Yesterday’s mini-budget tells an economic story but it is primarily a political document.
Outwardly designed to position the nation against the turbulence of a troubled world, its real unspoken mission is positioning Labor for the 2013 election.
At its core is Julia Gillard’s fear that carrying even a small deficit into the election that year, which most economists say would be perfectly justified and even prudent, would allow Tony Abbott to say Labor had never delivered a surplus and never would.
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It is regrettable that the Gillard Labor government didn’t bear in mind the theme of this year’s National Families Week when framing its Budget. The theme of the week is “Sticking Together – families in good times and tough times.”
The Gillard government will rip $50 million from family support services from the next financial year.
Family Relationship Centres will suffer funding cuts from January 1, 2012. Although the cut to the centres has been delayed until next year, it is estimated that 2,500 families will receive no service or wait up to three months for an initial assessment.
Many of Australia’s brightest researchers and innovators will gather in Brisbane this week for the annual conference of the Cooperative Research Centres (CRC) Association.
Conspicuously absent will be Science and Industry Minister Kim Carr. The fact he has apparently withdrawn from attending the conference in the wake of last week’s Federal Budget speaks volumes about Labor’s latest debacle.
Like many of their wacky and ill-conceived programs – the devil is in the detail (or the detail omitted) with this latest Budget.
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It’s not long ago that when people talked about the Federal Budget, the discussion was about more than hand-outs or who got what. It was about what the Budget meant for the nation, what it was going to leave for future generations, and how it was going to make Australia a better society.
This year’s budget hasn’t pleased everybody – Budgets never do. Some might have found it a bit underwhelming, but given the Government’s priority of returning the budget to surplus, it was not going to have the money for major projects.
What has surprised me is the nature of the debate in the media – the seeming obsession with minor changes to eligibility for family payments – and the lack of interest in how the budget deals with the challenge of getting people into work, improving the nation’s skills or fighting mental illness.
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The Federal budget highlights one great need for small business, and that is a rational coherent national strategy.
This budget and indeed the last 20 federal budgets have included a whole range of good and bad measures for small business people. But there has never been a strategy to underpin those measures.
There has never been a real statement of aims and objectives that we want to achieve. There has never been a documented comprehensive vision for the families who earn their living from their own business and who employ almost five million other people, and underpin our economic health.
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When the going gets tough, life only gets tougher. That’s the feeling among many voters after last week’s federal Budget.
In trying to spread the burden of cuts in order to return the economy to a fiscal surplus in two years, the Gillard Government’s self-proclaimed “tough” Budget managed to land a blow to almost everyone from the unemployed to double-income households.
But it was the effect on middle-class families that has become one of the main battlegrounds in the aftermath of this Budget, with plans to freeze family payments to families on a combined income of more than $150,000 a year - saving the Government $2 billion.
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As an alternative Prime Minister, former Bulletin journalist Tony Abbott makes a pretty good shock jock. For the second time running Abbott has used his formal budget reply speech not to outline an economic program for Australia but to launch a colourful and energetic but essentially empty political rant about the failures of the Government.
That’s not to suggest that the Gillard Government is light on for failures - far from it. There have been plenty and there are now more after Tuesday’s largely uninspiring Federal Budget. To a significant degree, it’s Tony Abbott’s job as Opposition Leader to chronicle those failures. It is, however, also Tony Abbott’s job to explain what he is going to do as Prime Minister.
As a former journalist, Abbott is prone to one of the most disliked features of the profession – he is much better at critiquing, attacking and denouncing than providing workable alternatives. He has made two formal budget replies as Opposition Leader and both have been criticised. They have sounded more like thundering newspaper columns or talkback radio editorials than economic speeches.
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Irony of ironies. In a time of unprecedented communications control where political statements are workshopped to death, both sides of politics are struggling for clarity.
What for weeks had been slated as a tough Budget softened greatly as the day approached and eventually emerged as a “Labor Budget”. In name anyway.
Indeed, Wayne Swan, Julia Gillard, and Penny Wong said so often as they ‘executed’ their media plan - a dizzying blitz of interviews across the land. Yet in reality, it was perhaps more of an old-style Liberal budget, winding in spending, lowering welfare payments and attaching tough new strings to disability support payments, the dole, and other supports.
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It is 222 years since the French Revolution established the principle of the separation of church and state. It is three months since Cyclone Yasi and the Queensland floods ripped $9 billion from our national economy.
In Australia we have an ostensibly secular and progressive government, which also claims to be fiscally prudent. It’s just blown $220 million on a program which is offensive to the principle of state independence from religious influence.
The reason: having avowed her atheism, Julia Gillard is now desperate to appease the Christian lobby. As such, one of the biggest new spending measures in what was unconvincingly billed as a tough-minded post-disaster budget will see chaplains running about in 3500 public schools, filling kids’ heads with what many people regard as fantastic nonsense.
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Let us first consider what Wayne Maxwell Swan said on the 10th of March 2009. He stated that “the emerging economies of China and India are now expected to slow markedly”. Because of this, Wayne Maxwell Swan stated “it will be necessary to increase Government borrowing”.
The result was Wayne Maxwell Swan increased by $125 billion the amount able to be borrowed by reason of the Commonwealth Inscribed Stock Act 1911 and the Loans and Securities Act 1919. This resulted in the nation’s credit card having a $200 billion limit.
Now as we know, China did not go into recession so neither did we, in fact China hardly missed a beat but Australia has now gained the ignominy clearly spelt out by Dr Ken Rogoff of Harvard when he noted the countries with the greatest cumulative increase in real public debt since 2007.
