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Version 1 Version 2
Yes, Joe Hockey, we understand the problem, but please cut to the chase Yes, Joe Hockey, we understand the problem, but please cut to the chase
(about 2 hours later)
OK, Joe, we’ve got the message. The budget is in deficit and big spending cuts are going to be necessary, starting in May.OK, Joe, we’ve got the message. The budget is in deficit and big spending cuts are going to be necessary, starting in May.
There are some quibbles to be had, of course, with the logic behind your “this deficit ain’t nothing to do with me – I’m the clean-up guy” softening up exercise. Yes, you inherited a budget $30bn in the red, but we all know the blowout in the deficit since August has been caused both by your own decisions and by your inability to get savings measures through the Senate. And to the extent that there is a crisis, it is more about the fact that the budget is in long-term structural deficit because governments – Labor and Liberal – promised recurrent spending and reduced taxation on the apparent assumption that the revenue from the mining boom would last forever. (There are some quibbles to be had, of course, with the logic behind your “this deficit ain’t nothing to do with me – I’m the clean-up guy” softening up exercise. Yes, you inherited a budget $30bn in the red, but we all know the blowout in the deficit since August has been caused both by your own decisions and by your inability to get savings measures through the Senate and by a weakening economy. And to the extent that there is a crisis, it is more about the fact that the budget is in long-term structural deficit because governments – Labor and Liberal – promised recurrent spending and reduced taxation on the apparent assumption that the revenue from the mining boom would last forever.)
But we take your main point – the budget doesn’t just need a trim, it needs some big structural changes to make long-term savings so we can live within our means.But we take your main point – the budget doesn’t just need a trim, it needs some big structural changes to make long-term savings so we can live within our means.
That leaves us with some important questions.That leaves us with some important questions.
The first is political. Your prime minister, Tony Abbott, promised a “no surprises” government. He ran a small target election campaign. He insisted Labor’s assertion that he would “cut to the bone” was a nasty scare campaign. If you make deep cuts now, a whole lot of Australians could be very surprised indeed. Can he live with that? The first is political. Your prime minister, Tony Abbott, has promised us a “no surprises” government. He ran a small target election campaign. He insisted Labor’s assertion that he would “cut to the bone” was a nasty scare campaign. If you make deep cuts now a whole lot of Australians could be very surprised indeed. Can he live with that?
The commission of audit has been asked to consider how governments can run things more efficiently, and that is certainly a good place to start.The commission of audit has been asked to consider how governments can run things more efficiently, and that is certainly a good place to start.
But most observers say savings of the magnitude needed will require cuts to payments and programs, in other words, cuts that create losers. In its November report Balancing Budgets: Tough Choices We Need, the Grattan Institute proposes as the least painful options restricting access to the pension, increasing the pension age, reducing high-income superannuation concessions and broadening the goods and services tax. But most observers say savings of the magnitude needed will require cuts to payments and programs, in other words, cuts that create losers. In its November report Balancing Budgets: Tough Choices We Need, the Grattan Institute proposes as the least painful options restricting access to the pension, increasing the pension age, reducing high-income superannuation concessions and broadening the goods and services tax.
To date you have shown little appetite for that kind of decision. To date you shown little appetite for those kinds of decisions. In fact you seem to be ruling out using tax changes at all.
When the Productivity Commission recommended this month that the pension age might need to increase to 70, you ruled it out. You are seeking to abolish Labor’s cuts to high-income superannuation concessions, and during the election campaign Abbott ruled out changes to the goods and services tax. And straight after saying “all options are on the table” you said there would be no net cuts to health, education and defence spending because of promises made during the election campaign, which suggests they aren’t on the table.
You gave sensible speeches as shadow treasurer about the need to end “the age of entitlement”, but whenever Labor tried even gently to rein in the growth in payments on things such as family tax benefit, your side of politics screamed “class warfare”. When the Productivity Commission recommended this month that the pension age might need to increase to 70, you ruled it out. You are seeking to abolish Labor’s cuts to high-income superannuation concessions and during the election campaign Abbott ruled out changes to the goods and services tax.
You gave sensible speeches as shadow treasurer about the need to end “the age of entitlement”, but whenever Labor tried to even gently rein in the growth in payments on things like family tax benefit your side of politics screamed “class warfare” – although you carefully avoided ruling out cuts in those areas in your answers at the press club on Tuesday.
And you seem undeterred by all suggestions that the $5.5bn-a-year paid parental leave scheme cannot be afforded.And you seem undeterred by all suggestions that the $5.5bn-a-year paid parental leave scheme cannot be afforded.
Now you are saying “all options are on the table” and that Australians are going to be asked to accept some tough decisions.Now you are saying “all options are on the table” and that Australians are going to be asked to accept some tough decisions.
The second is the principles by which you will decide who any losers might be. The second question is the principles by which you will decide who any losers might be.
The criterion that government payments should go to those most in need seems to have been put to one side, for example, in your decision to try to keep the high-earner superannuation tax concessions but abolish the low-income superannuation contribution, which tried to fix an inequitable situation under which very low income earners pay more tax on the money they put into superannuation than they paid on their other earnings, while high income earners paid dramatically less. The criteria that government payments should go to those most in need seems to have been put to one side, for example, in your decision to try to keep the high-earner superannuation tax concessions but abolish the low-income superannuation contribution, which tried to fix an inequitable situation that saw very low income earners pay more tax on the money they put into super than they paid on their other earnings, while high income earners paid dramatically less.
Yes, your rationale was that the low income super contribution was nominally paid for from the mining tax, which you intend to repeal, but that was also the case for the $1bn worth of road upgrades which you have now decided to keep, so the nominal connection with the mining tax (always spurious since it’s all the same bucket of money, and made by the previous government anyway) is not apparently a show-stopper in every case. Yes, your rationale was that the low income super contribution was nominally paid for from the mining tax, which you intend to repeal, but that was also the case for the $1bn worth of road upgrades which you have now decided to keep, so the nominal connection with the mining tax (always spurious since it’s all the same bucket of money, and made by the previous government, anyway) is not apparently a showstopper in every case.
Now your commission of audit is being told to consider programs on the basis that government should do for people only what they cannot do for themselves. Now your commission of audit is being told to consider programs on the basis that government should only do for people what they can’t do for themselves.
You are asking the right questions about Australia’s budget, not just questions posed by some new “emergency” that has suddenly become evident since the election, but much bigger questions that governments have been avoiding, or only tinkering with, for years. Now we’re waiting to see how your government intends to answer them. You are asking the right questions about Australia’s budget – not just questions posed by some new “emergency” that has suddenly become evident since the election – but much bigger questions that governments have been avoiding, or only tinkering with, for years. Now we’re waiting to see how your government intends to answer them.
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