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Now for Kevin and Wayne’s excellent budget adventure

Peter Lewis

by Peter Lewis

13 Apr 05:43am

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Filed under: Budget 2010, Election 2010, Kevin Rudd, Polls, Wayne Swan

42 comments

Spare a thought for Wayne Swan and Lindsay Tanner as they ferret away on Labor’s pre-election budget. At a time when they should be doling out the goodies, the public is telling them it’s time to stop spending our money.

Cartoon by The Australian's Bill Leak

The last few years have been a good time to be in control of the Treasury coffers – after all a successful economic rescue plan based on giving people money while interest rates remained low was sure to meet with public acclaim.

But now the party is coming to an end and the pressure is on to rein spending without causing an uproar in core Labor constituencies. As this week’s Essential Report

shows, the answer may lie in giving closer scrutiny to the Defence budget.

Q: If cost savings need to be made in the budget, in what areas should spending cuts be made?

Source: Essential Media

What is clear from this research is that for most of us, cutting spending on health and education is out of the question. Likewise there is little enthusiasm for cutting much-needed infrastructure and community services. There are also a significant number of people who either don’t know where to cut the dough or who reject the idea of cutting any specific programs at all.

Which leaves two remaining pots of money – welfare and social security and defence and national security.

The economic orthodoxy for many years has been that Defence is off limits for Conservative governments, who have instead taken the axe to welfare programs, making them politically palatable through the regular targeting of dole-bludgers, single mums and job snobs.

But the political fault lines break the other way for Labor, with more than double the number of Labor voters wanting the government to review defence and national security spending. Amongst Greens, the ratio is even higher – one to four.

Part of this mood to cut Defence could be attributed to recent revelations of over-spending by defence contractors. 

There is also a section of the Left that has always and will always treat the armed forces with a short-sighted disdain.

But looking at some separate polling this week, I think there is something more profound at play.  When we asked which countries Australians would like to see a stronger relationship with, we got some interesting results.

Q. Would you like to see Australia’s relationship with these countries get closer, stay the same or become less close?

Source: Essential Media

Leaving New Zealand aside as a strange anomaly, the nations we crave closer ties with are not the US and the UK, our traditional kindred spirits; but China and Indonesia,.

While Australians accept the need to maintain a defence force, it appears they are much more interested in developing close and harmonious relationships with those who would be our enemies.

Rather than shock and awe, they are warming to the idea of engagement and understanding, especially with our region.

Call it the upside of globalisation or a simple pragmatism, either way the majority see our security safeguarded by something other than the military.

And that just might offer a way through for Labor as it prepares a horror budget that doesn¹t scare the horses.

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42 comments

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    • acker says:

      07:09am | 13/04/10

      I hope they are a bit more generous in the budget than Anthony Albanese’s wife NSW Health Minister Carmel Tebutt is to those Hunter Valley kids in last nights 4 Corners story, where she does not think it is worth proceding with a health study on increased asthma and breathing difficulties on those living near the coal mines because the 40,000 + population in the area is to small and insignificient.

      Time to bring in 25% of mining and agricultural royalties to be paid back to regions nationwide.

      Reply

    • John A Neve says:

      07:51am | 13/04/10

      Based on the charts above, people don’t want cuts at all. Even in the worst case only 20% supported a cut.

      So what other options are there?  Increase governments income and we do this by havng a larger pool of taxation.  Replace all existing taxes with a Financial Debts Tax.  It would be fairer for the people and provide more income for the government.

      Reply

    • Jones says:

      11:05am | 14/04/10

      In an ideal(er) world, an option would be to actually have some common sense included in government spending.  For example, in Education spending, build school infrastructure that is needed, useful and competitively budgeted.  Instead of building a school hall for a 1-student school that already has one, why not divert that couple of hundred thousand to a school that needs to have asbestos removed from the roof?

      Silly budget decisions are being made regularly, across the board in all key spending areas.  Someone needs to step up to the plate.  Sometimes I consider having a go myself (if you want something done right, do it yourself) but I am currently not in a position to be able to.  Funny how you need to break a certain glass ceiling in order to represent your fellow constituents.

