The conservatives are back in charge, @DrCraigEmerson comments on brutal #budget2014

Craig Emerson

Dr Craig Emerson is an eminent economist with almost 35 years experience in public policy, politics and public service. He is a former Australian Minister for Trade and Competitiveness, Minister Assisting the Prime Minister on Asian Century Policy and Minister for Tertiary Education, Skills, Science and Research.

Craig Emerson

Craig Emerson
Dr Emerson is a former Minister for Competition Policy and Consumer Affairs, Minister Assisting on Deregulation and Minister for Small Business. He is a member of the Committee for the Economic Development of Australia’s Council on Economic Policy and an Adjunct Professor within the College of Business at Victoria University. He is lead consultant to the Australia China Business Council for its Food Summit to be held on 23 May 2014.

Federal Treasurer Joe Hockey Minister for Finance Mathias Cormann brutal budget

Federal Treasurer Joe Hockey and Minister for Finance Mathias Cormann enjoy the fine things before handing down brutal budget

 

If ever there were any doubts about the difference in values between conservative and progressive Australian governments they were laid to rest by the Abbott Government’s first Budget. It was the pernicious embodiment of conservative philosophy: treat the poor and vulnerable as malingerers while going easy on wealthy backers; and, in order to maintain their view of the natural order of society, deny opportunity to the disadvantaged who cannot improve their life chances without some government support.

Increasing the eligibility age for the pension is targeted directly at the most vulnerable. Life expectancy has increased over recent decades, but overwhelmingly it’s been for the better off. Wealthy Australians can expect to live six years longer than the poor. And US statistics confirm that the top half of income-earning males have enjoyed a five-year increase in life expectancy over two decades while the bottom half have picked up just a one-year improvement. Life expectancy of the truly poor hasn’t increased at all.

So, as lawyers, company executives and money market dealers live longer, the poor are being obliged to pay by waiting until they reach 70 to receive an age pension. To qualify for unemployment benefits, 65 year-old manual labourers and nurses with bad backs will be expected to go for regular job interviews against 22 year olds. It’s humiliating and degrading, all because the Abbott Government doesn’t want to upset its support base by properly tightening the age pension means tests that the Howard Government relaxed.

At the same time, the highest income earners will continue to receive extremely favourable tax treatment of their superannuation benefits. Claiming a “budget emergency” forced it to make lifer harder for the poor, the Abbott Government immediately moved to scrap a modest Labor measure to reduce the generosity of tax concessions for the top 16,000 retirees. Yet it didn’t hesitate to reimpose a 15 per cent contributions tax on the superannuation payments of 3.6 million low-income earners.

In a disgraceful performance, Social Services Minister, Kevin Andrews, held a media conference on the Saturday before the Budget to terrify people with disabilities by announcing a tightening of eligibility for the Disability Support Pension. The previous Labor Government had already tightened those tests.

The purpose of the Andrews media conference was purely political – to demonstrate to Coalition supporters that it was being tough on malingerers. People with disabilities don’t read the fine print of government decisions – they see a Minister telling them they will be checked again by doctors and thrown off the pension if they fail the tests.

If the Abbott Government truly believed there was room for improvement while allowing genuinely disabled people to stay on the pension, it could have quietly released the changes on Budget night, along with myriad other savings measures. But it didn’t care about the stress and anxiety this prime-time media conference would create for many of Australia’s most vulnerable people. Someone, after all, has to pay for the Abbott Government sending $50,000 cheques to well-off couples to have a baby. It might as well be disabled people.

And don’t believe the political rubbish that the burden of fiscal restraint is being fairly shared. NATSEM modelling confirms that the top one-fifth of income earners will lose, temporarily, a tiny 0.3 per cent of their incomes, while the bottom one-fifth will lose around 5 per cent. Already, aggressive tax planners are advising their wealthy clients on how to avoid the temporary high-income levy through salary packaging schemes, so many will pay nothing more and, after the scrapping of the carbon price, will actually be made better off by the Budget.

In a forensic effort to leave no poor person’s life unturned, the Government will charge everyone $7 to see a doctor. It’s the first stage in the dismantling of Medicare, which the conservatives have always loathed. They scrapped the Whitlam Government’s Medibank, only for the Hawke Government to reinstate it as Medicare. As Opposition Leader, John Howard promised to “take a scalpel to Medicare,” which ensured the Coalition would lose the 1987 election. Medicare cannot be axed politically, but it can be dismantled by stealth. Ending bulk billing is the essential first step in that process.

When recovery from so many medical conditions depends on early detection, the deliberate insertion of a price signal to deter people from going to the doctor is bad policy. Hospitalisation costs will rise. But that won’t bother the Abbott Government, since it has cut payments to the States for hospitals, forcing them to demand an increase in the regressive GST.

In that same Budget category – payments to the States – the Abbott Government has ensured the needs-based school funding system is definitely Gonski. Giving disadvantaged children an opportunity in life through decent school funding has been made subservient to returning tax revenue to mining companies by rescinding the Minerals Resource Rent Tax. At the very time that the funding requirements for the previous Labor Government’s needs-based school funding model were scheduled to ramp up, so would revenue from the mining tax as the huge deductions for the original mine construction costs were exhausted.

Equality of opportunity is being denied, too, through the Abbott Government’s shift to a free-market university system. In Opposition, Shadow Education Minister, Christopher Pyne, complained about the Gillard Government’s demand-driven system of uncapped university places which was allowing thousands of first-in-family students to walk through university gates. Quality was suffering, the conservatives claimed. Pyne wanted the system re-capped. But in Government he commissioned a report that supported the demand-driven system. So he kept the demand-driven system while announcing the total deregulation of university fees, cheerily claiming full fees wouldn’t be a deterrent to disadvantaged students since they didn’t have to pay the fees until later. It’s like saying the demand for washing machines won’t fall if the price is quadrupled, because people can borrow to pay them off over time.

