Wayne Swan evidently can’t win. He’s copped a shellacking from the fiscal whip wielders (among whom I confess I number) outraged the budget didn’t cut further. Alan Kohler led the charge, calling it a budget any decent CFO would be embarrassed by. Chris Richardson, famous for the really uncanny accuracy of his economic predictions, got stuck in as well, warning it would increase pressure on interest rates.
But then the Telegraph bases its entire budget coverage around the bizarre idea that Swan is “pickpocketing” the middle class, complete with confused illustration of the Treasurer as … well, it’s not clear who — maybe Fagin, maybe the Artful Dodger, maybe the banker guy from Monopoly — reaching into the pockets of an honest, unsuspecting family.
Sadly, of course, Swan didn’t even do that. Continuing the existing pause on indexation of the thresholds at which middle-class welfare cuts out isn’t even pickpocketing of money that high-income families shouldn’t be getting in the first place. That would require actually reducing the thresholds — something unlikely to happen while we have a Treasurer who, as Swan did yesterday at his lock-up press conference, supports the idea of “family payments”.
The weird logic of attacking Swan for his non-existent attack on the middle class isn’t confined to the perverse world of News Ltd columnists. It was only recently that the Sunday Age ran multiple stories on why families earning $130,000 a year “don’t feel rich” and should continue to get welfare.
Still, it’s only borrowing from our kids, who’ll have to pay higher taxes in decades to come to support an ageing population. We do that an awful lot anyway. There’s no war on the middle class in this budget. It only fiddles at the margins with our fiscal war on the taxpayers of the future.
Putting aside yet another failure of fiscal nerve, from the vantage point of the morning after, it’s clear now Swan has crafted a budget that wilfully defies the traditions of recent fiscal history, almost an anti-budget: no big surprises, no elaborate theatre, many of the spends and saves revealed in advance, aimed squarely at a solid, worthwhile but not exactly scintillating economic agenda of maximising participation. It’s a contrast even with Swan’s previous budgets, such as 2008 when big infrastructure spending was hyped as “new era of investing in Australia’s long‑term future needs”. Swan may have oversold his fiscal vigour — his $22 billion in savings includes $1.7 billion from the flood levy, hardly new and hardly a saving of any kind, but the overall pitch of the budget is aimed at such dry economic challenges as capacity constraints and maximising the use of our human capital, not exactly the glamorous stuff of budgets past, but of rather greater long-term benefit, provided its welfare reforms can actually achieve anything.
It’s a positive contrast to the hype and melodrama of budgets over the last quarter-century and of earlier versions of this Government.
As for the Coalition’s line about the absence of a carbon price scheme from the budget, Tony Abbott’s own comments give the game away. On Monday he said the carbon price would be the biggest change to the tax system since the GST (which presumably is an acknowledgement by Abbott that a carbon price will have a lower inflationary effect than the GST, but that’s another issue) and therefore should be in the budget.
So, did the Howard government include the GST in its budget forecasts after it announced it?
John Howard first announced he wanted to break his “never, ever” promise on a GST in May 1997. His cabinet endorsed his proposal to pursue tax reform in August 1997, and the government established a process to develop what became “A New Tax System”, involving consultation with business and the public.
So did the 1998 budget include forecasts for “A New Tax System”? No. You’ll look in vain for revenue forecasts relating to a GST. It wasn’t until the 1999 budget, after Treasury had costed “A New Tax System” as part of the pre-election Charter of Budget Honesty process in the 1998 election, that we saw any forecasts for the GST, two years after Howard first said he was embracing tax reform.
Still, Abbott isn’t famous for his consistency from one week to the next, let alone one decade to the next.
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