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TOUGH OR STUFFED? The “tough” budget that gave the ABC a record funding increase

bigspenders Inflation – and a lot of it – is the inevitable consequence of much of the economic policy coming from the governments of the world, including this budget’s record spending.

Inflation’s cruel effects on the most vulnerable in the community are well-documented, the living standards of people on fixed incomes like pensioners are eroded while people able to increase their prices or their salaries keep up or even do better.

Accepting huge potential inflation risk seems to have been the price the world has paid for avoiding a really tough shake-out of the economy.

Try renting a property in Melbourne, prices haven’t come down. Look on seek.com, (no one looks for a job in The Age these days except in the newsroom) there are plenty of jobs out there. Talk to retailers, many are doing very well, thank you very much.

This has been recession we have barely noticed except for the fact that the two biggest media centres of the world, New York City and London have been hit hard and have been keen to tell everyone about it.

So the government’s white-knuckled response was to splash an indecent amount of cash around in massive hand-outs to get people spending. There can’t be much doubt it’s worked, there is a lot of debate though about whether it made sense and what its long-term effects will be in terms of inflation.

SOME GREAT DECISIONS
That said, not all government spending is bad. The spending on infrastructure – like on broadband – that will permanently boost our competitiveness and prosperity is welcome and timely.

The hand-outs we’ve already seen, the failure to remove the Howard government’s middle class welfare measures and an absence of cuts to corporate welfare and enviro-babble are the disappointments.

SOME ORDINARY ONES
Noteworthy is that in the middle of this financial crisis, record funding has been found to expand the ABC, $136.4 million over three years. Another big win for Communications Minister Steve Conroy, whose Cabinet clout is clearly much bigger than his foes had suggested, but perhaps not the biggest priority in time of crisis.

Each year we see Treasurers develop with each budget, the closest this nation comes to a State of the Union address.

It was a privilege to see Paul Keating grow into his swagger delivering them, John Dawkins and Ralph Willis we’d rather forget and suspect everyone else has, perhaps we’d grown too cynical to always appreciate Peter Costello’s imitation and Wayne Swan has often seemed much smaller than those big men.

SWAN RISING
But it’s clear this is a big budget and one driven by a Treasurer never more confident and in charge.

Wayne Swan is the first Treasurer of this country who was a party secretary, a campaign director, a machine man.

And that makes him very politically savvy. So the cuts have been cautious, mostly foreshadowing a gradual change in direction away from middle-class welfare.

It’s a case of putting the frog in a pot full of cold water and hoping it doesn’t notice the gradual increase in the temperature as you turn the cooker on. That wouldn’t be our approach – especially given the dimension of the troubles in the world providing such a good excuse to act quickly and decisively – but we wouldn’t want to second-guess Swan on making the right political call. He’s as sharp as there is in Canberra.

At dinner parties around the nation the last few weeks, the talk of potential cuts to the private health insurance tax rebate has reflected much concern. By removing it in the way Swan has, he’s minimised the criticism while set the direction of policy clearly enough.

So from the luxury of this armchair, we are happy to preach about the need to scrap all the taxpayer funded and subsidised indulgences of upper middle class life in Australia. Not scrap the indulgences just the public subsidy of them.

From multi-billion dollar family payments to baby bonuses and everything else, they were Howard’s most potent political weapon and the one thing that massively undermined his policy credibility. If Costello had been as effective as Keating, he would have stopped most of this.

TARGET EVERYTHING – NO MORE WELFARE FOR THE WEALTHY
When one talks of these things, the echo of Mark Latham can be heard. Enough to cause anyone distress. But just because Mark Latham says it doesn’t necessarily make it not true.

But we prefer the echo of one of the great of Australian politics past, perhaps our greatest finance minister Peter Walsh. He was all for government helping people, but only the people who really needed it.

If Wayne Swan follows that principle he’ll surprise a lot of people as Treasurer.

The people of Australia voted for an economically conservative administration headed by self-professed ‘economic conservative’ Kevin Rudd.

After reading Rudd’s Monthly piece, we’re not so sure what he believes anymore but we’ll take him at his word, that he doesn’t like government deficits or big public sector debt and regards them as a temporary aberration designed to tackle this once-in-a-lifetime global financial meltdown.

The great thing about that is Rudd – when the storm clouds of the GFC break – will have the opportunity to be a Labor economic conservative. He’ll have to win in 2010, keep government out of the way of the recovery we need to have, manage the inflation current monetary and fiscal policy will cause and shape a new Labor form of economic conservatism.

In contemplating whether the vast web of government handouts to so many well-off families should continue indefinitely, he might consider the words of a real conservative:

You cannot establish security on borrowed money.

You cannot help men permanently by doing for them what they could and should do for themselves.

A safety net is undoubtedly good for the fabric of society and ultimately for the economy.

But it’s not a safety net to collect money in tax from families and then pay it back to them as “Family Payments” and expect them to be grateful.

