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Federal budget tensions « Previous | |Next »
May 8, 2005

If the week before a federal budget is a strange one--a mixture of political restlessness, bureaucratic lockdown and keen business anticipation---this time around it is overlaid by a big shift in the policy and political landscape.

The work of the Howard Government in the next term is reforming both the welfare-to-work system and the nation's industrial relations framework; putting Telstra up for sale; deregulating the media; maanaging a slowing economy; and resolving the rapid development of Liberal Party leadership tensions into a brawl.

Will it be Costello's last budget? Aah the hares are up and running. Who will deliver the 2006 Budget? Nelson? Abbott? Downer? Now that gets people thinking.

The first step in the new reform agenda is the Costello Budget, due to be handed down next Tuesday. Judging from from the leaks, it is structured around reforms to welfare-to work system. The media leaks indicate that it is not going to be a big bold reform, due to the protracted Cabinet battles on the issue. So is ithe budget the first instalment on the well thought-through fourth term agenda that can be delivered with a Senate majority? Or is it another sign of policy drift?

The media leaks also indicate that despite the promised "sandwich and milkshake" style tax cuts to soak up the big surplus, all is not going well on the welfare-to work policy. There appears to be too much severe stick and not enough sweet carrot.

Too much stick means instruments to move people off pensions (tougher criteria for pensions, less genereous indexaton of pensions, greater penalties for long term unemployed who break the rules).The ideology to stop the men with "bad backs" abusing the welfare system. The central thrust is to contain the cost of pensions by cracking down on the long-term unemployed, who are simply seen as shirkers.

Not enough carrot means investment to ensure increased workforce participation through vocational training, wage subsidies, child care for sole parents looking for part-time work,better tapering of nenefits as income increases, extra support for pensioners facing cuts and incentives to business to hire people with disabilities or mental health problems. If the stick is about punishing the unemployed, then the carrot is about helping the long-term unemployed overcome the substantial barriers they face in getting a job. That will cost a lot of money.

I'm only guessing what the protracted conflict within the Government over the welfare-to-work reform has been about. I am presuming that the hardline Kevin Andrews, the Minister for Employment and Workplace Relations, has adopted a tough stick (punishment) approach based on presuming that 25% long-term dole recipents are not making a serious effort to get off welfare; one that enphasizes the outsourcing of welfare to the Job network agencies.

I am presuming that Howard and Costello want a greater emphasis on the carrot.

| Posted by Gary Sauer-Thompson at 11:59 AM | | Comments (0) | TrackBacks (1)
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» Budget Initiative – Goodbye to the Bludger, Hello from Senator Andrew Bartlett
All of the usual pre-Budget spin, leaks, kite flying and softening up has now occurred, complete with the now-familiar leadership speculation and the "is this Costello's last Budget?" questions. [Read More]

 
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