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
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.