Budget war on all fronts

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It’s not an especially encouraging sign when the day after the Budget the Prime Minister is forced to roll out his biggest cannon:

AN election fight looms over the federal budget as Tony Abbott ­demands the Senate pass his economic agenda, despite a furious response to sweeping welfare reforms and school funding cuts.

Laying out a political strategy towards the next election, the Prime Minister said he would not accept attempts to “completely frustrate” the government.

Parliament will start to debate key budget bills within days as the Coalition prepares to force votes as quickly as possible, so that changes such as the new deficit tax can take effect on July 1.

While open to “horse-trading” on details, Mr Abbott indicated he would insist on the passage of the overall legislation.

“What we won’t accept, though, is an attempt to completely frustrate the business of government. I don’t believe that they will try to completely frustrate the business of government because, if there was an election again, hardly any of them would win their seats.”

Here’s the wrap-up in the Senate:

  • On the debt levy, Labor might offer support but might also elect to make it a “broken promise” by resisting, the Greens and LDP have said no but it still has a chance with PUP (but how likely is that?);
  • the petrol excise has Greens support and will pass;
  • the Medicare co-payment and the later retirement age are in trouble with Labor and PUP saying no and the Greens unlikely to;
  • university deregulation and hospital funding cuts could still make it with only the Greens objecting to date and,
  • family benefit cuts are still open slather.

But that’s only the beginning. The state premiers are coming together in an alliance to push back on everything:

Mr Abbott has also fallen foul of the premiers after the shock announcement in the budget that the Coalition would strip $80 billion from schools and hospital funding on the basis that the states run schools and hospitals and they should therefore take full funding responsibility. The move is designed to force the states to unite and agree to increase the rate or spread of the GST, from which they receive all the revenue.

…Queensland Liberal Premier ­Campbell Newman accused Mr Abbott of trying to force the states to lift the GST and demanded an urgent Council of Australian Governments meeting, which Mr Abbott refused.

NSW Premier Mike Baird accused the prime minister of a treachery which could damage the state’s credit rating.

…“What we’ve had last night from the federal government was a flick pass, it’s cost shifting and it says to this state, ‘we have a problem, you work it out,’ ” he said. He said the federal government should get its own house in order. There were similar outbursts from Victoria’s Denis Napthine, South Australia’s Jay Weatherill, Western Australia’s Colin Barnett and Adam Giles from the Northern Territory.

Business is in revolt over skills cuts:

Ten skills programs will be axed to save $1 billion. But the government is introducing an industry skills fund worth $476 million over four years to provide 121,500 training places in areas such as health, mining, manufacturing and defence. Businesses will be required to make co-contributions towards the cost of training on a sliding scale based on the size of the enterprise.

The Australian Industry Group lamented the loss of the long-standing Workplace English Language and ­Literacy program, which will be discontinued. “Never before has it been so important to develop entry-level skills, especially important trade and technical skills, but we also need to upskill our existing workforce,” AiGroup chief executive Innes Willox said. “Skills are a much-needed productivity enabler.”

Business Council of Australia chief executive Jennifer Westacott said the budget would impose relatively harsh measures on young job seekers without commensurate investment in training.

“The changes to Newstart [Allowance] look pretty tough,” she said. “When you look at that against the unemployment figure going up, can this be done? [For] a lot of unemployed young people, their literacy is poor, their numeracy is poor.”

So, who is happy? Medical research:

CORPORATE leaders sitting on boards of the nation’s top medical research institutes could not believe their good fortune.

Despite comprehensive leaking of the Abbott government’s first budget, the establishment of the Medical Research Future Fund — the world’s biggest medical research fund, to be capitalised at $20 billion after five years — was so unexpected that some of the institutes’ top administrators were winging their way to Washington on Tuesday night.

Why? To do what Washington does best. A fundraiser. Australia’s ambassador to the US, Kim Beazley, was hosting a dinner for some of the world’s big research funds, such as the Bill and Melinda Gates Foundation.

