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Budget 2009 ---good times near « Previous | |Next »
May 13, 2009

The heavily leaked Budget 2009 is being sold as the third phase of a fiscal stimulus to ease the fallout from the recession. The headline number is an $22 billion investment in the infrastructure that Australia requires to recover, grow and prosper. There is $8.4 billion on roads, rail and ports, $3.5 billion on clean energy, $2.6 billion on education, $3.2 billion on hospitals and the old $4.7 billion investment in the National Broadband Network. The total---$22.4 billion for "building our way to recovery"---is a fairly modest government contribution to infrastructure spending.

This part of the budget proceeds with, and repackages and makes-over, the spending on infrastructure measures decided during an economic boom. The permanent tax cuts that will cost the Treasury $5.3 billion over the first three years were barely mentioned. It is simply adding on top of that the cost of responding to the economic bust. And beyond the recovery in a year or so? What then. Nothing said!

Moirbudget09.jpg

It is not a green budget at all. It fizzes very badly on clean energy being a green shoot as all we have are four Solar Flagship projects. Even though the budget is all about spending the money for the future, the amount for solar energy is small ($1.3b). It shows, yet again, that the Rudd Government is not that serious about greening the economy and using the recession to start making the shift to a low carbon economy.

There is little to indicate that the Rudd Government is freeing itself from eleven years of Howard Government hostility towards renewables, which was encouraged so effectively in the media by the coal and nuclear lobby. There is little to suggest that the Rudd Government will develop a renewables manufacturing industry, creating jobs and export income at the same time as cutting Australia's reliance on fossil fuels.

The attack on middle class welfare has been done with a feather, the unemployed are ignored, whilst the reduction of the big deficit ($53.1 billion) and reducing debt (gross debt of $300 billion or 14 per cent in 2014 and around 4 per cent 10 years from now) is based on optimistic growth forecasts, rather than cutting into middle class welfare (health insurance, family payments, super concessions).

The economy will bottom out in mid-2010, with a recovery beginning in the second half of next year and back to solid growth and good times. China plugs the gap. The "worst recession since the Great Depression" is pretty much coming to a close and the concern is planning what the government will do in the recovery. So how do they reduce the welfare spend that Australia can no longer afford cos the boom is over?

The Labor tradition is an increase in pensions--single age pensioners get an extra $32.49 a week whilst couples will get an extra $10.14 a week--and paid parental leave. Despite the effects of the stimulus package, unemployment in Australia will reach 8.5% next year, yet the budget contains little in terms of measures specifically directed at improving the lot of the unemployed.

How come that unfairness? Is it assumed that they'll all get jobs quickly. However, the long-term unemployed are ignored in favour short-term youth unemployed. So what does what fairness really mean here?

| Posted by Gary Sauer-Thompson at 7:30 AM | | Comments (14)
Comments

Comments

They need to get re-elected. The Rudd Government holds 22 seats in Parliament by a margin of 5 per cent or less. So the big cuts to middle class welfare are postponed until Rudd Labor is re-elected. in 2011.

Nan,
you may be right. The big front-end stimulus packages mean spending must be severely constrained down the track when recovery starts. If Labor is re-elected, the second term will be on one in which there is little capacity for new 2010 election-year promises.

Leonore Taylor in The Australian says:

The Government continues to promise to contain real spending growth at 2 per cent a year once the economy gets back to "trend" growth - something it is scheduled to do in 2011-12.But the budget papers show that in 2011-12 real spending growth is already running at 0.9 per cent. And in 2012-13 it stands at 1.3 per cent.That means there is almost no room for net new spending in next year's pre-election budget, or the one after that, or the one after that again. Years and years of governments refraining from spending any money.
We are either in for austerity budgets for some time, even in the lead-up to a federal election, even when economic times don't feel so dire - or else governments will have to find much more drastic offsetting savings.

Gary,
you ask: What does fairness really mean when the unemployed (long term have been forgotten in the budget.

Greg Melleuish in The Australian answers this as follows:

So what does it mean to be fair?For one thing, it means tempering a concern for those who have problems in the race of life with a willingness not to intervene if that intervention prevents the sort of failure that will lay the foundation for future success.

As human beings, often we feel impelled to do something when we see unhappiness. There are occasions when individuals have reached such a condition that it is necessary to do something. For those for whom the race of life simply has become too much of a burden to bear by themselves, we should do something. That is fair.

