This budget isn't as bad as Labor will claim and the Liberal heartland
will privately think. It's undoubtedly the toughest budget since John
Howard's post-election budget in 1996, but it's hardly austerity
economics.
I give Joe Hockey's first budgetary exam a distinction on
management of the macro economy, a credit on micro-economic reform and a
fail on fairness.
Although Hockey has laboured hard to ensure few
sections of the community escape unscathed, the truth is most of us
have been let off lightly.
Only those people right at the bottom
of the ladder have been hit hard - unemployed young people, the sick
poor and, eventually, aged and disabled pensioners - but who cares about
them? We've been trained to worry only about ourselves, and to shout
and scream over the slightest scratch.
Someone in the top 4 per
cent of taxpayers on $200,000 a year will be wailing over the extra
$7.70 a week they'll be paying in tax. A single-income couple with kids
will be losing a lot more than that, while someone under 30 denied the
dole for the first six months will lose $255 a week.
And everyone
will be angry about the resumption of the indexation of fuel excise, so
worked up they forget it will raise the price of a litre of petrol by
about one cent a year.
Anyone surprised and shocked by the budget
can be excused only if last year's election was their first. Any
experienced voter who allowed themselves to be persuaded that "Ju-liar"
Gillard was the first and last prime minister ever to break an election
promise should pay their $7 and ask a GP to check for amnesia.
If
you thought a man who could promise "no surprises, no excuses" was a man
who could be trusted to keep his word, more fool you.
Any
experienced voter who didn't foresee that changing the government would
mean this year's budget was a stinker, isn't paying enough attention.
Labor
supporters want to believe that because Hockey and Tony Abbott are
exaggerating about a "budget emergency" and "tsunami of government
spending", we don't really have a problem. They are refusing to face
reality.
After running budget deficits for six years in a row, we
faced the prospect of at least another decade of deficits unless Hockey
took steps to bring government spending and revenue back together.
Failure to make tough decisions wouldn't have turned us into Greece, but
since when was that the most we aspired to?
This budget is
Abbott's admission that his claim to be able to balance the budget
without increasing taxes was no more than wishful thinking. The Liberal
heartland, however, schooled for years to give its selfishness free
rein, is having trouble facing this reality.
Hockey's problem was
that, with the economy weak and with big declines in spending on mining
construction still to come, sharp cuts in government spending or big
rises in taxes could have slowed the economy to a crawl.
This is
why some of the biggest savings he announced - particularly on the age
pension - have been timed not to take effect until 2017. It's also why
he put so much emphasis on increasing spending on infrastructure,
particularly by the states.
The economy is expected to be a lot
stronger by the time Tuesday's measures take full effect. This carefully
measured approach is what wins Hockey high marks for macro-economic
management.
He claims his reforms will improve the economy's
performance. His best measures along those lines are the increased
competition between universities, the concessional loans to TAFE
students, the loans to encourage youngsters to complete their
apprenticeships and the grants to encourage employment of people over
50.
But some measures are likely to make things worse rather than
better. The $7 patient co-payment for GP visits and tests is certainly
likely to discourage visits - more by the poor than the rest of us - but
if it dissuades people from seeking help until their medical problems
are acute it may end up costing the taxpayer more than it saves.
The
planned tighter means-testing and much less generous indexation of
pensions will be defensible only if the planned review of the tax system
leads to big reductions in the superannuation tax concessions going to
retirees far too well off to get the pension.