I hope there are a lot voting researchers because I can’t discern much of a political budget strategy beyond scorched earth…

 

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Comments

  1. It was interesting watching Mr Pyne on 7.30 pm get chased about the yard as to where he thinks the states could find the ‘money’.

    He was right to dodge the question.

    The states have taxing powers galore ( income and land tax for example) – but oddly Ms Ferguson does not seem to understand that – or perhaps was just enjoying making Pyne duck and weave.

    It is about time the states grew up and started to take responsibility for those things which are theirs under the constitution and that includes raising the funds to do so.

    The states are responsible for everything not expressly made the responsibility of the federal government.

    While Mr Abbott is clearly reaping what he sowed it would be good if the opposition parties rise to the occasion and present their alternative – even if there is a risk Joe will pinch the best bits.

    • migtronixMEMBER

      Good luck with that, the only thing more corrupt than a federal MP is one that started out in state parliament. Check out today’s ICAC for hints

      • Because the states (colonies) were self governing before federation and when they finally did agree to federate they powers they gave to the new Cwth were limited.

        This is the main list of what they agreed to hand over.

        http://www.austlii.edu.au/au/legis/cth/consol_act/coaca430/s51.html

        Anything not exclusively handed over they could still do.

        http://www.austlii.edu.au/au/legis/cth/consol_act/coaca430/s107.html

        Of course the High Court has been busy working over time in reading this list (and resolving inconsistencies between State and Federal laws) as broadly as possible to expand Cwth powers but in most cases the States are still free to do what they want.

        While I doubt that Mr Abbott really is into competitive federalism – most Canberra pollies want more and more power in their hands – a bit more correspondence between those who spend and those who tax is a good thing.

    • Hunson Abadeer

      The trouble with asking the States to raise extra funds in an ad hoc fashion like this is that most of their tax revenue comes from super inefficient taxes (stamp duty / income tax) and the knee jerk reaction will be to raise those or their slew of smaller but still inefficient ones

    • It would be a fascinating to see it devolve into a showdown between federal government and the states, start competing with each other, collecting revenue and providing services (US) or dissolve and remove a level of government completely (NZ)!

    • Stephen Morris

      “Responsibility-without-power” is devolved, while “power-without-responsibility” is centralised.

      The history of Australian taxation is one of relentless centralisation, with the Commonwealth actively destroying any tax which might give the States freedom of independent action.

      The matter was discussed at length on Macrobusiness (here) in September last year.

      Mr Abbott has made no secret of intention to fulfil Henry Parkes’ dream of a creating unitary Australian state with Sydney as its glittering imperial capital.

      His “mature discussion about taxes” will centre on the States effectively surrendering control of their remaining independent sources of revenue. Mineral royalties will be high on the list.

      As the saying goes:

      “The Liberal Party is now a broad church. It covers both sides of the Harbour.”

      • Yes, I have little doubt that Mr Abbott and Mr Pyne’s antics are nothing more than theatre.

        At the first hint that a state politician might seriously start pushing a states rights agenda, their tune will change quickly.

        But the chances of any state politicians doing that remain low as most state politicians and most people coming out of universities do not question the prevailing wisdom that the federal structure of the constitution should be subverted at every opportunity.

        So what we will get is a bit of argy bargy until the centrist-at-heart state politicians give Mr Abbott what he really wants and that is their support for a greater concentration of taxing powers in Canberra in the form of a higher GST.

      • migtronixMEMBER

        Very well said SM. Australia governments everywhere – being dominated by boomer self interest for 20 years – have abrogated their most solemn duty of stewardship for the next generations and have left us with fascists!

        Just about everyone on this board sickens me now! No safety net, no ability to afford dwellings, no educational support, no penalty rates ! But we get company tax cut, mining tax cut and cc tax cuts….

        Everyone is OK with it because it means the young will never have entitlements, and that’s what we want we want them to learn they’re here to pay! Not live..

        You all disgust me!

      • “You all disgust me!”

        I’m pretty sure that you’ll find a lot of us are strongly against this budget (but it may well be the case that we’re still disgusting in other ways).

