This week was budget week in Australian politics! Who cares you say? ME! Judge away, I don’t mind. I love all things politics, and budget week is no different.
There were winners and losers as always and it wasn’t particularly unsurprising who the winners were. As we head towards a July 2nd election, the Liberal Party know where their votes are. This is both good political strategy and horrible predictability that benefits the wealthier of our society. There are some things in it for everyone, but the winners and losers are not balanced across the socio-economic spectrum. Here is a run down of the big winners and losers, but I’m going to talk about other stuff here too.
They’re addressing bracket creep, which sounds good, and sort of is; but the devil is in the detail. If you earn between $80,000 & $87,000 a year, you won’t be pushed into the next tax bracket, which saves you $6 a week. At $87,000 a year, I’m not sure $6 a week makes the slightest bit of difference to your life, but anyway… This tax ‘cut’ will cost the government $4 billion, an absurd amount of money that makes little to no difference to the people getting it.
Imagine the schools and hospitals they could have funded with $4 billion! Oh yeah, they cut funding to education and health again too. This decrease in funding is meant to be offset by an increase in state funding, but there is no guarantee that’s going to happen.
Those with large amounts of superannuation will be worse off because of a tax hike. This only affects the top 4%.
One of the things I do like is a bit of a crack down on multinational corporations not paying enough tax. These reforms don’t go far enough, but it’s a good start. We are missing out on SO much revenue because of corporate tax loopholes. We should also stop subsidising big business and fossil fuels so much too, but that’s another issue.
We have both a spending problem and a revenue problem. You can’t look at one half of the equation without addressing the other half. We’re spending beyond what we’re getting (the deficit is up again, more on that later) and that is because of many things. Our resources are no longer as valuable. The mining boom is over and commodity prices are down, which means revenue is down.
There are some exceptions to this. Iron ore prices went down substantially in the last few years, but actually they’re up again. They’ve gone from $37 a ton to $55 a ton. This is good for our economy, but we can’t rely on commodity prices to prop up our budget.
This budget also assumes nothing will go wrong or substantially change in China. This may be ok, but it may not. China has been moving from a manufacturing based economy to consumption based economy over the last few years and that trend is continuing.
Growth was slower that previously predicted, which again has contributed to lower revenue and therefore increased debt.
In case you’re not sure what the difference between deficit and debt is; debt is the amount of money we owe, the deficit is how much we are spending over the amount that we’re earning. Being in deficit means that we are spending more than we earn and this has increased under the Libs who claim to be bringing us back to surplus. I’m not sure how if we’re actually spending more than we’re earning, and that amount increases every year… Some of this using deficit is due to global issues that aren’t the government’s fault however.
We’ve just spent $32 billion on defence submarines, but only $1.7 billion on defence innovation. I’m not sure our priorities are in the right place here. Do we really need 16 new subs?
Jobs and growth was the focus of this budget, and some of that sounds good in theory, but some of these measures don’t translate to the jobs and growth they’re promising. Trickle down economics does not work and never has. There has never been any evidence that it works. The idea that economic growth means more jobs isn’t always true. It often means people doing the same jobs for less money (less pay means more money floating around in the company which can look good) or more jobs, but also for less money (more jobs looks good on paper and is technically job growth, but at what cost?). The people at the top usually benefit from the extra money, not the workers.
Unlike previous budgets, Scott Morrison was talking up our economy for once. We are still the envy of much of the developed world in terms of our economic stance. We survived the global financial crisis basically unscathed (not that the Labor party got any political credit for this) and have been working towards balancing our budget once again. But have we?
One of the platforms of the conservatives is that they are responsible economic managers and Labor wastes everyone’s money. The numbers do not support this statement. Since the Libs took over, not only have we been increasing our debt, we have also been increasing our deficit! Here is our net debt as a % of GDP.
And a budget balance graph.