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In sport, teams go to great lengths to paint themselves as the underdog. It’s a tired old tactic designed to lull the other team into unwittingly going a bit easier on them, and it rarely works.
The same principle has been eagerly adopted by families in the wake of this week’s budget, and the decision to freeze the indexing of family payments to families earning in excess of $150,000. And to some extent, the tactic appears to be working.
The logic of families at or just above the $150k threshold is pretty simple, and can be loosely summarised like this: We’re not rich. In fact, we’re struggling to get ahead. Gimme gimme gimme!
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You might have picked up a theme in Wayne Swan’s fourth budget. It was tough. How do we know this? Because the government told us so.
In a major pre-budget speech, Treasurer Wayne Swan said “tough decisions are required” and “this will be a tough Budget.” Finance Minister Penny Wong, in an interview in the lead up to the budget, used the word “tough” more than ten times, including four times in one answer.
But did the reality match the rhetoric? In his budget speech, Swan announced $22 billion in “savings” over the next four years. Yet much of those so-called savings are actually tax increases like the flood levy, and regardless, they have been almost completely offset by increased spending in other areas. They’ve been roundly criticised already for failing to deliver a tough budget.
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It was billed as a tough budget but the document Wayne Swan brought down tonight will win no awards for bravery and lead to no riots on the streets.
There are $22 billion of savings in the budget - Swan’s fourth as Treasurer and Julia Gillard’s first as Prime Minister – and they include the $1.7 billion flood and cyclone levy which clobbers higher income earners over the next two years.
But there are no measures among this scary-sounding $22 billion figure which will lead to any social dislocation or public unrest. As a result, when Australia returns to surplus next year, it does so to the very modest tune of just $3.5 billion.
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Well, it’s the morning after the night before! What’s your assessment of the Budget? Too tough? Not tough enough? Who missed out?
Weeks of drip-fed leaks failed to elicit much excitement about this budget, as Australia collectively rolled its eyeballs at the now-traditional claims that this was going to be the toughest of tough budgets. The general consensus seems to be that it could have gone further, pushed through some serious reforms, and Australia would’ve had some respect for it - instead of just pitying the poor thing.
Anyhoo, for all the latest news, head to news.com.au, where there’ll be graphs and experts and analysis and blogs, the budget speech video, and all sorts of goodness.
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For the sake of the pensioners of Australia we can only hope that the guys installing free set-top boxes under the Gillard Government’s $308 million digital television scheme aren’t the ones who a couple of years ago were putting in the insulation.
Imagine visiting Auntie Ethel for her 93rd birthday to find the house surrounded by flames after her telly exploded when she switched from Gardening Australia to a re-run of The Sullivans.
The stated basis of the Gillard Government’s rollout of this set-top box scheme is compassion.
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As we enter another budget season, we are again swamped by a wall of excuses from Treasurer Wayne Swan, excuses that are supposed to explain why his budget will be a dud, again.
Each year it’s the same. As budget night approaches, out come the excuses. It’s someone else’s fault. It’s the financial crisis. It’s a natural disaster. It’s a mining boom that won’t deliver like other mining booms.
Wayne Swan acts as if he is the only Treasurer to face challenges. In Wayne’s world, all others had it easy. Peter Costello and the Howard Government were lucky, according to him.
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Fresh from declaring that “climate change is crap”, the Opposition has trawled through their repertoire of One Nation emails to emerge with a version of recent economic history that airbrushes out the Global Financial Crisis.
This denial theory being peddled by the Opposition is that the “GFC was crap”. If you listen and watch closely, everything they say and do is based upon this single “article of denial” – that the Global Recession was a figment of Labor’s imagination.
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As we wait for Wayne Swan to announce his fourth budget deficit, here’s a small preview of what to expect. Warning: the following contains plot spoilers.
Wayne will claim credit for the work of others, ignore his record and point to promises not achievements
Wayne Swan will try to take credit for outcomes built on economic reforms that he had nothing to do with, and in many cases opposed.
In a face-off between a simple argument and a complex one, the former usually wins hands down. Over the last year and a half, this is where Tony Abbott has had the edge over Julia Gillard.
True, Opposition leaders can do this more readily because their chief task is criticism.
Delivering programs is inherently more complex. For governments, the normal budget jiggery-pokery notwithstanding, the sums must add up.
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It’s not entirely clear what Julia Gillard is softening us up for following the Queensland flood disaster.
But if a Prime Minister is given the chance to deny the fact they are considering to introduce a new tax and doesn’t take that opportunity, well, you can safely assume that the revenue raising exercise being considered is not a talent extravaganza hosted by Sophie Monk.
Gillard seems to prefer the words “levy” to the more politically suicidal “tax”, but the Government appears to be committed to keeping its promise the budget in surplus by 2012-13 even if it means we pay more in tax at the next budget.
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With Parliament set to wind up in the coming week and the ructions of an explosive year beginning to fade, the reality of a more featureless landscape in the next two years is becoming clearer.
Such apparent predictability seems almost foreign after 2010 which kicked off with the game-changing retreat on emissions trading and then lurched from one crisis to the next - think the rise and fall of the mining super-profits tax, various boat controversies, the spectacular Rudd / Gillard coup, and of course the closest election in history.
Nonetheless, barring the disappearance of the Government’s numbers in some unforseen crisis of confidence, 2011 and 2012 should by rights be years of sound governance - unaffected by elections. The country needs it and in their own ways, both leaders are depending on it too.
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