    • DelraiserMEMBER

      On this point, I must disagree, if only for the fact that out triplicate sytem of governement requires root and branch reform before we even contemplate states expanding their tax base.

      I for one would love to see states being able to collect sales tax (GST) and income tax individually, as it would give an opportunity for the more inventive types to lower taxes and compete for skilled workers and value add industries.

      The problem is that land taxes and local council rates are effectively the same thing, income tax can’t be collected by both state and federal governments and sales taxes can’t be levied by both.

      States are the main health and education providers, yet must fund these through a federally raised tax (GST) and various inefficient taxes like stamp duty, payroll tax etc.

      If we are to empower the states with greater revenue raising powers, we need a serious debate on what government layers are required and where responsibilities for the management and provision of services begin and end.

      • And that debate won’t happen unless there is a REAL mess. WA might be upset enough if the federal government moves to take mineral royalties?

    • Ronin8317MEMBER

      There is a huge problem with leaving the revenue raising to the States : people and businesses will base themselves in the state with the lowest tax, leading to a war of attrition and not much revenue raised. Further more, the High Court have been very happy to declare state imposed ‘duties’ illegal. including stamp duty. If the revenue is to be raised by the States, Australia need a new constitution.

      • Stephen Morris

        “Australia need a new constitution.”

        It is worth noting that the Peoples of Australia were never given a free choice over their system(s) of government. At the time of federation they were offered a choice between:

        a) federating with a non-democratic (i.e. purely elective) federal government; and

        b) not federating but still with a non-democratic (i.e. purely elective) government at the state/colony level.

        Not only in Australia but throughout the world, the system of purely elective government is slowly but surely collapsing under the weight of the inefficiencies it creates.

        I know I’ve posted this before. but it really does go to the most important issue facing this generation: the future of government.

        In “The Reason of Rules”, the late economics Nobel laureate James Buchanan and his co-author Geoffrey Brennan of ANU described the system of purely elective government in economic terms as follows:

        “[S]uppose that a monopoly right is to be auctioned; whom will we predict to be the highest bidder? Surely we can presume that the person who intends to exploit the monopoly power most fully, the one for whom the expected profit is highest, will be among the highest bidders for the franchise. In the same way, positions of political power will tend to attract those persons who place higher values on the possession of such power. These persons will tend to be the highest bidders in the allocation of political offices. . . . Is there any presumption that political rent seeking will ultimately allocate offices to the ‘best’ persons? Is there not the overwhelming presumption that offices will be secured by those who value power most highly and who seek to use such power of discretion in the furtherance of their personal projects, be these moral or otherwise? Genuine public-interest motivations may exist and may even be widespread, but are these motivations sufficiently passionate to stimulate people to fight for political office, to compete with those whose passions include the desire to wield power over others?”

        Under such conditions (and in the absence of true Democracy) it is perfectly reasonable to expect that:

        a) the system will adversely select megalomaniacal (and quite possibly psychopathic) political agents who act in their own interests, with minimal regard for the subjects they rule;

        b) such politicians will deliberately misrepresents the state of affairs to the public in their desperate attempts to secure votes;

        c) such politicians will engage in obscene competitions to hand out bread and circuses – each side seeking to outdo the other to secure power – running up unsustainable public debts in the process; and

        d) such politicians will engage in grubby auctions, buying off special interest groups and powerful lobbies piecemeal with gifts from the public purse . . . and look to receive favours in return, either in the form of support in government or employment in later life.

        This is unsustainable.

        It is noteworthy that Buchanan himself (writing elsewhere, without Brennan) concluded:

        “In sum, the effects of direct democracy add-ons to existing decision rules surely work toward reducing the range and scope for politicization, a result supported by classical liberals.”

        The real benefit of Democracy lies not its direct empowerment of the People (whose country it is anyway). The real benefit of Democracy lies in neutralising the tendency for adverse selection of corrupt pychopaths.