    • Mark says:

      08:52am | 13/04/10

      “There is also a section of the Left that has always and will always treat the armed forces with a short-sighted disdain.”

      Peter, comments like that are probably best in a blog where you can express your ill informed opinion without backing it up with a reasoned argument.

      Please can you articulate the credible threat Australia faces that warrants the size of Defence force we have?

      Reply

    • Martin G says:

      10:20am | 13/04/10

      Uh, China? Indonesia?

      Am I detecting some ‘short-sighted disdain’ from you Mark?

    • Overflow says:

      11:44am | 13/04/10

      Australia ranks in bottom third in size of the defence force and spends less than 3% of GDP.  Given that majority of the work that the ADF does centres on reconstruction, UN missions and territorial security AND we are being stretched doing those tasks what size would you suggest Mark??  How many less personnel should we have and what areas should they be cut?

      Short sighted disdain?? Someone should look in the mirror

    • Dan says:

      06:40pm | 13/04/10

      Martin G, in what possible world is Indonesia an enemy (or possible enemy) of us? The chances of us going to war against them are probably less than zero. They pose no threat to us whatsoever

      As for China; unless they and Taiwan go to war, and Australia is forced to intervene, and we do so against China; the chances of us going to war against them are also minimal at best. And it is incredibly unlikely that China and Taiwan will go to war .

      China and Indonesia are not our enemies, and almost certainly will not become our enemies (especially Indonesia.)

    • mark says:

      07:01am | 14/04/10

      Overflow, if the majority of work is reconstruction then I guess we should look at all the items that aren’t required for reconstruction work.  I suggest the Marching bands, silver service dining and golf courses as a start.

    • JR says:

      01:18pm | 14/04/10

      Dan
      If you think the probability is less than zero, do you think that may have something to do with the size of our defence force?

    • Dan says:

      09:24pm | 14/04/10

      JR, no, it has nothing to do with the size of our defence force. Indonesia’s not being an enemy of us has nothing to do with it. Truth is, they were never really an enemy of us, and now they are certainly not.

    • Dan says:

      02:33am | 15/04/10

      JR, just to expand, the idea that Indonesia was/is a threat to us is based on an Islamophobic premise that because they are the world’s most populous Islamic nation, they are therefore a threat to us. Well, it’s nonsence. Even during the East Timor mess, when tensions were heightened, the idea that they would have invaded us (regardless of the size of our military) was imaginary.

      One can certainly argue that we should maintain the size of the defence force, but to claim that the reason is to protect us from Indonesia (or China) is laughable.

    • Dan says:

      07:38am | 15/04/10

      Uh, no JR. It has nothing to do with the the size of our defence force. Indonesia is not, and has never been a threat; the only reason people like to think so is Islamophobia, pure and simple.

      As for China, they aren’t a threat otherwise, and it’s not because of the size of our defence force. To consider the absence of a threat from these two countries (especially Indonesia) is due to the size of our defence force is delusional.

    • Texas Millionaire says:

      08:45am | 13/04/10

      There were obvious areas missed out on. Cutting funding for the arts (particularly film) has to be done. This will have the added benefit of making film makers create movies that people actually want to see, instead of boring, arty flicks that have no hope of recouping the money spent. Additionally, all funding to climate science has to be slashed to zero (after all the science is settled, so there is no need to pay people to do more work in that area). It was also be useful to increase the tax base. Increasing GST to 15% would be a good start (provided income taxes are reduced accordingly). This would provided a more certain income base, but also allows discretionary spending by consumers to avoid paying the GST. Also, get rid of all exemptions for GST, just charge it on everything. Get rid of state based stamp duties. In fact, the government needs to make all funding conditional on this and stick to it - not one cent if a single transaction attracts stamp duty.

      Reply

    • John A Neve says:

      09:06am | 13/04/10

      Texas Millionaire,

      What is the point in increasing the GST, if you are then going to lower income tax?

      Oh, that’s right, I see it now, you want to transfer the load from one group to another, good one!!!!!

      What we need is a fairer system, not a worse one.

