I’ve been pointing out for eighteen months that the Abbott Government’s real intellectual leadership appears to be coming from Joe Hockey. In an interview with the AFR today he raises expectations that he is for real about the end of the “age of entitlement”:
Treasurer Joe Hockey has signalled an early release of the Commission of Audit’s findings, and argued the public needs to understand the magnitude of the task facing the government if it is going to support the necessary budget cuts.
…Mr Hockey said the government hoped to adopt the “great majority” of recommendations in the audit and would include savings in the May 13 budget in addition to those recommended by the audit.
Mr Hockey said he would not be distracted by short-term volatility that has roiled financial markets…
Sounds promising, Hockey goes on:
“We cannot longer rely on the land, through minerals and agriculture in particular, or the heavy lifting done by previous generations of manufacturing. We can no longer rely on that to sustain our quality if life in the future…Most governments everywhere have run out of money and a private sector that is awash in money needs to start doing the heavy lifting and the private sector is individuals as well as corporates,’’ he said.
And on SPC:
“Ultimately it comes down to the fact that [SPCA’s parent company] Coca Cola Amatil was asking for taxpayers’ money to buy plant equipment to retool the factory,’’ he said. “Abdul the kebab maker in Parramatta mall, to quote [former Liberal MP] Ross Cameron, is not asking for a new oven. These business are there to compete in the open market place. We want to encourage enterprise, not entitlement.’’
Mr Hockey said the only areas immune from cuts would be those promised before the election and this was important because the government needed to offer stability as well.
Hockey also refused to endorse Families Minister Kevin Andrews on his promise that the exemption for the family home from pensions means testing would remain.
The AFR editorial offers this summation:
[Hockey] is starting at the top: no to the corporate welfare cases at GM Holden and SPC Ardmona. He is even prepared to tough it out with drought-hit farmers. And he is ready to extend this to middle-class welfare and bloated government through his Commission of Audit into the federal budget.
…Mr Hockey is out to do nothing less than break the entrenched political economy of the modern welfare state, including corporate welfare. Mr Hockey’s London speech described how democratic countries had given particular groups of citizens more and more taxpayer funded entitlements, partly because they were better and richer societies, but mostly as part of the modern democratic competition for votes. But once the tap was open, said Mr Hockey, no-one had been able to turn it off. The spending moved from tax money to borrowed money. And it was always politically easier to hand out the goodies than to take them back.
…the spending party is still over because our medium-sized, resource-driven economy is leaving its biggest mining investment boom of all time with a budget deep in the red, just as the budget costs of an ageing population are beginning to bite.
…The second force driving the end of the entitlement age is the reshaping of the Australian economy from a protected domestically focused manufacturing base into a supplier of minerals, energy, services, food, and niche manufacturing to Asia…
That signal extends to the linkage to Australia’s traditional industrial relations system, based on the defining assumption that the state should intervene to set a “fair” wage. The assumed entitlement of labour, divorced from its contribution to profit, was then attached to the corporate entitlement to protection from foreign competition.
I’m all for this. Go ahead, Joe. Break it. It will give the Liberal Party the mission it currently lacks and will make Australia richer via higher productivity growth and fairer as a more functional meritocracy.
But if you’re going to do it, do it properly. Get rid of:
- negative gearing
- exemptions for the family home from the pensions means test
- superannuation concessions that disproportionately benefit the wealthy
- paid parental schemes that disproportionately benefit the wealthy
- baby bonuses
- fringe benefit concessions on company cars
- diesel fuel concessions for miners
- free guarantees for offshore bank borrowing
It’s a long and difficult road, Joe, reversing many of your own Party’s policies. But if you take it you’ll have my support.