        In Switzerland, for example, partisan politics of the “normal” kind doesn’t exist. The federal Cabinet comprises seven members drawn from all the major parties (typically four or five) who act collegiately as administrators on behalf of the People. Swiss Ministers will sometimes be seen defending policies that are not supported by their own parties! As Ministers they act on behalf of the sovereign People, not their factional party.

        Megalomaniacs are not attracted to these positions because they provide no opportunity to wield power over others. Any megalomaniacal behaviour would be immediately vetoed either by Parliament or, failing that, by the People voting directly in a referendum.

        Where people have been given the option of choosing Democracy (or more directly democratic government) they have almost invariably chosen it. Where people enjoy democratic rights, they do not vote to have them repealed, even though it is a straightforward matter to call a referendum for that purpose.

        While opinion polls show either majority or plurality support for directly democratic government in most countries, support is highest in the place – Switzerland – where it is most often used!!

        That is the most persuasive evidence in favour of Democracy. The People – whose country it is – demonstrably prefer it whenever they are given the chance to have it.

        There are now several organisations in Australia promoting genuine democratic reform. If there is to be any long run reform of Australia this is where it will come from.

        Democracy is the beginning and end of everything. With genuine Democracy everything is possible. Without genuine Democracy all other battles will utlimately prove futile.

      • Ronin8317MEMBER

        A government fails when the wrong people are put in charge, this is true for both dictatorships, one party states, and democracy. The Swiss system will also fail in Australia when we elect people like Clive Palmer, who represents his own business interest, into parliament.

        What Australia needs is another “Eureka Stockade” moment.

      • Stephen Morris

        “A government fails when the wrong people are put in charge, this is true for both dictatorships, one party states, and democracy.”

        Democracy doesn’t work by putting people “in charge”. That’s “elective government”, not Democracy.

        “The Swiss system will also fail in Australia when we elect people like Clive Palmer, who represents his own business interest, into parliament.”

        Under Swiss-style Democracy, Mr Palmer would be unable to “represents his own business interest”. Any attempt to do so would ultimately be overruled by referendum. (In practice, the elimination of adverse selection means that it would be overruled by other parliamentarians.)

        This was explained in detail above. I don’t know how much clearer I can make it.

    • If no one has the balls to remove negative gearing at a Federal level – just increase land tax 4 fold.

      So rent seekers will end up either not negative gearing through using the property PPOR or paying through the nose for land tax.

      • How does this help farmers? I am on 10 acres (a hobby farm), productively using the land, not drawing a lot of income.

        Do you wish to devolve the countryside into monolithic, monocultural farms? Or, for foreign interests to own great swathes of land?

  2. The government has few allies because everyone feels agrieved but lacks the ability to gloat over the losses of others.

    I would have loved this budget if it had included the removal of negative gearing for example

  3. They wanted a ‘budget emergency’ – based on the headlines I’m reading this morning, they’ve got one.

  4. “the petrol excise lift is already dead with only the Greens in support”

    No. Anything that has both Coalition and Greens support gets through. They have a combined senate vote of 43 from July 1. Enough to pass legislation.

  5. the petrol excise lift is already dead with only the Greens in support

    Hang on, Greens + LNP has a majority in current Senate don’t they?

  6. I don’t believe that they will try to completely frustrate the business of government because, if there was an election again, hardly any of them would win their seats.

    So Tony is suggesting that they will choose their own skin rather than the will of the electorate?

    Goes to show where his head is at, moral-wise.

    • “Goes to show where his head is at, moral-wise.”

      Yes, yes it sure does.

      “So Tony is suggesting that they will choose their own skin rather than the will of the electorate?”

      Given that PUP and the Greens have improved their support since the election (and WA re-run), I think there are a fair number of Senators who’d win that bet with Tony if he offers it.

      The really minor party Senators would most likely disappear but the bigger minor parties would be happy to go back to the polls after seeing the turd that Abbott and Hockey plan to serve to the country.

      • It might be a turd, but the main point is it is a turd based on lies both before the election and after.

        Tony Abbott is a a blatant liar and unfit to lead this government obtained by his fraud on the Australian people.