The conservatives also tell us that they want to lower tax. Well if they want to do that, they should, or stop pretending they actually do, or that it’s practical. Taxes are actually higher under the coalition government. They might want to genuinely lower taxes, but they can’t, because then we’d have even more of a revenue issue. And frankly I’m happy to pay my taxes if it allows the government to provide adequate support and services to the community. Lower taxes = less services, and that may be ok for the well off, but it really only serves to widen the gap between the haves and have-nots.
Even though Morrison talked up our economy in this budget, earlier that day, the reserve bank actually cut interest rates. Not a sign the economy is going really well.
The government is assuming a 0.5% increase in real GDP over the next year, but according to analysts, that’s unrealistic, which just means less revenue for the things they’ve promised to fund. Not good.
Then there is that new jobs/internship initiative thing. Basically the government will give a business $1000 to take on an unpaid intern. So… the business gets money for slave labor. Seems rife for abuse to me. I understand the idea that it helps people get experience so they can gain employment, but at what cost? You can’t work for free and still survive (although you would be receiving unemployment benefits as you’re technically unemployed. Work for the dole anyone?). They are also making this internship mandatory if you’ve been unemployed for 5 months. This seems like a good idea on the surface in some ways, but I can’t imagine it working well in reality.
There is some new infrastructure money for roads, and this is a good thing. However there is no where near as much money as expected being poured into infrastructure in general.
Tertiary education funding was cut.
Childcare subsidies were cut.
Aged care funding for nursing homes was cut by $1.2 billion. How awful.
There was zero mention of climate change. Pathetically predictable.
The tax on cigarettes is going to sky rocket. I’m not really sad about this. Maybe it’ll help fund health care. Except that it won’t because health funding was cut. Sigh…
There is $1.6 billion of spending unaccounted for. We’re yet to fund out what this is.
There is better super flexibility at the low end of the the superannuation spectrum, and this is a really good thing. This affects people earning less than $38,000, which is particularly good for part-timers and low-income couples.
Another brilliant thing is that the de-regulation of uni fees has been postponed. I hope it never goes through, although they’ve said they’ll reintroduce it next year. I guess it’ll be post election time then… But they can’t get these reforms through the senate. Hopefully that problem will persist.
The NDIS was fully funded, but isn’t really anymore. It’s now been pitted against pension funding. Basically we can fund one or the other, but not both. What an appalling choice.
ALL company tax is to be lowered over the next 4 years. This seems like it’s just going to cause more revenue problems. Decreasing income for the government is not going to help the debt and deficit problem. I know their plan is to stimulate the economy, but how does that help our nation instead of just benefitting share holders? I’m not even sure this helps workers, just those in charge. Again, trickle down economics has never been shown to work. To a point lowering company tax is good, there are certainly benefits, but everything is a two sided coin.
The vision for this budget is that business produces growth, which produces jobs, which stimulates the economy. It’s just never that simple though.
This budget seems to disadvantage those on the lower end of the socio-economic scale. If you are a single parent on $87,000 and you have 2 high school aged children, you get that extra $6 a week tax cut, but because of education cuts, you are actually $86 a week worse off. You’re down $80 a week. This doesn’t seem like a fair budget to me.
There are some winners here, but there seem to be a bunch of losers. The Libs certainly know who their voter base is and seem to have gone easy on them, pre-election. It’s not that their voter base has escaped unscathed, but it’s nothing too bad. It seems to benefit the wealthy more than the poor who get no tax cuts at all, and effectively get an increase in their cost in living because of health and education cuts.
On a completely different note, I was watching a live Q&A with Annabel Crabb on election night where she was answering questions on Facebook. Most people were asking budget related questions, of course, but there is still a percentage of the population who are ludicrously sexist. Women have to look a certain way and it’s acceptable to tell them when they don’t live up to your standards. Please. One commenter said that Annabel’s face didn’t look great, and she basically fobbed him off lightheartedly for being ridiculous. I would not have reacted so nicely, but I bet she gets this sort of thing a lot being in the media, even though she’s ridiculously smart, talented, great at her job, and gorgeous. I mean really, her face doesn’t look great?! Seriously? She’s not 19 and she looks fabulous! Even if she didn’t, we’re here for her mind, not her beauty. Shallow idiot.