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Budget: Joe Hockey asks too much too soon and puts credibility at risk

EDITORIAL

Looking like a man in too great of a hurry: Treasurer Joe Hockey's budget may fall short on fairness.

Looking like a man in too great of a hurry: Treasurer Joe Hockey's budget may fall short on fairness. Photo: Andrew Meares

Rarely has a federal Treasurer laid out so quickly and clearly such stark reforms to the Australian way of life. Rarely have voters been left wondering about the justification and asking, ''Why the rush?''

Dozens of changes to benefits, handouts and programs have been outlined, along with new taxes, curbs to health and savings on higher education.

Some voters may ask, 'But why do so much?' 

There have been myriad broken promises. And many surprises.

Joe Hockey's first budget speech builds a narrative of short-term pain for long-term gain; not by tightening the economy to the extent that a slowdown is imminent, but by drawing on a highly developed ideological framework.

This new user pays world fits snugly with what Mr Hockey admitted was the goal of ''reducing the government's share of the economy over time''.

''The age of entitlement is over,'' Mr Hockey declared in his budget speech, recycling a treatise he delivered in 2012 in London but conveniently omitted to stress during the 2013 election campaign. True, the Coalition in opposition promised to fix the budget, albeit not to raise taxes, or make excuses.

As a result many voters, and the Herald, backed Tony Abbott and Mr Hockey as best placed to embark on much-needed economic and budgetary reforms to end years of Labor dysfunction.

Eight months on and no one can accuse them of not having a red hot go at changing the nation.

The public can, however, ask whether the government's zeal for shifting the burden of economic change risks jeopardising the sort of national unity needed if Australia is to accept many of the necessary reforms in this budget.

The Treasurer is looking like a man in too great a hurry.

No doubt he is gambling that an unviable opposition under Bill Shorten will pose little obstacle. Mr Hockey will have his fingers crossed that consumer confidence holds up, infrastructure jobs grow and the economy outperforms his relatively pessimistic assumptions. That way, voters who have been hit in the hip pocket through family payment cuts will forget any taint of unfairness in this budget by the time they enter the polling booths in 2016.

True, many of the most severe cuts affecting the middle class - as opposed to the easy targets of jobless youth - kick in after the next election or will be temporary.

But the so-called economic growth dividend from reform will need to come quickly to offset the unsettling 16,500-plus public service job cuts and the uneasy sense that it has suddenly become more comfortable to be a wealthy Australian than someone who needs a helping hand.

Mr Hockey's narrative tries to keep voters engaged through a series of give-and-take deals. He pledges to recycle health savings and most funds from the new $7 co-payment for doctor visits into a $20 billion health fund. Government assets will be sold and recycled into new job-boosting infrastructure. A hike in fuel tax will be funnelled into road upgrades.

A welfare crackdown will be recycled into a better work culture and a more sustainable safety net for the vulnerable. Capped university fees will be recycled into a fee free-for-all, but with 20 per cent converting to scholarships for the poor.

Labor's age of entitlement will be recycled into what Mr Hockey calls an ''age of opportunity'' under the Coalition. But it all depends on voters replacing their ''age of self interest with national interest''.

''Doing nothing is not an option,'' he says - to which some voters may ask, ''But why do so much?''

''Repairing the budget is necessary to protect living standards and prepare for an ageing population,'' he says - to which some might ask, ''Explain why this can't be staged more slowly and why you didn't tell us at the election?''

''It will allow us to respond to future unexpected events'' - to which some will say, ''But our debt position is still the envy of the world''.

To make room for future tax relief and pay it forward - to which many will say, ''At whose cost?''

Many of the easiest ways to reduce budget spending by means testing upper-class welfare or reducing tax breaks for the wealthy on superannuation, capital gains and negative gearing are conspicuously absent from the budget. What's more, voters must be confused about the need to act so strongly now.

Although the Coalition told Australians before the election the economy was dire, it is now showing signs of recovery. While the prices for our exports remain subdued and may fall further, interest rates remain low, lifting household spending.

Even Mr Hockey says, ''Now is not the time to talk our country down but to talk the facts'' - to which many angry at broken promises and policy surprises will respond, ''We aren't sure we can trust you to tell us.''

Such a potential disconnect between a new government and those who elected it is distressing given the positive aspects of this budget. With more explanation and less aggression, Mr Hockey could have made a strong case for medium-term adjustments to government programs with the burden shared by all.