      • migtronixMEMBER

        @Explorer:

        Tony [it takes 2 to tango] Abbott, 774 ABC Melbourne, August 2013

        If we do win the election and we immediately say: Oh, we got it all wrong, we’ve now got to do all these things’, we will instantly be as bad as the current government has been and I just refuse to be like that

        Lying, filthy, degenerate, youth-destroying, class preserving scum! Just like 3d1k!

      • I am inclined to agree, which is why I think Abbott’s threat is just bluster. He’s got a history of threatening double dissolution (remember on the Carbon Tax?) and not going through with it.

        With the reforms passed recently (above the line preferencing), it has never been easier to preference the minor parties, and in a double dissolution I would think that the Motoring Enthusiast guy, LibDem guy and the Libs have the most to lose.

  7. If there was an election again, hardly any of them would win their seats.

    I doubt the swing voters and students will ever vote for Tony Abbott again..

    I don’t know where Abbott gets the confidence that he will survive the party room shitfight or the election if he opts for double dissolution.. He is an idiot.

    • I’m just hoping that he’s enough of an idiot to go back to the polls. I don’t think even he’s stupid enough but I’m not completely convinced of the fact.

      He really does look desperate when he’s threatening such as stupid move. “Don’t come any closer to me or I’ll shoot myself right here in the foot.”

    • drsmithyMEMBER

      I don’t know where Abbott gets the confidence that he will survive the party room shitfight or the election if he opts for double dissolution.. He is an idiot.

      No, he’s not that stupid. On top of that, he’s the worse kind of arsehole – a cowardly one. He’ll never go to a DD.

      • migtronixMEMBER

        Of course not, no one will ever go a DD again! Its all just so much BS to deflect attention away from the tanks rolling over the under 30’s in the street.

        NO PENALTY RATES FOR YOU!!

  8. ….no worries, next we’ll be importing a pom to captain Australia and Mother Teresa to give our poor to the rich….
    ….if only a better tanned Morrison had been around when the first fleet turned up….

  9. Mr Abbott said on the night before the 2013 election: “No cuts to education, no cuts to health, no change to pensions, no change to the GST and no cuts to the ABC or SBS.”

    Not since Labor under Whitlam trying to get foreign loans from Tireth Khemlani has any Senate had a greater right to withhold supply.

    Abbott has no mandate for his changes to education, health pensions ABC or SBS. He blatantly lied. The Senate ought hold him to his promises, vote against all measures that are contrary to the assurances Abbott gave to Australian voters and call for a fresh election to enable this fraudulent government to seek a mandate.

    • Torchwood1979

      The line they’re using is that repairing the budget trumps everything else. Good luck in the Senate, I say.

  10. Monetize education and its game over in a less than a few generations.

    Assembly lines only create widgets, widgets are subject to increasing obsolescence due to time event horizon compression [Ihole new product roll out paradigm], last but not least the administration goes full Corporate CEO retard.

    Skippy… Most American education CEOs are more concerned about funneling in kids to their mates financial arms to collect bonuses and finders fees than the quality of product they manufacture.

    Securitize the future – “Duty NOW for the FUTURE!” baby!

    http://www.youtube.com/watch?v=kf4eu5y0418

    • I imagine this is just softening up the HECS loan book to make it a better sell. Remember when they were mooting selling off HECS?

      If they get in for another term, you can kiss goodbye to HECS and say hello to student loan CDOs!

  11. Ronin8317MEMBER

    There is no political advantage for the ALP to support any of the budget moves, especially the debt levy. Shorten will just say ‘no’ to everything, and so long as Abbott continues to self destruct, Shorten may even get away with it.

    For any kind of reform, a politician needs to convince the general population that it’s good for the country. All we see right now are ‘broken promises’ but hardly no mention of the reason for it.

    • Unfortunately there is a ‘pact’ to refrain from blocking supply between the two majors since the whole Whitlam thing, so the budget will probably pass.

      If only Bill had the cojones and the same moral ambiguity as Abbott to actually break the pact though… a man can dream.

