Budget Reactions

Gillard & Swan

Tuesday saw Wayne Swan deliver his seventh, and possibly final budget. Clearly in an election year the general habit of government of any flavor to have a voter friendly budget. There are a number of issues at the moment that make this interesting, and possibly different. The Gillard Government has for the second term of Labor with a knife edge set of deals to secure a majority of one. This term has seen the ongoing effects of the global financial crisis, and a number of internal discipline issues for the party including the Peter Slipper matter which was more of a coup de disaster than anything else, and the seemingly never ending saga of Craig Thompson and the Health Services Union, Kevin Rudd now safely she assumes put to bed, and the ongoing matter of the failure to deliver on oft repeated promises and implementation od policy that she has committed not to implement. Government has clearly not been easy for them, and this has been exacerbated by the Prime Minister’s determination to govern ‘in defiance’.

Last year for a budget Wayne Swan determined that it would be a surplus budget, and with some nice footwork on the dance floor managed to move a few things back and forward in terms of years and come up with what was essentially a very modest surplus, in real terms a balanced budget. The problem was that nobody really believed it. In the last few weeks Wayne Swan alerted to the notion that there had been a budget blowout, and there would be a deficit of around 8 billion dollars. A few weeks later the Prime Minister advised us that in the wake of the number to key significant factors and the high dollar that the deficit was to be around 12 billion dollars. The it was Penny Wong‘s turn to let the cat out of the bag that in fact it was going to be 17 Billion Dollars due to a revenue shortfall. as a number that is $17,000,000,000.00, or about $750.00 for each man woman and child, probably about $2,000.00 per tax payer. A deficit means that we are running the country at a loss. You can do that for a bit, but not for ever.

The secret for the individual to grow wealthy is to spend else than you earn. If you earn $10,000 and spend $9,500 you will be better off that if you earn $20,000 and spend $20,500, by $1,000 per year. Do that for 10 years and you need $500 a year just to pay the interest.

The tradition of the conservative side of politics is to see virtue in a budget surplus, and on the socialist side of politics to distribute wealth especially to lower earning groups. This is often described as the trade off between social justice and fiscal responsibility. Glibly put, the liberals believe it is made flat to stack whilst Labor thinks it is made round to go round. The best outcomes or the community i found somehow between the two approaches. We need social change, we need equitable distribution of resources, and we need to pay our way as a nation other wise we won’t have enough resources to equitably distribute.

On one level then the budget is a classic Labor Budget, extending the social reach of Government. The National Disability Insurance Scheme is a huge ticket massive social impact scheme, a big ticket item, and it is clear that the people of Australia believe in it. Most Australians are prepared to cop a .5 % levy towards the funding of the scheme, which will pay for about one third of the scheme. People are concerned on the current track record that the costing may well be wrong an that it may well prove to be more expensive, and wonder about the capacity of government to do it. It may well be one of those things we can’t not afford, even if we can’t quite see how we can afford it.

The Gonski reforms to Education are a more difficult for the electorate. The Labor track record on Education isn’t as easy to swallow, though Julia Gillard has constantly painted it as the great success. The Building Education Revolution was seen as a huge waste of money, poor administered, over spent and under delivered. Many of us think it is not just about throwing money and having more bureaucratic staff and new white papers. A big ticket item we can’t understand or afford at the moment. Perhaps it needs to be explored a bit more before we buy this one.

In short the budget introduces, 90 days out from election the Labor/Gillard ten year plan in an environment where the expectation. It represents an undisguised attempt to force the social and political agenda of the Coalition who are expected to comfortably gain government on September 14.

Thee electorate therefore concludes, ‘lets see the mini budget in November’. And most of us hope that 17 Billion is the ceiling,  and fear it may yet be another tragic under estimate.


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