Betting the house on a matter of Budget semantics
About a month ago a minister was renewing with vigour the Government’s determination to deliver a 2012-13 Budget surplus. “If necessary,” said the minister with sweeping arms taking in the walls of Parliament House, “we’ll get Lend Lease in to give us a quote on this place.”
It was a joke of course, but a joke which underlined the Government’s fierce resolve not to lose the political debate over which side of the ledger the Budget accounting ends up.
This raises the question of whether the political point scoring by both sides is good for the national welfare. It is appropriate to point out during the general interest in Mayan final days that it would not mean the end of the world were the Budget outcome for this current year to slip slightly into the red.
In economic terms, the difference between a $1.1 billion surplus, the latest forecast, and a $1.1 billion deficit would be so minor as to be non-existent. The financial ratings agencies would not waste ink on rewriting the nation’s AAA status.
But that $2 billion - the surplus plus the spending into the red - could be put to good use in an economy which is slowing, better use than sitting on a shelf propping up a trophy surplus.
The Government has been unable to do things it wants - and voters want - because it can’t spare the money. It has ripped what cash it can from the hollow logs and unessential projects of the public service, and faces the politically dangerous task of evaluating frontline services themselves, or raising taxes.
And it is getting tougher to convince others to spend more when you can’t set an example.
Prime Minister Julia Gillard has been confined to negotiating on principle alone as she urges the states to back the proposed National Disability Insurance Scheme. The principle of the NDIS has been accepted by the Federal Opposition and all the premiers, but only NSW has reached a deal on funding, and that in effect involves a relatively small $600 million in both extra spending and “in kind” support.
It is understandable the states which don’t have the existing high level of spending on disabilities of NSW are shirking a huge forward commitment.
They don’t have much money to spare, either. And the Prime Minister as yet can’t explain how a Federal Government will find the money for a full NDIS. She has ruled out a levy, and last week Treasurer Wayne Swan denied there would be a “bequests tax” - federal death duties.
A handy $2 billion wouldn’t solve the NDIS financing problems, just as it wouldn’t mean much for the roughly 650,000 unemployed people on the Newstart Allowance which many MPs and welfare groups argue is far too low.
It’s not that the Government doesn’t like the unemployed. It’s because it doesn’t want to lose a political battle with Tony Abbott during an election year by spending more money on them. That’s seems to be why, at a time when global economic slumps are hurting an otherwise perky Australian economy, the trenches are being dug in form of the small Budget surplus.
Opposition Leader Abbott knows the value of a victory in this area. He already is rehearsing lines about economic incompetence and more broken promises.
“They don’t have an economic plan, they just have a spending plan, and this is why there will never ever be an honest surplus from the current government,” said Mr Abbott last week.
“They’re building up to dumping their surplus even though on no fewer than 150 separate occasions Wayne Swan has said there will be a surplus. ‘Come hell or high water’, he said there will be a surplus. ‘No ifs, no buts, it will happen’, said Prime Minister Gillard just four days before the last election, the day after she made her infamous ‘there will be no carbon tax under the government I lead’ promise – another broken promise.
“So dumping the surplus will be yet another broken promise from a government which is just incompetent and untrustworthy to its core.”
Back on November 4 Mr Abbott said a Coalition government would reach a surplus in its first three years. He declined to answer whether there was economic justification, given declining world conditions, for this government to keep chasing one.
He doesn’t think Julia Gillard will reach the mark, and he is ready to make the worst of it.
There would be an equal and opposition consequence for Mr Abbott should the Government achieve the surplus. His dire Budget forecasts would look as over-the-top as his warnings on the introduction of carbon pricing.
That’s why the Government has not conceded public defeat on a surplus. It wants a win on this issue, at any price. You can bet the House on it.
Comments on this post will close at 8PM AEDT.
Read all about it
Up to the minute Twitter chatter
The latest and greatest
Good morning Punchers. After four years of excellent fun and great conversation, this is the final post…
I have had some close calls, one that involved what looked to me like an AK47 pointed my way, followed…
In a world in which there are still people who subscribe to the vile notion that certain victims of sexual…