What did you think of the Federal Budget?

It has certainly created more talk, and for a much longer time, than is usual.  It has elicited some excellent commentary on the ABC website and in the Sydney Morning Herald from quality thinkers like Waleed Aly, Tim Dunlop, Ross Gittins, and Jonathon Green.  Here is some flavour, and links to the articles, if you have the time and interest in any of them.

“Hockey wants us to believe he had no choice but to do what he did. I accept he had to get on with bringing the two sides of his budget back into balance, but he had a lot of choice in the measures he took to bring that about.

He chose to focus on cutting three big classes of government spending: health, education, and income-support programs (pensions, the dole and family tax benefits). Not by chance, these are the programs of least importance to high income-earners.” — Ross Gittins SMH

“Politicians can obviously survive broken promises, but Abbott’s first budget has taken us into new territory.” — Tim Dunlop ABC

“… with this budget, the government was behaving as though it had the most monstrous of mandates. It was positively radical in its ambition to break the social democratic model of our welfare state.” — Waleed Aly SMH

“… if this Budget marks anything, it is another decisive step in the distancing of the political class from the interests of the public it nominally serves …” — Jonathon Green ABC

Commentators like these make a lot more sense than the politicians, don’t they?  I have no doubt the Murdoch press and talk-balk radio hosts had a different perspective, but I haven’t time to dwell on their partisan clap-trap.

Even the incomparable Annabel Crabb is wondering where the “adult” government has gone?

“… the promise of ‘grown-up government’ was an especially reverberant one. … But the first post-budget parliamentary sitting week … is starting to look distinctly like a fraternity cracker night.” — Annabel Crabb ABC

The fact that a wider community has paid attention and is talking about all aspects of the Budget is a good thing.  We certainly need to be stirred from our relaxation and comfort. We need to realise that a continuation of the trends established through 23 years of continuous economic growth, much of it fueled by an ever increasing mountain of household debt, is impossible.  2008 changed everything.  And a further (perhaps even bigger) economic/financial correction is likely coming quite soon.

Joe’s messages about the sustainability of welfare, health and education services without “something being done” are on the mark.  Current settings and trends for these government expenditures are not forever sustainable under our current tax regime.  We have to make careful new choices about the levels of tax, expenditure, standards of living, and so on.

But the idea that the government debt and deficit is currently “out of control” is gross political exaggeration.  Scaring the voters to enlist support for harsh policy is as old a trick as politics itself.

Scare campaign or not, my sense is that this simple message is starting to sink in. People are reacting to the idea that government largesse will shrink and taxes must rise. Even then our standard of living (measured in financial terms) will likely fall over the next decade or two.

We’ve seen the news items about bulk billing doctors saying that the flow of patients has decreased (even though $7 levy is still far from a fact).  Consumer confidence was measured to plunge, (but has now recovered a bit).  A coffee shop waitress, a hairdresser, a taxi driver, a garden shop owner, and a manager of pubs have all told me things have been “quiet this last few weeks”. So look for further news about flat consumer confidence, and retailers complaining in the next month or so.

But more saving and more debt reduction, and less unnecessary consumption won’t do us any harm.  Of course the banks won’t like it because their job is to sell more debt: that’s what makes them rich.

So far so good.  But then there’s the issue of where the burden falls.

Much of the talk has been about the inequity of the impacts of the budget. The privileged, asset owning generation came through pretty unscathed.  Not so the young unemployed, young families, students, the sick, the disabled and pensioners.

Sure, there are areas where our welfare system and government expenditure could do with some discipline and reform, but not whilst the exorbitant privileges enjoyed by: house owners (negative gearing, capital gains tax exemptions); banks and investors (tax free financial transactions); superannuation funds discretionary contributors (big tax concessions); corporations and trusts (tax lurks and avoidance) are left totally unaddressed.

And this flows on to the politics.

We certainly now have a much clearer divide in political philosophy.  Gone, it seems, are the days of the drift of both the left and the right of politics to the centre.  Gone are the days when commentators could lament that the two main parties were so alike there was no real choice.  Abbott and his government have, with this budget, clearly set their course hard to the right: “lower taxes, lower expenditure, fend for yourself”.

Next time we vote it looks like it will be much less about this or that silly promise or sound-bite, and much more about what fundamental political philosophy we like, and what sort of society we want.

On that note I should leave the last word to that wonderful long time student of Australian society, Hugh Mackay.  At the end of a powerful essay here in the SMH Hugh concludes:

“… this is a profoundly disappointing budget. It’s not the economics; it’s not the politics; it’s the clear sign that this government has young people, the sick, the poor, the unemployed, the elderly and the marginalised in its sights.

It’s a budget that not only turns its back on the problem of inequality; it exacerbates it.”