said :

There has also been discussion of a switch in taxation arrangements between the States and the Commonwealth whereby the States resume income taxing powers, “temporarily” handed over during WW2, and in return the Commonwealth takes back the revenue from the GST.

Oh goody. The States and Territories will then be able to engage in tax arbitrage and the ACT will quickly empty of taxpayers if the current level of government charges and expenditures are anything to go by. Why not propose different GST rates as well? After all, the various States in the U.S. have differing sales tax rates. Then the ACT will empty even faster.

dungfungus 11:00 am
20 May 14
#42

davo101 said :

Andrew Barr said :

Australia is the only federation in the world where the states do not levy an income tax.

Well, except for Mexico, Germany, Russia, and Malaysia (and Indian states can only tax agricultural incomes) that is*.

*Probably more but I can’t be bothered looking them up.

Source?

davo101 11:25 am
20 May 14
#43

dungfungus said :

Source?

Curiosity, an ability to read, and a memory.

dungfungus 1:29 pm
20 May 14
#44

davo101 said :

dungfungus said :

Source?

Curiosity, an ability to read, and a memory.

Actually, it was meant to be a joke. We haven’t heard from the comical gamer nerd for a while and I was channeling him for a moment. I wouldn’t challenge anything you contributed from any other source.

dungfungus 3:26 pm
20 May 14
#45

To all of you that continue to warn that there is no budget crisis and everything is rosy in the garden, you were warned; and remember interest rates are still at “emergency” (Wayne Swan’s words) record low rates.

https://au.finance.yahoo.com/news/warning-australias-credit-rating-risk-214711951.html

Andrew Barr 7:17 pm
20 May 14
#46

Standard and Poor’s says Australian rating safe

Agency contradicts Tony Abbott and Joe Hockey’s claims that blocking budget in the Senate could lead to a rating downgrade.

http://www.theguardian.com/world/2014/may/20/standard-poors-aaa-rating-not-at-risk

chewy14 8:53 pm
20 May 14
#47

Andrew Barr said :

Standard and Poor’s says Australian rating safe

Agency contradicts Tony Abbott and Joe Hockey’s claims that blocking budget in the Senate could lead to a rating downgrade.

http://www.theguardian.com/world/2014/may/20/standard-poors-aaa-rating-not-at-risk

The important part of that article is:

“But an S&P spokesman said its long-term view was that Australia had a “stable outlook”, meaning there is less than 33% chance that the country’s coveted AAA-rating will be downgraded in the next two years.”

The next two years.

Hockey and Abbott are playing silly political games with the AAA rating over Labor potentially blocking budget measures but our budget problems aren’t in the short term, they’re in 5,10,20 years if we don’t address the structural problems now or in the next few years.

We need to cut expenditure growth in the medium to long term and raise more revenue at the same time. Unfortunately Federal Labor has taken the leaf out of Abbott’s playbook and are far more interested in being obstructionist rather than detailing solutions to this.

Oh for some decent politicians and a voting populace that would be mature enough to accept that the gravy train is heading for a massive derailment unless we address these intergenerational issues.

magiccar9 6:16 am
21 May 14
#48

Goodness, are we still debating this?

Andrew Barr is going to continue to sledge the budget, cover for this local government’s poor spending habits, and use his precious (tax payer funded) work time to check back on the site to see if someone has challenged one of his comments.

No matter what is said here, at a uni protest, or anywhere else, we can’t change the decisions the feds have made. We just need to show some resilience, knuckle down, and stop banging the “it’s not fair” drum.

milkman 6:35 am
21 May 14
#49

chewy14 said :

Oh for some decent politicians and a voting populace that would be mature enough to accept that the gravy train is heading for a massive derailment unless we address these intergenerational issues.

Sadly it seems like too much to ask.

“Waaaaaaaah, the government is taking some of my free money away”

dungfungus 7:26 am
21 May 14
#50

milkman said :

chewy14 said :

Oh for some decent politicians and a voting populace that would be mature enough to accept that the gravy train is heading for a massive derailment unless we address these intergenerational issues.

Sadly it seems like too much to ask.

“Waaaaaaaah, the government is taking some of my free money away”

On the subject of money, the $80 billion that the states and territories claim has been withdrawn never existed. It was an unfunded pledge given by Labor immediately before last year’s election and it was planned to commence in 5 years (outside the then current 4 year budget cycle) so it didn’t have to be explained where the money would come from.
Abbott and Hockey are not magicians. At the same time they are not very good communicators.
The best outcome to the political impasse that is crystallising would be for Abbott to call an election which Labor would win. Labor could then re-instate all the imaginery unfunded budget cuts and bloated entitlements, borrow more AAA rated money, give the media back the 24 hour news cycle, open the borders to anyone who wants to come here and everyone left staying in Australia would be happy.
New Zealand suudenly is looking like a very attractive place to live.

Tetranitrate 6:41 pm
21 May 14
#51

chewy14 said :

Oh for some decent politicians and a voting populace that would be mature enough to accept that the gravy train is heading for a massive derailment unless we address these intergenerational issues.

Good thing they’re dealing with the looming explosion of aged pension costs by including the family home in means-testing so property millionaires need to draw on their equity before coming to the government cap in hand, just as the commission of audit recommended….oh wait, no they aren’t, they’re ripping away the social safety-net from GenY instead.

The 6 month rubbish wasn’t even recommend the commission of audit – it recommended forcing young people to move to areas of higher employment to continue receiving payments which at least makes some amount of sense and works toward solving aspects of structural unemployment. This, on the other hand is a nasty, thuggish, discriminatory policy that North Shore liberals like Abbott and Hockey have farted out variations of on and off over the past couple of years, but never had the guts to actually carry into an election as an actual explicit policy.

Here’s what they went into the last election with: http://tinyurl.com/pjt5vh4

Codders111 1:18 am
22 May 14
#52

milkman said :

chewy14 said :

Oh for some decent politicians and a voting populace that would be mature enough to accept that the gravy train is heading for a massive derailment unless we address these intergenerational issues.

Sadly it seems like too much to ask.

“Waaaaaaaah, the government is taking some of my free money away”

I think you’ll find a lot of people who are upset about the budget aren’t directly affected.

miz 3:52 pm
22 May 14
#53

Very enlightening explanation from Peter Martin on why govt debt does not have to be repaid in the same way as household debt – see link here

http://www.abc.net.au/radionational/programs/lifematters/everyday-economics-is-government-deficit-the-same-as-personal-d/5465022

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