Federal Labor leader, Bill Shorten, seems intent to follow Tony Abbott’s “Dr No” example in opposition and oppose nearly all attempts at reform.
In his Budget reply speech last night, Shorten declared the Abbott Government’s first Budget “a Budget of broken promises” and declared that Labor would oppose nearly all significant measures, including changes to university fees, the Medicare co-payment, fuel tax re-indexation, changes to indexation arrangements for pensions, and tougher Newstart requirements for under 30s; although it will probably allow through the temporary deficit levy on high income earners.
Killing these measures would blow a combined $18.5 billion hole in the Budget over the four year forward estimates, and much more thereafter.
Given that the Greens also oppose these measures, with the exception of fuel excise re-indexation, the Coalition has little hope of passing these measures before 30 June, which would place them at the mercy of the Palmer United Party in the new look Senate.
While some measures in isolation are highly questionable, such as tougher requirements on young unemployed and changes to university fees and funding, others are not, and it is disappointing to see the Labor take such a broadly negative position.
Its opposition to fuel excise is especially odd and politically opportunistic. Freezing fuel excise indexation in 2001 was one of the biggest blunders of the Howard Government, and now costs the Budget some $5 billion per year in lost revenue, with this figure growing over time with inflation. It has also narrowed the tax base and increased the tax burden on less efficient income taxes – precisely what you don’t want with an ageing population and a shrinking worker share.
Labor’s opposition to raising fuel excise is also curious in light of its previous support for emissions trading and/or a carbon tax. Fuel excise is a defacto pollution tax. Opposing an increase in fuel excise, whilst lamenting climate change, is incoherent.
Its opposition to changing pension indexation to the consumer price index, rather than male earnings, and in the process bringing it in line with other forms of welfare, is equally irresponsible. Like it or not, the proportion of workers supporting retirees is set to plummet over coming decades, making the pension a growing strain on the Budget, and working-aged Australians in particular (see next chart).
The fact is, current indexation arrangements are too generous. As illustrated by Peter Martin recently, in the 4 1/2 years since the former Labor Government implemented the special age pensioner cost of living index, age pensioner cost index of living rose by 14%, whereas the pension itself climbed 25%. Meanwhile, those on Newstart have received CPI increases, which rose by only 13% over the same time period.
Labor’s position on fuel excise and the Aged Pension, in particular, ignore what is a genuine fiscal problem facing the nation. Such partisanship is precisely the opposite of what Australia needs if it is to successfully navigate the challenges ahead; although it is not totally unexpected given Shorten is merely following Abbott’s script.
