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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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davo101 9:30 am 20 May 14

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.

VYBerlinaV8_is_back 8:42 am 20 May 14

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…

Masquara 7:40 am 20 May 14

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!

Masquara 3:11 pm 17 May 14

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 …

Andrew Barr 2:26 pm 17 May 14

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.

davo101 9:30 am 17 May 14

Masquara said :

What possibilities besides an increase are there?

Distribution.

Masquara 8:07 am 17 May 14

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?

JC 11:37 pm 16 May 14

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 8:40 pm 16 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.

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.

dungfungus 5:36 pm 16 May 14

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.

damien haas 5:28 pm 16 May 14

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

neanderthalsis 1:59 pm 16 May 14

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.

farout 11:04 am 16 May 14

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.

Milkman left out his sarcasm marks in the “spend big because my neighbour is more in debt” comment. Which by the way is what the opposition is proposing to do.

I’m no economist but the budget seemed to be laying the foundation for structural, strategic change, not a short term fix this year. By introuducing a price point to medical services, it creates the realisation that these services are not free. People will probably cross-check that they are being billed for services actually received – at the moment there is no incentive for patients to check what is being billed to Medicare. Encouraging younger people to find work instead of relying on the dole is a significant change in mindset. Same for encouraging employers to find work suitable for older people (desk jobs, admin assistants, etc.), Getting people to realise that welfare is only a supplement to their normal income, not the equivalent of a salary, is another good move. HECS holders will pay their debts back quicker because that will unlock money that can go to the more needy. All these measures will control spending in the medium-long term (even if this year it is not much of a saving), and lay the ground for structural tax reform over the next 2 years. Which may be tax rate rationalisation, increase in Super Tax, increase in GST, limiting Capital Gains, etc,

Does anybody think the problem can be solved by just increasing the top tax rate to say 70% and letting spending trends continue as they are?

JC 10:24 am 16 May 14

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.

farout 9:20 am 16 May 14

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.”

dungfungus 10:35 pm 15 May 14

watto23 said :

milkman said :

watto23 said :

[Stop using facts 🙂 the coalition don’t seem to like facts, coming from experts like economists and scientists. Despite Liberal saying there was a budget crisis, there really wasn’t. Being one of 10 or so countries with a AAA credit rating (which is only good if your side of politics achieved it) or the fact our debt to GDP ratio is incredibly low also is again only a fact if the coalition did it. Instead we’ll spread fear to convince people there is a problem.

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.

No that is not what I said. You still aim to pay it off, like any debt. Continuing to add to debt is bad if you can’t afford to repay it. The issue is Liberals have spread a lot of c$%p about our budget position to mush through radical cuts and changes.

Yet in the real world economists with no political bias have said the economy is fine, we just need to reduce some spending such that we are not paying debt with more debt. Labor and Liberal agree on this. Just some hardcore right wingers have swallowed the whole emergency thing to make the cuts look necessary.

Liberals are dumping several income streams as well and adding to spending, so they have make bigger cuts to cover their own spending as well.

Or we can sit here and tell Australians that the indonesians are going to invade (more scare tactics and lies) thus we need new jets, something which could be delayed til the end of their term when the budget would be healthier. We apparently want to end the age of entitlement, unless you want a baby in which case the current minimum wage for 18 months isn’t good enough. here have $50k instead, but apparently others who need the money just to live don’t deserve it yet a middle class or wealthy couple who can afford to have a baby on their own and would probably also afford to send that child to a private school get $50k to have the 6 months off.

As I said on another thread, we are still borrowing $1 billion a month to pay interest of $1 billion a month on the debt chalked up in the past 6 years.
You have just said “we just need to reduce some spending such that we are not paying debt with more debt…..” – so the red lights should be flashing shouldn’t they?

watto23 9:05 pm 15 May 14

milkman said :

watto23 said :

[Stop using facts 🙂 the coalition don’t seem to like facts, coming from experts like economists and scientists. Despite Liberal saying there was a budget crisis, there really wasn’t. Being one of 10 or so countries with a AAA credit rating (which is only good if your side of politics achieved it) or the fact our debt to GDP ratio is incredibly low also is again only a fact if the coalition did it. Instead we’ll spread fear to convince people there is a problem.

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.

No that is not what I said. You still aim to pay it off, like any debt. Continuing to add to debt is bad if you can’t afford to repay it. The issue is Liberals have spread a lot of c$%p about our budget position to mush through radical cuts and changes.

Yet in the real world economists with no political bias have said the economy is fine, we just need to reduce some spending such that we are not paying debt with more debt. Labor and Liberal agree on this. Just some hardcore right wingers have swallowed the whole emergency thing to make the cuts look necessary.

Liberals are dumping several income streams as well and adding to spending, so they have make bigger cuts to cover their own spending as well.

Or we can sit here and tell Australians that the indonesians are going to invade (more scare tactics and lies) thus we need new jets, something which could be delayed til the end of their term when the budget would be healthier. We apparently want to end the age of entitlement, unless you want a baby in which case the current minimum wage for 18 months isn’t good enough. here have $50k instead, but apparently others who need the money just to live don’t deserve it yet a middle class or wealthy couple who can afford to have a baby on their own and would probably also afford to send that child to a private school get $50k to have the 6 months off.

JC 8:39 pm 15 May 14

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 you 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.

milkman 6:38 pm 15 May 14

watto23 said :

[Stop using facts 🙂 the coalition don’t seem to like facts, coming from experts like economists and scientists. Despite Liberal saying there was a budget crisis, there really wasn’t. Being one of 10 or so countries with a AAA credit rating (which is only good if your side of politics achieved it) or the fact our debt to GDP ratio is incredibly low also is again only a fact if the coalition did it. Instead we’ll spread fear to convince people there is a problem.

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.

watto23 5:29 pm 15 May 14

JC said :

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.

Stop using facts 🙂 the coalition don’t seem to like facts, coming from experts like economists and scientists. Despite Liberal saying there was a budget crisis, there really wasn’t. Being one of 10 or so countries with a AAA credit rating (which is only good if your side of politics achieved it) or the fact our debt to GDP ratio is incredibly low also is again only a fact if the coalition did it. Instead we’ll spread fear to convince people there is a problem.

The facts were we needed to probably do a few things to keep the debt from increasing and start decreasing, but certainly don’t need all the proposed changes. A balanced budget would have been fine. Like when a person has a mortgage of say $250k. Its nice to pay it off quicker, but most reasonable people wouldn’t pay so much off their house to the point they couldn’t afford to run their car or go to the doctors. This budget is like cutting downs costs to eat bread and water to pay of the house a few years earlier. Not necessary unless you have some fear or paranoia about debt.

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