This year’s Budget has revealed both a major flaw in the Budget process itself and a continued unsettling dishonesty in the wider political process which can only increase cynicism and alienation among the electorate. This year the Government used the Budget to initiate two major policy changes: the sale of the Commonwealth Bank and a new way to finance retirement incomes. In a decade when “”consultation” has become the buzz word it is inconsistent to launch major policy changes in the Budget.
The Budget process is essentially a secretive one and it is presented as a fait accompli. A comparison with the native-title issue is instructive. In that process, the Government prided itself on effecting a major policy, consulting all affected parties and getting a good result. On the Budget, the Prime Minister prided himself on a major policy initiative. But where was the consultation and is the result a good one? There was some secret consultation with the ACTU, which has had a special place in the ear of the government even though it represents fewer than 35 per cent of the Australian workforce.
The stamp of the ACTU can be seen in the resulting scheme. The scheme is to be needlessly run through the award system. It will give a large amount of power to union run superannuation funds and its implementation will be uneven and uncertain. Business, large and small, was not given a chance to present its views. More importantly, the superannuation industry did not get a say. And this for a policy which Mr Keating himself admits is to affect the Australian economy for 40 years. In a modern, complex industrial society, major policy should not be pulled out of a hat and plonked on the table as a fait accompli. The Government is to be commended for tackling superannuation and it has done well in widening its coverage since taking office in 1983. It is also to be commended for tackling the matter of Australia’s low savings habits. However, these big-picture issues are better tackled with more input from all affected parties. The trouble is that the Government was more interested in a short-term juggling act than in a well-thought-out policy.
Some Budget consultation has been offered since the Greens and Opposition blocked some parts of the Dawkins Budget two years ago, but it has not been of the sort that usually accompanies major policy initiatives where at least the outline of the policy is presented for comment. In this case only the ACTU was privy to the essentials of the superannuation plan. The framing of this Budget gives rise to the more general question of how much secrecy is really necessary in the Budget process. In the past, when the currency and other elements of the financial market were controlled and the flow of information more restrictive, Budget secrecy was necessary. Nowadays, a few tax measures, especially excise, might need secrecy, but many other elements could be opened up. Of course, it is not going to happen while the Government engages in government by deals _ playing one group against another, appeasing the marginal seats and making things look better than they are.
A more honest Government would not be frightened of putting proposals _ such as superannuation and the Commonwealth Bank _ up for discussion rather than making decisions in secret or after stitching up a deal with just one of the bodies affected. The other effect demonstrated with this Budget was the ability of the government to give with one hand a take away with the other. Because there were so many measures the extent of the sleight of hand has taken some days to becoem apparent. There were tricks galore. The so-called dollar for dollar government superannuation grant for example, is to be taxed at ordinary superannuation rates. In effect it is a grant of 85 cents for each dollar.
The company tax increases were no more than a way of bringing money into next financial year’s books which will go out the following year. Companies will have to pay an extra 3 per cent tax. However, in the following year when shareholders get their dividends they will be able to claim three per cent more in imputation credit. This Budget has shown that secrecy and dishonesty go hand in hand. It is time to remove major policy initiatives from the Budget process and to make the process more honest. The overall picture painted by the Government was a lie. It said it was reining in Commonwealth Government spending to create a surplus so that interest rates could stay down and something could be done about Australia’s trade deficit.
The fact was it increased spending on social welfare and increased taxes. It decreased spending on things that might help the trade deficit like Austrade, transport and communication. To balance up the figures it slashed grants to the states and sold off the family silver to pay the grocery bills. It is time for some legislated standards to be put into the Budget. Benchmarks need to be set so that objective comparisons can be made between past, present and future spending patterns. At present it is a movable feast. Movable measures like percentage of Gross Domestic Product and average weekly earnings were put up as measures of government performance. Unfortunately, it is not confined to the Budget process. Other economic indicators are twisted and diluted for political purposes. The consumer price index is suddenly transmogrified to a head rate of inflation.
Unemployment is qualified by the participation rate. Of course, the Government and those Australians it manages to convince with these accounting manipulations are like Voltaire’s Candide, imagining “”all is for the best in the best of all possible worlds” _ or more succinctly put by Mr Keating himself as: “”This is as good as it ever gets.” But there is one figure that cannot be dishonestly juggled because it is calculated by a reality outside: the trade figures. One day this best of all possible worlds will have to be paid for. It will have to be faced honestly.