A WIN FOR A MODERATE UNION
And paid parental leave sounds compelling when every except Swaziland has it but what will the public reaction be when some of its recipients receive a pay rise while on parental leave compared with their previous earnings? I foresee a future ACA/Today Tonight programme on this very issue. That’s the problem with a big government fits all solution.

Far more sustainable and sensible would be rewarding and encouraging those employers who’ve already moved on paid maternity leave for their own sound reasons.

It won’t get much credit for it in the media or the union movement generally but it’s been the stealthy but effective Shop Assistants Union who’ve championed this cause, negotiating paid maternity leave with firms like Ikea and Noni B, Bunnings, Aldi and Woolworths. Members of that union clearly get a lot of value for their dues.

The smaller issues aside, the government’s budget papers set out a direction for the next few years. Long-term economic forecasts are nearly as difficult as long-term weather projections.

But you don’t need a crystal ball to figure out that the path back to surplus is get rid of all the public subsidies of private health insurance, first home buying, tax deductibility for the interest on beach-houses and investment properties, uncommercial farming operations and so much else. Use all that to reduce nominal tax rates, cut the occasionally still insanely wasteful bureaucracies in Canberra and Kevin Rudd could end up being the economic conservative he promised to be while being Labor all the way.

Discussion

Comments are disallowed for this post.

  1. economic conservative will never ever be a term that can be successfully associated to anything Rudd or Swan have done!

    Posted by anonski | May 13, 2009, 12:56
  2. RUDD IS A DISGRACE!

    Posted by anon | May 13, 2009, 13:23
  3. After last night he is definite a ‘one term wonder’, his only chance is to go early before next year’s budget.

    Posted by anon | May 13, 2009, 14:06
  4. Spoken like three typical liberals who can’t get over the fact that the vast majority of Australia, be it Federal or State Government don’t respect, nor want a Liberal Party in Government and actually prefer Kevin Rudd who you’ve described as a disgrace. Poor little boy, get over it and wake up that the people have spoken, get used to it. And as far as ‘Anonski’ goes, you should get start doing some real work for your Liberal master instead of thinking up childish names to hide your identity and your obvious disbelief that the Australian Population don’t want your party’s conservatives in Government and probably won’t for quite some time.

    Posted by Bill | May 13, 2009, 17:01
  5. Increasing the age for age pensions to 67 was first done in Sweden, a so called socialist state which is also a pornographers paradise.

    Swan and Rudd ought to be ashamed of themselves. Heavy manual workers deserve a retirement. Forcing them to work longer years will lower their life expectancy. Is this budget meant to benefit the working class? I think not.

    The Maoist union boss Clarrie O’Shea once said on Bill Hartley’s radio program on 3CR that the worst think any worker could do was to vote for a Labor government. Rudd and Swan may prove him right.

    Posted by Anonymous | May 13, 2009, 17:21
  6. I am concerned that Little Kevvie has misplaced his hair dryer.

    Posted by Concerned Christian Families of Mitcham | May 13, 2009, 18:17
  7. Piss off anon 17:21 Hartley and O’Shea were commies

    Posted by Anonymous | May 13, 2009, 21:05
  8. 21.05 is a typical fan of Bruce Ruxton. Tells me to piss off and suggests Hartley and O’Shea were commies. One was and the other was a Lib.

    O’Shea was a Maoist. He was a member of the Communist Party of Australia (Marxist Leninist).

    Hartley was once President of the University of Western Australia Liberal Club. He later joined the ALP and was expelled over support for Arabic terrorists abroad. Hartley ran for the Senate using the title Industrial Labor Party and his preferences were directed to the Liberals. He was a Lib in his youth and towards the end of his life also supported the Libs.

    We have a Maoist and a Lib saying the same thing. That doesn’t mean they may not be correct.

    Pommy civil servants who have never done a days hard work in their lives were responsible for raising the pension age by the Pommy Labour Party. Rudd and Swan should use their brains, if they have any, and not listen to Pommy civil servants.

    I’m not racist. Pommy civil servants are the enemies of all decent working Australians.

    Posted by Anonymous | May 14, 2009, 1:50
  9. Rudd is just a younger version of Howard but with a hair dryer.

    Posted by Natural selection | May 14, 2009, 23:27
  10. Natural selection – you pay Little Kevvie a compliment he in no way deserves.

    Posted by Anonski | May 14, 2009, 23:51
  11. William Bowe on the Crikey Poll Bludger web site has censored my views about Rudd and Swan and the budget.

    I said that it was a bad budget and the people who will suffer are the workers.

    Bowe is a typical mad Labor supporter. Not willing to accept that some people have alternative views.

    Posted by Caroline Church | May 15, 2009, 0:48
  12. Crikey is not a fan of this news site. That’s why Caroline got censored. Bowe is merely doing what Crikey told him to do, to ignore Vexnews.

    Keep fighting Caroline.

    Posted by Anonymous | May 15, 2009, 0:50

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