That account of fair implies that the unemployed need to be toughened up for the race of life by experiencing a bit of failure.

For many older workers fair means life on welfare--going from Newstart to the disability pension. They will not be retrained since life has not become too much of a burden to bear by themselves.

Tertiary ed did quite well out of it.

Nan,
Chopping middle class welfare in one budget would be political suicide. If they want to roll it back it makes more political sense to chip away at it gradually over several budgets.

For the majority, life after the budget will go on as usual.

Lyn,
yes there was $5.3b on tertiary education, research and innovation was more than expected. Gillard is starting to deliver on her education revolution, which recognizes that an investment in learning is an investment in growth (and a way to deal with rising unemployment).

Increasing indexation for teaching and learning in universities to be phased in from 2010-11 is long overdue as is the increase in their research infrastructure funding.

Where was the funding for the Government's big "earn or learn" push, given big increase in projected unemployment ? Do the unemployed wander into TAFE for a quick vocational course?

Still it does recognize that Australia must maximise its intellectual and creative resources and its skills if it is to develop and prosper in a global world. That is a welcome break from the Howard decade in which Quarry Australia was linked to an animus against higher education.

health seemed to have done alright as well. $2.5b for hospital and health workforce reform, $3.2b from Health and Hospitals Fund to modernise hospitals and improve cancer facilities.

What is the health workforce reform about?

Nan,
As you know, doctors have traditionally served as gatekeepers to Medicare and the Pharmaceutical Benefits Scheme, which they argued allows them to substantially lower the cost of consultations and medicines for their patients as well as ensure their safety. That gatekeeping role was ruthlessly defended by the AMA.

The proposed reforms ensure that midwives and nurse practitioners will spearhead Canberra's health workforce reforms, winning the right to both prescribe subsidised drugs and to bill their services to Medicare. This spearheard goes further and faster towards breaking down doctor-nurse boundaries than the Government's health reform adviser recommended.

The National Health and Hospital Reform Commission's interim report this year backed access to the taxpayer-funded health schemes for nurse practitioners and other allied health workers, but angered nurses by proposing the reforms start in country Australia, where doctors are always in short supply.

However, Health Minister Nicola Roxon set aside $126million over four years in a tight budget to fund the reform changes, which will apply in cities as well as the bush.Allied health has been left out in the cold.

The reform package also provides professional indemnity insurance for many of the independent midwives who have lacked cover since the HIH collapse. Home births are excluded --I think.

As far as I can tell, the tertiary ed funding isn't subject to specific, government-favourite target areas either. That's a relief.

On the earn or learn push and keeping unemployment numbers down, at our house it's consisted of a series of phone calls from Education Queensland. We got one yesterday, in fact.

Is your son still working?

He's actually interested in going to TAFE, but when I asked whether the earn or learn thing involved any assistance for young people making decisions and trying to support themselves, nobody really knew anything. All we know is that family benefits get chopped if you answer the questions the wrong way.


Shame about home births. Decent scare campaign on that. Just don't mention New Zealand.

How can "the most severe since the Great Depression" be expected to be over faster than "the recession we had to have", to be shallower than it was, and to be followed by a period of above trend growth? How come?

Lyn,
It would appear that the changes to indexation will just slow the rate of decline in resources per student.

This will encourage universities to make up the funding shortfall by enrolling as many full-fee paying overseas students as possible in undergraduate degrees and masters by coursework programs.

That means universities desperate enough to maximise numbers will continue to lower academic and English standards.

Surely reform would also mean ending some of the outrageous rorts under the Medicare Safety Net have been addressed without destroying the safety net itself.

Isn't this the first time that a government has been prepared to take on the specialist doctors in this way to redress clear anomalies and distortions in Medicare funding?

The AMA cannot be too happy about that. Their response so far has been muted.

Gary,
It's beside the point now, but I'd like to know what uni funding would have looked like had we not had a GFC.

We don't know how the recession is going to affect student numbers from all sources. Or whether it will. So far, not a lot has changed.

Gary,
Rudd seems to have put the fence higher with the 20% cut backs in immigration and the $600million or so added to border security. So does this make the rudd government more dirty than the dirty conservatives?

I thought that the cutbacks in immigration were for skilled migration not family reunion.