    • Andrew says:

      10:29am | 13/04/10

      John,

      How is a tax on consumption not the fairest tax of all? You could still have a tiered income tax system but those with more money will naturally consume more and will therefore pay more tax.

      My thoughts would be:
      1. An increase in the GST to 13.5%
      2. An increase in the medicare levy to 2.75% with a total federal takeover of health funding and a commensurate increase in funding for preventative medicine.
      3. Abolition of negative gearing on any investment property outside the 1st investment property (note this would breach the corporate veil and trusts, in which case you couldn’t own 1 in your own right and then one in companies or trusts).
      4. Decrease company tax to 28%
      5. Abolish tax advantages for discretionary/family trusts.
      6. Increase the SGL to 11.5% and decrease tax advantages for salary sacrifice to super.
      7. Abolish stamp duties.
      8. Abolish CGT where funds realised from a sale are reinvested within 90 days of receipt and limit FBT
      9. Abolish Payroll tax
      10. Introduce a school voucher system with a safety net for rural/regional schools and low socio economic areas.

    • Texas Millionaire says:

      10:22am | 13/04/10

      John A Neve, you are right, we do need to move the base of the tax system. At the moment, the top 10% of income earners pay 90% of taxation revenue. This is grossly unfair. Unless, of course, your desire is to penalise people for being successful… a la the commies.

      That is why we need to broaden the tax base. However, if you increase GST without reducing income tax you are effectively taxing people twice on the same money. Besides those with more money, spend more and hence will pay more GST, so in the end you will not really be shifting the tax burden at all, which is a shame. Afterall, the services paid for using tax revenue are used more by people paying the least amount of tax than those paying more tax. This is grossly unfair and in any society that values equality and freedom of choice, this should not stand.

    • John A Neve says:

      10:42am | 13/04/10

      Andrew,

      What I wrote in response to Texas, pointed out the contradiction in raising the GST and then lowering income tax. Slightly different to what I think you are asking?

      As to your question regarding the fairness of a consumption tax; my obvious response is the fact that not all people consume either the same things or to the same quantity e.g. a person who drinks, smokes, drives a car, gambles, has a boat, I could go on, but you get the point. Pays more tax than some one who does non of these things.

      What we need is a fairer and simpler form of taxation.

    • Wayne Fehlhaber says:

      10:53am | 13/04/10

      John Neve :  I can see where Texas Millionaire and Andrew are taking this debate and i believe they are correct . Their main aim is to simplify
      our complex tax system . Consumption Tax ( G.S.T. )  is the fairest tax of all , everyone is a consumer , rich or poor , you pay tax on whatever goods and services you use.  Increase the G.S.T. and drop the iniquitous taxes such as stamp duty and payroll tax. I can not see where a load is being transferred from one group to another.
      G.S.T. on food would affect Pensioners but surely an offset or concession could be put in place for those who rely on pension payments to live.

    • John A Neve says:

      01:13pm | 13/04/10

      Wayne,

      You are a worry sometimes!  “Their main aim is to simplify”, Andrews post has ten (10) points in it!!!! So that is simplifying tax?

      Texas wants to reduce income tax but raise GST, hows does that impact on all those that don’t pay income tax e.g. most pensioners?

      My way Wayne, would impact on all equally and only being one (1) tax much simpler.

    • Henry says:

      03:12pm | 13/04/10

      John A Naive

      Texas Millionaire is spot on and his idea would be a much fairer system.  Income tax needs to drop and GST could rise to offset it.  People should not be smashed for working harder.  As it stands people paying the least tax use the most government services.

      The tax rates should be flat too.  The sliding scale is like something out of the USSR.

    • Saskia says:

      03:33pm | 13/04/10

      John, how can a consumption tax not be the fairest tax possible?

      If you want more toys you pay more tax - totally fair.

      I await your socialist style simplified tax system!  I bet that will be fair! Hahahahahahaha

    • Andrew says:

      04:01pm | 13/04/10

      John,

      10 points!! Wow sorry to overly complicate things for you.

