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

Andrew Barr ACT Chief Minister 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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Hockey’s budget: the bucket list of a Young Liberal
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dungfungus 5:19 pm 15 May 14

Andrew Barr said :

WildTurkeyCanoe – everyone will pay the increased fuel levy but you are right that those on lower incomes will feel it more than those on higher incomes.

Dungfungus – you have probably articulated the views of many rusted-on coalition voters but I suspect that there were many people who might have believed the Prime Minister when he said things like this: https://www.youtube.com/watch?v=wAHNXdHai0g

Fair enough Andrew but the cuts to our publicly funded broadcasters was only 1% and most of that will be through cancelling the ABC’s contract to broadcast overseas.
I doubt if either the ABC or SBS will sack one person as a result. Mind you, some deserve sacking.
As long as your promise not to triple our rates holds good you have nothing to fear.
Tony Abbott has only broken promises once, so far. He has a long way to go to catch up with Wayne Swan.
http://www.smh.com.au/federal-politics/political-opinion/labor-has-choked-on-a-surplus-of-promises-20121220-2boz3.html

davo101 8:32 am 15 May 14

rosscoact said :

IIRC it was Howard that put a cap on the fuel levy because he was copping some flack because the GST had pushed up petrol prices by 10% and the rationale of having a tax on a tax was so weak.

The fuel excise was dropped by 6.656c/L in 2000 to off-set the increase due to the GST so there was no tax on a tax.

rosscoact said :

Can somebody with a better memory than mine confirm?

Here is one mea culpa.

Madam Cholet 8:29 am 15 May 14

dungfungus said :

lumnock said :

I just popped in to say that I think it’s great to have this sort of thread on the riotact. I hope it leads to a bit more continuous dialogue between local politicians and the public on this site, rather than just pre-election when we all get overwhelmed in one big hit.

hear hear!

But let’s not make it a platform for campaigning. We have enough of it in this small town without starting early on the local one.

bikhet 6:47 am 15 May 14

It’s hard to give credence to anything Andrew Barr might say about the Federal Budget when he won’t come clean on how the proposed light rail line will be funded:

http://www.canberratimes.com.au/act-news/act-treasurer-wont-say-how-canberras-light-rail-will-be-paid-for-wont-rule-out-a-rating-zone-20140513-zrbhk.html

That being said, I think Hockey’s budget is a crock. Yes, the culture of entitlement needs to be ended, but this isn’t the way to do it. Depriving the most needy to provide more middle-class welfare isn’t the way to go.

laraeddy 3:32 am 15 May 14

Walker said :

dungfungus said :

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.

Federal Labor continuosly broke promises on delivering budget surpluses and no one in the media gives a tinker’s cuss. People who voted for the coaltion voted for the spending and waste to stop and a plan to be enacted to stop the borrowing and repay the debt. An increase in the fuel levy is part of that strategy. No one complained when fuel increased as consequence of the carbon tax.
Our debt to GDP is dangerously high for a country that hardly manufactures anything. In the event of another global downturn when no one wants our minerals what are we going to make to trade out of debt.
All the other countries that defenders of the debt compare us to are giants in manufacturing.
The triple A credit rating will only last as long as one of our creditors asks for some money back and we can’t pay.

To my mind (I’m not all up to scratch on all aspects of economics), some good questions in there. Any takers?

Whether there was ever going to be a surplus again was part of pretty much every ‘news’ broadcast from post-GFC 2008 till 2013.- first sentence is …. well, actually, no adjective could describe how nonsensical that is.

Second sentence is a judgement call – I really don’t know why people voted for this rabble, and I suspect lots of those who did are now wondering about that too. Certainly the local bloke now in the Senate for this mob was never heard from during the election – so you do have to wonder about that. Did I hear the braying of many donkeys ???

Fuel (as in petrol, I assume) never did increase as part of carbon pricing – it was exempt. Which is not to say that the petrol companies didn’t use the excuse to jack prices up – but they will use any excuse to do that.

