For some time now the government has been leaking a tough anti-deficit budget, almost line by line. The country was prepared for a bitchy, axe wielding effort as has been seen in the past. The result was very different.
The setting for the budget needs to be understood. A $50 billion deficit, with an average $25 billion per year deficit was the scenario. This budget is intended to get Australia back into surplus by 2012-13. The deficit is ridiculously small by international standards, and compared to Australia’s $1 trillion a year GDP, and 4% growth, $50 billion is smallish beer, if not tea money and not acceptable in terms of revenue.
(Note: All due respect to Keynes and Roosevelt, but I'm anti deficit on principle.You can't play footsie with your revenue forever like the US and expect to get away with it forever.)
The leaks were misleading. It was almost the antithesis of a political budget. Cuts there are, but not major surgery, more like tactful depilatory work. This budget was tailored to cut into “middle class welfare”, like the Fringe Benefits Tax, areas where there was actually fat to be cut. $2.5 billion out of defence and $1 billion from the public service were also cut. $2 billion out of various family tax concessions spread over a year or so isn’t really a major hit, at least in theory. Tougher work for the dole conditions were forecast and delivered.
What was unexpected were the new spending initiatives. $2.5 billion in mental health was a result which the mental health sector has now been sweating on for at least two decades. Even hospitals are getting a slice of the spending, and there won’t be too many complaints about that. Regional Australia, aka The Bush, is now getting big money and infrastructure money and for the first time, regional placements for skilled migrants. Even small business got some space, with various initiatives, instead of the usual handshake and smile.
The government’s compound slogan for this budget is “Jobs, jobs, jobs and back in the black”. As a matter of fact, that’s a bit of an understatement. The real baseline is strategic, and it’s looking as if Labor has remembered its origins and is finally diverting major resources to education, training and employment on a large scale. That will be welcomed by the Labor heartland, which hasn’t had a lot of encouragement in recent years from a somewhat ambivalent government.
All credit to Wayne Swan, however, for a decent effort in terms of doing some basic nuts and bolts work with this budget. His performance was almost evangelical, a sort of latter day Doc Evatt/ Bob Hawke approach and it sure sounded like the budget was the result of thought, not jingle writing. The Gillard government has been looking decidedly iffy with tax policy, muttering about taxes and not showing a lot of product and waffling about the carbon tax, which still doesn’t have a working model to consider. This budget will add some credibility and ideological spine which have been noticeably lost in the last year or so of press releases.
If this is a sign of Labor leaving Namby Pamby Land or wherever it’s been for the last 12 months and getting down to the hard work, then good luck to them. The education, training and employment initiatives have been going to hell, and they had to be upgraded and focused. The skills issues have been going around Canberra like a floating plastic shopping bag in a hurricane for 20 years.
The irony is that for a country which has dropping unemployment and a deficit which wouldn’t pay for a medium size US defence contract, this is “tough”. This is a strategic budget at heart, and it’s been long in the making. If the Bush gets the money and the workforce gets the big training boost it’s needed for so long, parting the waves of Lake Burley Griffin is the next likely miracle.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of DigitalJournal.com