As it stands, the danger is the necessary pain in Mr Hockey's plan will become embroiled in the politics of backlash.

The Herald believes Australians do need to realise that the return to budget surplus is a valid goal.

That super tax breaks and other lucrative perks created long-term structural flaws in the budget just as governments should have been banking the proceeds.

That privatisation of some assets is a useful way of freeing up funds for roads.

That indexation of fuel excise does need to be reintroduced especially as the government shrinks the tax base.

That pension assets and income tests do need to be toughened over time in concert with the rise in the retirement age.

But the Herald also believes increased equality of opportunity for education is an investment not a cost and that early intervention will save money on health.

What's more, a temporary tax on those earning over $180,000 is a poor replacement for removing structural programs that support those who need them least.

Granted, Mr Hockey had to make tough decisions. But if the Treasurer had said no to more Australians who could afford to hear the bad news this would be a better and fairer budget - and it would have a greater chance of gaining acceptance among a rightfully cynical public.

51 comments

  • The age of entitlement is over for the unemployed, the working poor, those who are working and just keeping their heads above water, and those who are about to lose their jobs but the age of entitlement is not over for the parasite Politicians.

    Politicians demand that the unemployed find a job as they force jobs off shore,

    Politicians cut the pensions of those who subsist on a couple of hundred bucks a week while they give themselves a $40,000 pay rise,

    They cut the Defined Benefit Superanuation schemes of the Derfence Forces while keeping theirs,

    Politicians want to take away weekend Penalties and Shift allowances from the lowest paid shift workers while demanding they keep their perks because of the hardships of being a Politician,

    They want to privatise State owned assets so their Ozzigarch mates can get richer by sacking and lowering the wages of the already low paid and then probably employ an ex Pollitician or family member on the Board.

    Bring in optional voting, I don't want my vote legitimizing the skunks from the LNP, Labor or the Greens.

    Commenter
    Rory the Red
    Location
    Sydney
    Date and time
    May 14, 2014, 8:02AM
    • @Rory the Red:
      Abbott, Hockey and the entire cabinet are falling over themselves to declare the end of the age of entitlement. Get a job they urge, with silly slogans like earn or learn. Great theatre but very little substance about how to go about lifting employment opportunities. Sacked public servants and the immense fall out as a result of the car industry close downs will only aggravate the position further in the short term. The latest insult is to offer a $10k payment to businesses employing someone over 50 who has been unemployed for over 6 months. Great theory and good luck to the over fifties who benefit but the end result will be one less job for someone in their twenties.

      Commenter
      JohnC
      Location
      Gosford NSW
      Date and time
      May 14, 2014, 2:11PM
  • It is clear from this budget that the heavy lifting will be done by those who are weak and vunerable. Perhaps big Joe should have visited the local Gym, he would have learnt that the strong lift the heaviest weights!

    Commenter
    KIDDING
    Date and time
    May 14, 2014, 8:46AM
    • The sad fact of life is that the 'heavy lifting' has to be done by those how actually get government hand-outs. And no, paying the same 15% tax rate on money locked away in super for decades when your marginal tax rate is 49% is not a hand-out, simply equitable treatment of everyone's super contributions. Otherwise the 'cost' of giving the same superannuation tax rate to those on high marginal tax rates as those on low marginal tax rates should be mentioned in the same breath as the huge 'cost' of having a 'progressive' tax system - just imagine how much tax revenue the government misses out on by not taxing everyone at 49% of every dollar of salary!!

      The main question should be how well these cuts are targeted... should we clamp down on family tax benefits paid to those earning over $100,000 pa? should we expect kids that leave school and don't go on to further education/training to actually get a job, rather than become accustomed to living off the dole? should we expect it to cost something for a hypochondriac or a lonely pensioner to visit the GP every other day? should we expect someone attending a prestige 'G8' uni pay higher fees for their degree than the student attending some third-tier country uni? should we expect those retiring with a life expectancy of 80+ have a few less years getting the aged pension?

      Most of the changes seem reasonable, unless seen through the prism of that particular vested interest group...