      Maybe if you read them instead of counting them you would see I advocate:

      - 4 changes to current taxes or levies
      - The abolition of 5 taxes or levies
      - And a fundamental education/tax reform allowing parents to choose where their education taxes are spent.

      Hardly complicated.

    • John A Neve says:

      04:33pm | 13/04/10

      Andrew & Saskia,

      Governments have tinkered with our current taxation system for years.
      PAYE taxpayers still carry this country.

      Yes, Andrew, I did read your post and it is just another tinker, nothing new, take a little bit here, add a little bit there. Just re-arrange the deck chairs. Clever boy aren’t you?

      Try to move on and look at a different taxation system or does change scare you?

      Saskia, if you have never heard about a Financial Debits Tax, you must have lived a sheltered life. When did they let you out? Enjoying Freedom?

    • Wayne Fehlhaber says:

      05:14pm | 13/04/10

      John :  I thought i made it quite clear when i said ” an offset or concession could be put in place for those who rely on pension payments to live. “
      The G.S.T. has already been implemented . Drop the iniquitous taxes ,
      raise the G.S.T. =  a much simpler system.
      John , i still believe equality triumphs when we all pay G.S.T. on whatever we buy , goods or services . The more affluent the individual , the more he buys and the more he pays tax. Can’t get fairer than that.

    • John A Neve says:

      05:21pm | 13/04/10

      Wayne,

      The GST is a state tax raised by the federal government. It cannot be changed without the agreement of the states.

      Regarding an “offset or concession”, this has already been done, I mentioned it to you some posts ago, remember?

      How many times must we tinker with afailed system?

    • Wayne Fehlhaber says:

      06:47pm | 13/04/10

      John :  i’m well aware that raising the level of G.S.T. requires agreement from the states . It is not a state tax John . It is a federal tax , the revenue is disbursed to the states in it’s entirety.
      John , i don’t think you are following this debate real well.
      We have been talking about raising the G.S.T. rate and what i am saying is that a concession or offset would have to be put in place for pensioners,( if the hypothetical increase is made.)  Any concession or offset recieved by pensioners when the G.S.T. was implemented would not cover the hypothetical increase.  Wheeeeeeeewwwwwww !
      Is that clear enough. ?

    • John A Neve says:

      06:07am | 14/04/10

      Wayne,

      I think unlike yourself, I see the situation very clearly.  Firstly the whole idea behind the GST was for it to be a state tax collected by the feds to replace other state taxes that were to be removed.

      Secondly, the concessions made to pensioner last time, did not fully address their situation.

      Lastly, all you are doing is more tinkering with an outdated system, come on Wayne, think big, freshen up, all this conservatism will be the death of this country.

    • Wayne Fehlhaber says:

      08:20am | 14/04/10

      John Neve :  At last !  we agree on one point. The states were to remove taxes such as stamp duty on implementation of the G.S.T.
      Every state had a Labor govt. when G.S.T. reform arrived , every Labor state reneged on the deal.  Every Labor state directed their newfound windfall from G.S.T.revenue to projects relating to election promises.
      This ploy kept them sweet with electors , no taxes raised , kept them in government , all Labor govts. Those Labor states relied exclusively on G.S.T. revenue and failed to raise money to deal with their own responsibilities.
      Pensioners would be compensated for any future increase in G.S.T. by the federal govt. of the day .
      Finally John , allow me to reiterate that G.S.T. is a Federal Tax from which revenue is collected and disbursed to the states. Not even John Neve can blur these facts.  I rest my case.

    • John A Neve says:

      09:52am | 14/04/10

      Wayne,

      Try just for once to forget party politics.  The GST was brought in by a
      federal government, if the states reneged on the deal?
      Why didn’t the federal government do some thing about it?

      You see Wayne, the trouble with you one eyed supporters, you worry too much about the Ref and not enough about the ball.

      I don’t care if you vote for Tweedle Dee or Tweedle Dum, in my view you would not get one good parliament out of all of them combined.

      PS.  Why stick with an obsolete taxation system?