And in any event, the revenue from carbon pricing was used to compensate for any price increases resulting from carbon pricing (increase in tax-free threshold, increases in pensions, etc). And pretty much every analysis since then has found that there were no significant increase in prices as a result of carbon pricing – less than 0.5% of CPI according to renowned greenie activists and more than occasional stockbrokers J P Morgan (http://www.news.com.au/finance/business/carbon-tax-adds-up-to-04-to-cpi/story-e6frfkur-1226502382939),

Increases in electricity prices were down to the ‘network charges’ rort whereby we have all been conned into paying for extra transmission capacity while demand has actually dropped.

So, in the end, most of us were probably overcompensated (ie, better off), as it happened. Which might explain the lack of complaint.

And now we have a policy that says that well, you know, it is better that you and me and all the other taxpayers – in these days of fiscal ‘crisis’ – give billions to the companies that generate carbon pollution so that they will all be jolly decent and stop it. Oh, but we wouldn’t want to inconvenience them by asking whether they have done anything useful with that money. I should just rip a thousand or two out of my mortgage now and post it straight to ExxonMobil ! Lordy only knows, the poor devils need it. And there’ll soon be precious few public servants left in the Tax Office to do it for me.

Sorry, but whether you believe in climate change or not, that is what all you Coalition voters voted for.

But that is wholly consistent with a bunch of rent-seekers that just want to rip money out of all of us and hand it over to their corporate mates. Aren’t the NSW ICAC hearings fun to watch for Libs everywhere.

Our debt to GDP remains amazingly low compared to pretty much every comparable country on the planet. No one seriously argues we have a ‘debt crisis’ – it is a furphy. ‘Manufacturing’ has little to do with it. Our debt to GDP is around 11% – around the same as manufacturing giant Luxembourg. Canada, who are probably most like us, come in at 36%. Cash-strapped Germany (who seem to be able to buy and sell other bits of Europe at will, and with minimal grief) is running at around 44%, and has been for about a decade. Selling lots of Mercs just doesn’t seem to shift it.

Yep, we went up from about 5% pre-GFC – but the good old USA went from 36% to 61% over the same period. But Switzerland – well, yes, guess they make very nice clocks, but sure know their way around a currency deal – dropped from 23% to 20%. Go figure.

And yes, that’s right – those crazy, profligate, chocolate eating Swiss are twice as much in ‘crisis’ as we supposedly are !! (http://stats.oecd.org/Index.aspx?DataSetCode=GOV_DEBT)

And, really, if manufacturing was the issue, why has this govt been so supportive of local industries like Ford, Holden, Toyota, Ardmona SPC …..

So not one single bit of that nonsense holds up to even the most elementary bit of thought.

But I’m guessing no-one else here is surprised by that !

rosscoact 2:26 am 15 May 14

IIRC it was Howard that put a cap on the fuel levy because he was copping some flack because the GST had pushed up petrol prices by 10% and the rationale of having a tax on a tax was so weak.

Can somebody with a better memory than mine confirm?

justin heywood 12:16 am 15 May 14

lumnock said :

I just popped in to say that I think it’s great to have this sort of thread on the riotact. I hope it leads to a bit more continuous dialogue between local politicians and the public on this site, rather than just pre-election when we all get overwhelmed in one big hit.

This budget was something of a free kick for Labor. and you can’t blame the local lads for trying to make some political capital out of it.

But I wonder if Andrew will be so keen to blog on here when the ACT government has to make some tough choices of its own?

I’ll be very surprised if he does.

Walker 12:10 am 15 May 14

dungfungus said :

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.

Federal Labor continuosly broke promises on delivering budget surpluses and no one in the media gives a tinker’s cuss. People who voted for the coaltion voted for the spending and waste to stop and a plan to be enacted to stop the borrowing and repay the debt. An increase in the fuel levy is part of that strategy. No one complained when fuel increased as consequence of the carbon tax.
Our debt to GDP is dangerously high for a country that hardly manufactures anything. In the event of another global downturn when no one wants our minerals what are we going to make to trade out of debt.
All the other countries that defenders of the debt compare us to are giants in manufacturing.
The triple A credit rating will only last as long as one of our creditors asks for some money back and we can’t pay.

To my mind (I’m not all up to scratch on all aspects of economics), some good questions in there. Any takers?

JC 12:02 am 15 May 14

dungfungus said :

Federal Labor continuosly broke promises on delivering budget surpluses and no one in the media gives a tinker’s cuss. People who voted for the coaltion voted for the spending and waste to stop and a plan to be enacted to stop the borrowing and repay the debt. An increase in the fuel levy is part of that strategy. No one complained when fuel increased as consequence of the carbon tax.