      Commenter
      Rob
      Location
      Sydney
      Date and time
      May 14, 2014, 2:02PM
    • Rob, it's all a matter of equity. This budget will have minimal affect on my self, save a few bucks a week in additional fuel. From my point of view it's perverted logic to expect those that can least afford t, those that are doing it tough to do even more. Most of those on unemployment are genuinally unemployed, convincing you of that fact I think would be a waste of time as I am sure like many others you have a story about your neighbours mate who's son just sits around all day doing nothing living it up on a few hundred bucks a week. I pay tax and have no problem supporting people who are unemployed and I don't expect all of them to take any job just to save me a few bucks a week.
      You comment " And no, paying the same 15% tax rate on money locked away in super for decades when your marginal tax rate is 49% is not a hand-out, simply equitable treatment of everyone's super contributions. " is particularly interesting. No one has suggested that you pay a marginal rate of 49% , which by the way does not exist in the tax system as it currently stands, they are suggesting that you pay higher rates over a certain amount, current thought is $100,000, on your own argument you would agree. I would go much further and make it 48% over $50,000. If you are earning 50K plus on your supper you don't need the pensioners to subsidise you.
      Judging by your comments most of what I am saying will go in one ear and out the other as I am sure your ok just like me. Difference is I want everyone to be ok, your just concerned for yourself.

      Commenter
      KIDDING
      Date and time
      May 14, 2014, 6:24PM
  • Quick march towards US value systems. I am of the opinion that increases in welfare should be commensurate with the capacity of the country to pay. So I felt that some of the welfare measures taken by the previous government were a bit over the top. Too much, too fast. But Hockey's response is flawed. We need a treasurer and government which are prepared to examine structural reforms to both revenue and expenditure, keeping Australian values (not American ones). There is a fairer way, and this is not it. Most of this Budget is fluff and puff and same old, same old, take care of our own. You couldn't call it short-sighted' - it is purely "veiled" hypocrisy. It does not address any of our national, financial, cultural problems. None whatsoever.

    Commenter
    Pooh Bah
    Date and time
    May 14, 2014, 11:04AM
    • So we were all well and truly hoodwinked. Under contract law that is grounds for termination of the agreement and restitution of all costs incurred. Julia Gillard did not have a majority and had to do deals with minor parties to form a government and was pillaried for this as Ju-liar. Under the charter of budget honesty, Tony Abbott knew exactly what the financial situation was prior to the election and made all these promises with the sole purpose of winning the election and then asking forgiveness for breaking them afterwards. He is after all the man who would sell everything, except his arse to win government. That wasn't a lie, this is a lie.

      Commenter
      kluf
      Date and time
      May 14, 2014, 12:00PM
      • "Rarely have voters been left wondering about the justification and asking, ''Why the rush?''
        The question implies that people are not aware of the debt projection commenced by Labor and the fact that as of now our annual interest bill is $12 billion. If nothing is done, or if it is done too slowly then the debt could rise as will the interest bill and we would be continuously borrowing to pay of our interest obligations. If Labor was in Government they would still be in denial and they would just keep on whacking up debt and blaming it on 'revenue shortfall'.

        Commenter
        noitall
        Location
        Beacon Hill
        Date and time
        May 14, 2014, 12:00PM
        • Even the RBA and leading economists say it is not as bad as Hockey makes out (lets not forget he lied about the medicare payment saying he had one of the largest bulk billing electorates which is the complete opposite) and so the basis of the liberal debt tax is flawed even without looking at how it doesn't address the structural recurring costs that will only drive the deficit up again once the liberal debt tax is taken off.

          If you say $12billion fast enough it sounds large but then look at in context of the overall GDP and how we compare v other countries and we are in pretty good shape. So why the rush given the massive cuts to health and education (but not school chaplains I see)? It is a politically driven budget and not an economic driven one.

          Commenter
          lance
          Date and time
          May 14, 2014, 1:01PM
        • If the LNP are so concerned about debt and deficit, why have they left all the tax loopholes for their mates to drive their mining trucks through?
          Why did Joe Hockey go and put $68 billion more on the credit card in six months, the majority of which he didn't need to do and is already blaming Labor for?
          If Labor are so wedded to debt, why wasn't their spending as a percentage of GDP higher than Howard and Costellos? In your answer, please also contend with the fact that Labor ran a GFC-preventing stimulus package and still didn't exceed Howard and Costello's spending as a percentage of GDP.

          Commenter
          PRA
          Date and time
          May 14, 2014, 1:29PM

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