    • Wayne Fehlhaber says:

      01:11pm | 14/04/10

      John Neve :  The Howard federal govt. did what needed doing , it reformed the tax system , it disbursed the G.S.T.revenue to the states,
      the states reneged on their part of the deal to remove state taxes .
      It was not up to the Federal govt. to do anything about the states failing to keep up their part of the bargain , it was up to the state electorates ,
      ( the people )  to vote the state govts. out. 
      Party politics is something you should get used to John , it is the system we use. You and i can’t change it , so learn to work with the system .  The trouble with fence sitters is they keep banging their heads on the proverbial brick wall and achieve nothing.

    • John A Neve says:

      02:13pm | 14/04/10

      Wayne,

      Most people or companies would take action if a contract/deal was broken. So your response on Little John’s behalf is a cop-out.

      Further, if people are resigned to keep on keeping on, Tweedle Dee then Tweedle Dum, then back to Tweedle Dee they deserve all they get and believe me it going to get worse.  I am glad I won’t be here when it hits 36 mllion.

    • Charles says:

      08:46am | 13/04/10

      What is needed is to spend the money more wisely and gain some value for it.  This poll assumes there is no efficiency to be made in spending, and that when the government spends it, it will waste it like it has on the BER, insulation, etc.

      The reality is that at all tiers of government we now have an unsustainable level of public servants all trying to get their cut of the action.  This creates inefficiency, and somewhere, sometime, some politician is going to have to stand up to the proliferation of public servants before this mess will be corrected.

      Reply

    • Wayne Fehlhaber says:

      09:07am | 13/04/10

      Mark :  Australia would find difficulty restraining a troop of N.Z.‘s boy scouts from taking over a McDonalds restuarant in Sydney.
      I guess that’s a bit over the top but you follow what i mean , i’m sure.

      Reply

    • Eric says:

      09:01am | 13/04/10

      One fact of significance is that government spending on social security and welfare is much greater than government spending on defence. Thus, a 10% cut in welfare would save two or three times as much as a 10% cut in defence.

      The military makes up about 10% of federal government spending. Health and welfare make up around 30% each.

      Reply

    • Shane From Melbourne says:

      09:21am | 13/04/10

      Cut the defence budget? Lots of luck on that one. Defence has killed the careers of many government minister, Liberal or Labor and not one of them have managed to stop the widespread rorting that goes on within the Department of Defence.

      Reply

    • Nigel Catchlove says:

      10:47am | 13/04/10

      Shane, if you have knowledge of ‘widespread rorting’ in the Department of Defence then you should advise the Commonwealth Ombudsman through http://www.ombudsman.gov.au/pages/making-a-complaint/ .

      If you don’t then perhaps you may wish to recant your cowardly slur.

    • Shane From Melbourne says:

      05:47pm | 13/04/10

      This article as one example:
      http://www.smh.com.au/national/the-wrong-stuff-20100308-psw6.html
      but I guess oil paintings, leather chesterfield couches and golf memberships are vital to the defence of Australia. Almost forgot about the rugby trip to Europe with its $18,000 of “incidentals”.
      No, I don’t wish to recant my cowardly slur when it has basis in fact.

    • Henry says:

      03:17pm | 13/04/10

      Agree Shane.  There needs to be a Royal Commission into where and how are tax dollars are spent.  Billions spent on a mickey mouse force.

      Reply

    • Andrew says:

      04:03pm | 13/04/10

      No Royal commission or ICA, lets set up a task force.

    • Harquebus says:

      12:04am | 14/04/10

      Oil depletion will affect us all. We’ll see who our friends are in a couple of years.

      Reply

    • Moggy says:

      12:25am | 14/04/10

      Honestly, some of you blokes are so friggin’ anal. What the heck does it matter who’s right & who’s wrong.  Why can’t you just read & contemplate rather than having to be “right!” Anybody would think you’re politicians!!!

      Reply

    • Chris says:

      11:39am | 14/04/10

      Peter, in this sentence:

      “While Australians accept the need to maintain a defence force, it appears they are much more interested in developing close and harmonious relationships with those who would be our enemies.”

      ...have you left out an “always” before the “would be our enemies” - or is this would a sort of conditional “would”?

      Reply
 
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