Budget: season of sectors and selfishness

by on May 12, 2017

BUDGET time often shows Australia at its most sectional and selfish, especially if it is a Coalition Budget. This one was certainly no exception. It has been described as a turning away from the meanness of the Abbott Government’s mean approach of the 2014 Budget and turning away from obsession with deficits. But I get the sense that virtually every 2017 Budget measure was done with an eye to voters, but not to voters or society overall, but to particular “sectors” of voters who might change their vote for or against the Government according to how well or badly or unchanged the Budget affected their individual financial position.

Let’s take housing. It has three sectors: home-owners, investors and potential home-buyers, who are also often renters. It is not possible to significantly help home-buyers by making dwelling prices fall, without hurting investors and home-owners.

You can only make prices fall if you take the heat out of the market by removing tax concessions to investors. If prices fall, however, the 65 per cent of households who are home-owners would feel hard done by.

In balancing those sectors in the Budget the Government pretended to do something for first-home buyers with a tax-concessional deposit-saving plan and a plan to encourage states to increase supply.

It only tinkered with investor concessions. In short, it just added more air to the housing bubble.

Now let’s take education, which is deeply sectional. The Coalition has often been on the back foot on education, particularly after the first Gonski report. “Needs-based” funding was a winner. But the Gillard Government ran scared and promised that under needs-based fund no school would be worse off. The two were contradictory, financially unsustainable and educationally suspect.

Nonetheless, Gonski continued to give Labor the advantage with education. The Government had to do something. So it adopted Gonski, stripped of the “no-school-will-be-worse-off promise”. However, the Coaltion’s change did not come because it was a change of heart. Coalition members in their hearts are proponents of private and elite education.

The change did not come because they thought it was the right thing to so. No it came because it had to nullify Labor on this issue.

As it happens, needs-based funding is the right thing to do. You get more educational bang for your buck by putting money where it is most needed and less money where educational standards are already good – in wealthy schools drawing students from well-off suburbs.

In doing so, though, the Coalition has hit the selfish, sectional snag. The Catholic sector thinks it is hard done by and wants a special deal. If they get one, the Independents will want one too, and the whole thing will unravel.

If the Government holds its nerve, the Greens might support it because they like the fairness behind the funding base, even if they would like more money to be spent in total. But watch Labor opportunistically exploit the Catholic dissatisfaction, even at the cost of a better education-funding model.

The Coalition expropriated David Gonski himself to report on why Australia’s educational outcomes have fallen in the past 15-20 years, as a sop to the right of the Liberal Party which believes it is all down to “lazy” teachers and teacher unions, when we know nearly all of it can be put down to money being misallocated to where it is not needed.

As to financial sustainability, the Government will give more to the secondary sector by taking some from the tertiary sector. It is easier pickings. You can take money from tertiary students without too much of a squeal because they repay their fees way out in the future, so their parents are not too concerned and will not change their vote on this issue alone.

Coalition Governments can also take money from universities without too much fuss. Academics are seen as mainly Labor voters. Yet the correlation between excellent universities and good economies should be obvious.

In health, again the Coalition needed to neutralise Labor. Its heart is against universal public health with a single health insurer and for private health with just a safety net, no matter the inequity and inefficiency. But the Coalition had to be seen supporting Medicare and similarly the National Disability Insurance Scheme (through an increased Medicare levy) even though they are Labor ideas, because too many voters like them too much not to.

Medicare and NDIS are now voter changers as we saw last election. And they have to be funded, at least just enough to neutralise Labor’s advantage, not because the Coalition believes in them.

Similarly, with the ruling out the welfare meanies of the 2014 Budget – the “zombie” measures knocked back by the Senate. They were removed, not because the Coalition thought they were unfair, but because they had to be dealt with lest they affect our triple-A credit rating. But a couple of other sneaky ones were put in their place.

The Coalition kept favour with one of its favourite sectors since the Howard years: retirees. It gave an electricity payment to pensioners to heat and fuel their often high-value principal residences which are excluded from the pension means test. Too bad for younger renters who cop the same electricity bills.

Another sector that did well was coal mining whose subsidies topped $1 billion – a pretty good deal for the modest sums it donates into Coalition coffers.

Overall, the Budget was crafted for people and sectors who want more money and things for themselves – their “fair share”, which translates as more than they deserve.

It was a petty just-enough Budget – just enough to neutralise some big Labor advantages without doing anything about Howard-era tax injustices which have favoured the wealthy over the common good for two decades.

And, apart from a couple of big-ticket worthwhile infrastructure projects (inland rail and the second airport) there was little concern to the long-term common good.

That is why there was virtually nothing about the one thing we all share – the environment, in particular renewal energy. Unless Australia and other countries seriously do their share of the heavy lifting to preserve a now threatened planet, all the Budget cakes and how they are sliced up will be meaningless.
This article first appeared in The Canberra Times and Fairfax Media on 13 May 2017.

{ 2 comments… read them below or add one }

peter 05.12.17 at 7:38 pm


home ownership for the young….. leave the big cities,you can buy a house for less than 200K in a rural town. Factor your education to a rural career.

Environment is the single biggest issue. move rural, bang on solar and two tesla batteries and disconnect from grid.

Spaceship earth is dying, both sides of politics but more so LNP don’t care.

The budget is all about a double dissolution next year, the LNP’s “war on the poor” (the new boat people) and security will be the main agenda.

Who really are the terrorists? someone who blows up a subway? or perhaps someone who causes oceans to rise, crops to fail (india) , millions to die from heat, dying of thirst, plague, famine, reefs to die, species decimated and dont forget the bees (dying)

Spaceship earth urgently used a James T.

Brian O'Donnell 05.14.17 at 8:48 am

Excellent analysis Crispin.
There has been a lot of talk about this budget being Labor-lite, which focuses on where the LNPs have apparently moved to. Though (as you rightly point out) there innate preferences haven’t moved at all.
However, there has been less focus on the territory they have had to abandon in this forced move. They have had to abandon their rhetoric about DDD (the debt and deficit disaster) and the myth of their wonderful economic management skills. The down-stream implications of their abandoning that territory deserve thorough examination.

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