Fact, under this budget the Liberals will be spending $415B, which BTW was the exact same amount that Labor had forecast to spend this year. Their revenue projection however revenue will be about $25b less.

So please pray tell how this budget is going to stop borrowing and repay debt?

All this budget is, is a redistribution of money and costs to the total benefit of the big end of town and to the detriment of the average person. Ironically it was votes from the average person, tricked into thinking their was a budget emergency and heaps of government waste that got the Libs over the line at the last election. No doubt Hockey and Abbott have some bribes planned for the 2016/2017 budget to help let these people forget being royally screwed over.

Walker 10:26 pm 14 May 14

Enemies may lose my respect but that’s not to say friends don’t need to earn it.

Let’s see how we navigate, on local issues before during and after the cards dealt. The ones we can’t fight off, at least. Whatever it is, we will still need good local leadership.

That said, yes, these are good points overall and it will be interesting to have this sort of thing on riotact. I wonder how it will go. And I wonder how the nation will go on these things (and plenty of other concerns). Something tells me there’s more afoot this year somehow or other. We’ll see.

Andrew Barr 10:13 pm 14 May 14

WildTurkeyCanoe – everyone will pay the increased fuel levy but you are right that those on lower incomes will feel it more than those on higher incomes.

Dungfungus – you have probably articulated the views of many rusted-on coalition voters but I suspect that there were many people who might have believed the Prime Minister when he said things like this: https://www.youtube.com/watch?v=wAHNXdHai0g

dungfungus 10:10 pm 14 May 14

lumnock said :

I just popped in to say that I think it’s great to have this sort of thread on the riotact. I hope it leads to a bit more continuous dialogue between local politicians and the public on this site, rather than just pre-election when we all get overwhelmed in one big hit.

hear hear!

dungfungus 9:14 pm 14 May 14

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.

Federal Labor continuosly broke promises on delivering budget surpluses and no one in the media gives a tinker’s cuss. People who voted for the coaltion voted for the spending and waste to stop and a plan to be enacted to stop the borrowing and repay the debt. An increase in the fuel levy is part of that strategy. No one complained when fuel increased as consequence of the carbon tax.
Our debt to GDP is dangerously high for a country that hardly manufactures anything. In the event of another global downturn when no one wants our minerals what are we going to make to trade out of debt.
All the other countries that defenders of the debt compare us to are giants in manufacturing.
The triple A credit rating will only last as long as one of our creditors asks for some money back and we can’t pay.

wildturkeycanoe 8:42 pm 14 May 14

Masquara said :

Andrew, what is your position on the fuel levy?

Well obviously Andrew will not be affected one iota by the fuel levy, as politicians get easily over $120,000 per year plus another 70-110% on top. What’s another lazy $20 per week for them? Even then it will be paid back by us as taxpayer funded travel. Who trusts any politician, even when on the other side of the debate, when they all sit in a room and behave like children in a playground arguing over “He said, she said”. All we know from the budget is that those who are borderline on poverty are now pushed into poverty. The numbers don’t lie and if real results about the satisfaction of this budget ever come out, they will be staggeringly in favor of turning time back approximately 9 months and re-doing the whole thing. I would not be surprised how many folks change their mind about the current administration.

lumnock 8:06 pm 14 May 14

I just popped in to say that I think it’s great to have this sort of thread on the riotact. I hope it leads to a bit more continuous dialogue between local politicians and the public on this site, rather than just pre-election when we all get overwhelmed in one big hit.

HiddenDragon 6:37 pm 14 May 14

Well, indeed – and all of this bad news is on top of the already high living costs in Canberra, which will presumably only get worse when we learn of the next round of “it’s only a coffee a day/ week whatever…” increases in the ACT Budget.

Andrew Barr 6:35 pm 14 May 14

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.

Codders111 6:33 pm 14 May 14

Couldn’t agree more. Good response.

Masquara 4:54 pm 14 May 14

Andrew, what is your position on the fuel levy?

Canfan 4:50 pm 14 May 14

Note from Editor: RiotACT has contacted all political parties seeking their feedback on the 2014 Budget. Responses will be posted once received.

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