The true conservative agenda for universities is to return to the pre-Whitlam days when wealth was the key determinant of access to higher education, when it was important to keep ‘the riff-raff’ out and to ensure an ample supply of labourers to clean out the gutters, mow the lawns and do the ironing.

As Australia’s highest-income earners enjoy their fully reinstated superannuation tax breaks and look forward to receiving a $50,000 cheque for having a baby, Australia’s poor will be discouraged from going to a doctor, if they are disabled they will live in fear of their pension being withdrawn, if young and unemployed they will have to wait six months for income support and if older they will have to wait until 70 for a pension. The conservatives are back in charge.

*Craig Emerson is a former Minister in the Gillard Government.

Read Dr Craig Emerson’s piece: The media now operates with all the subtlety of a Pugilist.

Comments

  1. joy cooper says:

    Welcome Craig. It is wonderful to read your very erudite writing. Sorry, but I refuse to buy anything Murdoch, have for years, so I miss seeing your opinion pieces in the Australian.

    This budget is truly appalling & nasty. It is Dickensian in all its glory with the hoi polloi being ground down & actively prevented from utilising any opportunities to improve their condition.whilst the idle rich are allowed to continue with their inbred, self-absorbed lives being made easier, more cushier for them.

    This deliberate creation of such divisiveness is despicable but it is so typical of this awful conservative government. We all saw this would happen so I cannot understand why so many voters could be conned into voting against their best interests. Wonder how they feel now.

    Thank you, again, Craig for your commonsense & clear thinking. This is truly a nasty, talentless government with no thoughts, whatsoever, of building a decent Australia .


  2. Thank you Craig. And all these years we were told it was the left that did all the ‘social engineering’.

    The Abbott/Hockey budget continues the dismantling of the middle classes, punishing the poor and making sure their ‘constituency’ (Gina, Rupert, et al) are looked after. Just think how much money they can make once robots take all the mining and manufacturing jobs, no-one works on an Award, unions and workers’ rights are destroyed, everyone formerly of the working and middle classes will be able to pick up a casual job from time to time, but that will of course mean they can never borrow money to establish a business, or take out a mortgage to buy a house (if indeed they earned enough to repay a mortgage).

    Actually, those scary American SciFi movies about huge numbers of disaffected people struggling against a corrupt and entrenched elite hidden behind well defended walls, just doesn’t seem that silly any more. I mean, just what do young people do when they have no job, no home or income, no food – some will steal of course. it’s called surviving. Then we can all buy guns to defend ourselves…. just like the Americans. And yet, the Budget potentially sets us on such a course.

    The effect of the budget:
    - permanent and disproportionate sacrifice by the poor, elderly, disabled, unemployed re welfare;
    - temporary pain for the rich, but guarantees of long term privilege;
    - the poor will get sicker as Medicare is wound back;
    - youth not from wealthy families will potentially be – uneducated, unemployed, homeless, penniless and permanently disaffected;
    - the rich will be able to retire relatively healthy at 70 and enjoy life. Anyone whose employment involves physical labour will be unable to make it to 70. And even though they are physically unable to undertake work that may be on offer, they’ll still have to compete with young people (who also can’t get a job) for such jobs. This crushing humiliation is aimed squarely at the working classes;
    - rich youth who are not necessarily that bright will get special favours (such as the PM’s daughter getting a $60,000 scholarship at a design school led by a Liberal Party benefactor – a school that doesn’t give scholarships!); This is how the well connected will get ahead. Without connections, you go nowhere.
    - rich kids eventually won’t have to compete for places at good universities, as the poor and middle income groups can only get there through scholarships. The rich parents just keep paying like they did with their kids’ exorbitant school fees. But at least they won’t have to mix with so many nasty working or even middle class kids. Maybe the University could be located inside a gated community, where even the roads are private.

    I utterly resent these jokers trying to turn Australia into America. This is social engineering that will hurt us. The US has destroyed large parts of their middle class – in the name of defending the super rich, and the poor have simply been abandoned altogether to fend for themselves.

    Joe Hockey gave a speech where he advised that Hong Kong was a suitable economy for us to emulate – we’d simply have to lower our standards of living and live without any welfare safety net! Should we all be very afraid of Joe jockey? just what is he trying to achieve here?

    I once read an article by (jerk) journalist Paul Murray lambasting the Labor Government for not producing the NBN for the same price as Singapore or South Korea! (Of course, that was when Labor was vying for Government, and newspapers didn’t have to practise real journalism then.). But don’t you just love these ^^%$%^& proposing overseas solutions to a country as unique as Australia (i.e. lowest population density/one of the world’s biggest countries). In what parallel universe does Joe Hockey live in if he thinks (right wing) American abject lack of care for its citizens could work here. Barnaby Joyce, will you please explain to Joe (and Tony) that Australia is a big place, with no simple solutions, and what Government does is important.

    What did Australians do to deserve this lot?

    There is so much that can be said of this budget. Someone’s PhD thesis perhaps on how not to do a budget, or how to destroy a community, or how to destroy your faith in Government?

  3. rangermike1 says:

    Dear Joe was sitting at the breakfast table one morning and spied a note of interest on the side of a Corn Flakes packet. “Get your Economics Degree here” it cried. Joe not knowing how to count past Ten (Eleventy with his calculator) applied for the course. Joe was so eager, He sent off his $250:00 to the Corn Flakes Uni without a second thought. Back came his Degree. “Dear Joe, here is your Degree, Use it wisely and don’t tell a soul from who you received it”. JOE never has.

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