  12. peterbruceMEMBER

    The one thing you always have to remember with Abbott is that he REALLY BELIEVES he has God on his side.

    Couple that strongly held belief with the power he now has and this man is capable of anything!

  13. Laura Tingle sums it up well.

    http://www.afr.com/p/national/budget/states_have_every_right_to_be_screaming_185dpmkfrHDafDwa4eCXpM

    Break an election promise and you have a credibility problem with voters. Break a multibillion-dollar agreement with other governments – and try to force them to take the blame for a 50 per cent increase in the GST before a state election – and you have the seeds of a riot.

    It was hard to escape the impression – no matter how much they may have been theoretically braced for a bad reaction to their budget – the Prime Minister and the Treasurer were a little shocked at the ferocity of that response on Tuesday night and Wednesday.

  14. Such is the hubris of these glorified strip mall accountants and conveyancing lawyers that they thought they could casually instigate an ideological war on the a large part of this country’s citizens, and then blithely spin it away as ‘Opportunity’. They deserve every bit of grief they get over the next two years.

    • To listen that that fat windbag Hockey this morning on ABC North Coast (Chris Uhlman, I think) was horrifying for his blatant stupidity.

      I mean, here he is, when asked by Chris (who, turns out, is a great interviewer) what does Hockey say to a kid finished year 12, or who simply CANNOT get a job (regional Oz) at, say 21, who is applying for job after job and can’t get one.

      What’s he/she to do?

      Hockey basically said, and this is no word of a lie “they should be working.”
      Uhlman was incredulous. He basically said, WHAT IF HE CAN’T GET A JOB.

      “Well this is what it’s about.”

      This is what what is about you pompous ass?

      Jesus, I cannot believe the gall of these f$#cking idiots.

      Having spent 9 months out of work in regional Oz, with an engineering degree, I applied for maybe 200 jobs in 9 months. Barely got an interview. In some areas, there are simply bugger all jobs. (Or else it’s insider jobs, like in education/gov’t *cough* ringfenced *cough*)

      Notably, Turnbull has been VERY VERY quiet.

      (My newly betrothed made a very good point last night though: if you’re a parent with a 14, 15, 16 yo – get them a job NOW. Get them a trade (mobility) or skills in hospitality (travel). Good point.)

      • drsmithyMEMBER

        Hockey basically said, and this is no word of a lie “they should be working.”

        Uhlman was incredulous. He basically said, WHAT IF HE CAN’T GET A JOB.

        I’m actually a little bit surprised Hockey didn’t say something along the lines of “well back in my day we went and got a paper run, or delivered milk – kids these days just want to play computer games”.

        That’s what you usually get back when you challenge the neoliberal article of faith that only the lazy and worthless are unemployed.

  15. Crocodile Chuck

    Get rid of the States. Neither the UK (population 60M) nor NZ (population 5M) have three levels of government.

    Get rid of the States.

  16. bolstroodMEMBER

    Consider the idea of doing away with “Democracy” as we practice it in Australia. Why?. Because it is not Democracy. What we have are a professional political class wrapped up in a Party system.
    The Parties, a tiny fraction of the population, chose the candidates, not the people. The Parties chose the policies with no reference to the people. The successful candidates who become Parliamentary Representatives represent their Party, not their electors.
    Around & around we go swapping one of two major parties, both of whom lie to us ,serving their own ends at the communities expense.We are not well governed.
    Imagine an alternative system where there are no Parties,no factions, no campaigning, no elections.
    Appoint Parliamentary Reps in the same manner that we select Juries, by Random Ballot off the electoral roll or because we would not have an electoral roll, a list of elegible citizens, say those over 18.
    They serve one term only.This gets rid of the professional political class, keeps corruption to a minimum, and saves us from having to listen to all the lies& bullshit.
    The selected reps job is to sift policy ideas which benefit the whole population,not a narrow sectional interest, a policy they are then compelled (by the new Constitution) to put to the people via electronic voting. The people can also put policy to the reps al la Citizen Initiated Referenda.
    Would we be any worse served than we are now?