The big questions this week are: what do governments do and why do they do them?
This week’s budget was an abdication of the fundamental reason for government: to do the things that must be done collectively, and cannot be done by individuals acting alone so as to nurture and protect people and society.
Essentially, the Government chucked unaccountable billions of dollars in tax cuts and concessions to business. The message was: do what you like with the money as long as you create jobs. Not a care or message as to what sort of jobs or what is to be achieved by them. Just jobs for jobs sake. Dig holes and fill them in and we’ll give you an investment allowance for a hole-digging machine and another investment allowance for a hole-filler-in machine.
But surely the pandemic and its lockdowns should have taught us more. To be brutal, a lot of our magical GDP is made up of people making coffee for each other. But come the pandemic lockdown, businesses could no longer sell $5 coffees. But people did not go without coffee. They made it at home for 30 cents. Our standard of living did not fall. Only the chimeral GDP fell.
The pandemic has shown that a lot of retail therapy has been unnecessary. A lot of business travel has been zoomed to redundancy. The role of government should be to prepare for a new economy not yearn for the old.
From its election in 2013 the Coalition has been obsessed with eliminating debt and deficit.
That is the what. What is the why? The Coalition obsessed about debt and deficit because it meant cuts to government spending, especially in public health and education, which they regarded as wasteful if it went a skerrick beyond what was needed to avert voter revolt.
But come the pandemic there had to be lockdown to prevent economic collapse. It meant severe inroads to business profitability. Under the Coalition Government that was an anathema – more of an anathema than high deficits and high debt. So, talk of the imperative to reduce debt and deficit went out the window. Demand for the products of corporate Australia had to be underpinned.
With debt and deficit deemed inconsequential, the Government could bolster demand (for the goods and services generated by Australian business) by giving big handouts to people who might otherwise become unemployed and big handouts to the businesses that employed them. The constant here is not fiscal prudence or debt control. Rather, the constant is looking after business mates.
Note, the handouts were nearly all done in cash. This is the corrupt brown-paper-bag element of the Covid response. Even the childcare handout was pushed to corporate providers.
The Jobkeeper tax cuts, the concessions to business and the Jobseeker money were provided in cash. The message was: just go out and buy lollies from whatever Australia business is providing to keep our mates in corporate Australia afloat.
There has been no eye to long-term structure or long-term national objectives about any of this. Rather it has been an exercise in handing money to the peasantry so they can buy the capitalists’ output. Throw enough money at the capitalists to keep them afloat. After a while we can go back to normal.
What an unimaginative, unintelligent waste of opportunity.
The government outlays on labour and capital could have, and should have, been structured for long-term national development. There is no need to give an unconditional investment allowance to any idiot who wants to dig a hole and fill it in again.
The money directed at labour should have been directed towards health and education and worthwhile infrastructure.
Much has been mentioned of the Government’s abandonment of its “principles” on debt and deficit when it comes to handout to corporate Australia. But there has also been an abandonment of “principles” of ensuring welfare is not “wasted” by giving cash that might be spent on booze and smokes. Given the need to provide money to boost demand for the goods and services provided by corporate Australia, cash is currency under this government.
The leopard’s spots of this government have been nothing to do with fiscal rectitude or welfare-recipient rectitude. Rather they have been geared to an endless pour of excessive public money into the black hole of Australian business, much of which is moribund, rent-seeking and migration-dependent.
Worse, the only deliberately directed government leg-up amid this “do-what-you-like-with-the-money” Budget has been in the wrong direction – money for a gas-fired power station and more for pie-in-the-sky carbon-capture schemes to prop up the coal industry.
There was next to nothing directed at renewables; electric vehicles; lower-carbon agriculture; bio-technology; mineral processing in Australia; water conservation and hi-tech industries.
The Budget was just another bit of the Coalition’s blinkered business-as-usual approach. It projected a return to senseless, unsustainable high immigration as soon as the Covid crisis ends.
There was no vision where the Australia economy should be in 10 or 20 years or how to get there. In particular, there was no vision about what part Australia must play if the world is to avoid climate breakdown and global heating.
Nor was there any recognition that a new world order on carbon will be upon us soon with China’s recent pledge on zero emissions and Europe and a Biden-led US taking it so seriously that they will penalise through trade sanctions countries that do not pull their weight.
Rather than face the prospect of inevitably being forced to be a good global citizen, this Government, starting with this Budget, should have taken seized the moment and set Australia on a new hi-tech trajectory.
By the way, we should stop using the words “climate change” and “global warming”. These are propaganda words that downplay the seriousness of the threat. “Change” can be benign and “warming” conjours up pleasant images of huddling around a heater on a winter’s day.
Rather, we should use words which portray the threat of massive bushfires; more severe floods and droughts; melting polar ice sheets and rising sea levels; extinctions and disappearing rainforests and reefs. That is the threat we face. That is the threat this blinkered, backward, visionless Budget shamefully ignored to the eventual great cost of the Australian people it pretended to protect.
A total failure of government.
Crispin Hull
This article first appeared in The Canberra Times and other Australian media on 10 October 2020.
Building more houses for an ever-growing population, to employ tradespeople, to generate income for an ever-growing population. It’s right up there with digging holes and filling them in, or mice on a treadmill. Much of the fit-out cost goes on imports manufactured in China, and probably employs more people there than here. It’s an intellectually vacuous industry, like selling cups of coffee or fast food. It’s not as if there aren’t exemplars: like building commuter trains and ferries (think Austal), respirators (Resmed, AmpControl), blood products (CSL), even novel drugs (Immuron). If we put a fraction of the money just dumped into housing and retail, we’d have a first world economy instead of a third world one.
I think people are waking up to the con this time: tax cuts are no use if you don’t have a taxable income e.g. un- or under-employed, small business can’t use instant write-off of assets if they don’t have the money to buy them.
The descriptor “incompetent frauds” applies to all of them. The descriptor “barely controlled anger” applies to me!
Great article Crispin thank you ! Expressing how many of us are dissapointed by this budget , being forced down the road of small govt by the ideology of the IPA by reduced future tax income and welfare for the corporates . Can you please research the IPA connections to the Taxas Institute and it’s backers the corporates in the US
Crispin, thank you for understanding how we feel, and putting it into words.
The Matthews Family.
I once read how the men who rowed the (Phoenician?) galley ships around the Mediterranean would hire overseers to whip them if they shirked or rowed out of sync…the historical coxswain… the Liberal Party of Australia, aided and abetted by the owners of capital using whipcash as the incentiviser.