A key reason why Tony Abbott failed as Prime Minister is because he failed to acknowledge the true situation facing the Budget, and attempted to pin the blame for “Labor’s Budget mess” on too high government spending, under the guise of “lifters versus leaners”, while altogether ignoring the collapse of revenue.
Abbott then tried to argue that to not address the Budget deficit was a form of “intergenerational theft” that would leave future taxpayers worse-off, only to then target Budget cuts unfairly at the young and disadvantaged (e.g. via university cuts/fee rises and reducing access to unemployment benefits), while leaving the swathe of tax expenditures benefiting richer, older Australians (e.g. superannuation concessions, negative gearing, and CGT concessions) untouched.
Sadly, the newly-elected Turnbull Government seems to be making the same mistakes all over again.
Prime Minister Malcolm Turnbull over the weekend called on Labor to meet him in the “sensible centre” over Budget repair, and warned that “to act otherwise would badly misread the mood of the vast majority of Australians who want us to work together to secure their future”.
And yet in last week’s speech to Bloomberg, we heard Treasurer Scott Morrison effectively reincarnate Abbott’s “lifter versus leaners” meme with the “taxed and the taxed-nots”.
In this speech, Treasurer Morrison effectively blamed working Australians and the unemployed for the blowout in the Budget:
“… a generation has grown up in an environment where receiving payments from the Government is not seen as the reserve of those who unfortunately will be forever dependent on support or in need of a hand up, but a common and expected component of their income over their entire life cycle.
On current settings, more Australians today are likely to go through their entire lives without ever paying tax than for generations. More Australians are also likely today to be net beneficiaries of the Government than contributors – never paying more tax than they receive in government payments.
There is a new divide – the taxed and the taxed nots…”
Morrison’s view comes despite the data showing that working-aged welfare dependence has actually fallen over the past decade, as revealed in last month’s HILDA survey:
And yet, as part of the Government’s Budget repair plans, it still intends to raise $1.4 billion over four years by cutting unemployment payments to new recipients by axing the clean energy supplement.
As a result, the newly unemployed would be paid a record low of 32% below the official poverty line. The base Newstart rate for singles is just $263.80 – a paltry $37.70 a day – with the supplement adding $4.40 a week.
The proposed cuts have angered those whom care about fairness. Thirty four notable Australians have signed an open letter calling for the Government to abandon the Newstart cuts:
“For the government to cut a payment which is at a record low and going to the very least well off Australians when there are so many areas of largess in the federal budget is bad policy and bad politics…”
“A government that plans to give more to the richest Australians while cutting support for people below the poverty line will only further entrench inequality in Australia. We urge the Prime Minister and all political leaders not to cut Newstart.”
Even the Business Council of Australia has previously argued that Newstart “no longer meets a reasonable community standard of adequacy and may now be so low as to represent a barrier to employment”.
Meanwhile, Labor and the Greens have slammed the planned cut to Newstart and called upon the Coalition to instead target other areas, like negative gearing:
Greens leader Richard Di Natale told ABC radio on Friday.
“There are ways to do this without hurting the poor.”
Senator Di Natale and senior Labor figure Anthony Albanese said the government should instead be targeting negative gearing.
The government had conceded there were “excesses” when it came to negative gearing and yet was not prepared to do anything about it, Mr Albanese said.
“What we won’t support is just hitting those people who are most vulnerable, while leaving intact the big end of town,” Mr Albanese told the Nine Network.
In summary, we have a government that is perversely looking to cut unemployment benefits, which are already at razor-thin levels, at the same time as it defends property tax lurks that overwhelmingly benefit the wealthy, as well as watering-down its own modest superannuation reform package so that its wealthy constituents are spared from sharing the Budget pain.
The Turnbull Government’s best hope of holding on to government rests with it capturing the ‘middle ground’, and developing good policy in the national interest – reforms that blend Budget restraint with fairness, as well as combine efficiency with equity.
So far it is failing badly by following the Abbott play book, lurching to the right, and governing in the interests of the wealthy elite.
