The verdict is unequivocal: the budget is inequitable

http://www.theguardian.com/world/2014/may/23/the-verdict-is-unequivocal-the-budget-is-inequitable

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You always know politicians are desperate when they start talking about CCTV cameras on street corners. It usually happens towards the end of election campaigns, but on Friday Tony Abbott reached for this most micro of populist issues at the end of a week that left his macro budget sales pitch in tatters.

Travelling to Campbelltown in western Sydney to re-announce the “safer streets program” – it was an election promise and already included in the attorney-general’s portfolio statements in the budget – the prime minister said this tiny spend ($6.4m for NSW and $50m nationwide from a budget that cut total spending in net terms by more than $15bn over the next four years) was important because it showed it had been “a budget for building as well as for saving”.

But voters are not buying the message. For good reason.

In a gently self-deprecatory speech announcing a press gallery journalism award this week (boy, he must have really felt like doing that), Abbott noted that journalism was one of only a few professions held in lower esteem that politics, and then joked: “Some might say I am contributing to closing that gap.”

But it is precisely because of the budget’s broken promises, on top of the underlying general scepticism about the truthfulness of all politicians, that his budget sell has been so spectacularly unsuccessful.

Because in those circumstances voters turn to third parties – experts and practitioners they trust – to test their own judgment about what the government is saying.

And the third-party verdict is unequivocal. State premiers, doctors, community and welfare groups, most vice-chancellors, students, pensioners, scientists, researchers, Indigenous groups, even government backbenchers and businessman David Gonski say parts of the budget are ill-thought through or unfair.

A few brave voices have ventured forth to argue the government’s corner. The Business Council president and head of the Commission of Audit, Tony Shepherd, castigated “sectional interests” for resisting the cuts that hurt them personally and for failing to stand back and look at the big economic picture and the need to spread the pain.

With an air of bewilderment that the punters are apparently not listening to what they are being told to think, News Corp papers are also taking up the government’s case with vigour.

“Ten days after the first Abbott-Hockey budget was released, the time has come to cut through the mounting hysteria fanned by sectional interest groups and argue the case for what is a courageous economic blueprint,” the Herald Sun thundered on Friday. “The Coalition has cut, sometimes deeply, but it has spread the unavoidable pain as far as is possible … we condemn the most intense scare campaign mounted against a budget by an opposition in recent decades.”

But some of those “sectional interest groups” would be Herald Sun readers, who can also read reports of economic modelling by the National Centre for Social and Economic Modelling (Natsem) and separate modelling by the Australian National University, both of which showed low-income earners were hit hardest and high-income earners would feel very little pain.

The government takes issue with some assumptions in the modelling. For example, Natsem includes the abolition of the carbon tax in its calculations but uses what families would have paid if we had moved to a floating price under a Labor government as the comparator. But even taking those into account, the take-home message is the same – the budget cuts are not fair.

Those same readers can see that the “deficit levy” is temporary and that the government has not touched superannuation tax concessions, or negative gearing, or the treatment of family trusts or any of the things that might have really spread the pain. They know that the reindexation of petrol excise (which in itself, I think, is a good idea) might cost “40 cents a week” in the first year, as the prime minister repeatedly tells them, but that it will go “up and up and up” (to quote someone from another place and time) so that filling the average tank costs $2.50 more a week by 2017.

They also know, because it was reported during the budget process, that the government thought about cutting back the $3bn a year in fuel tax rebates for farmers and miners, but didn’t because the miners got in early and lobbied against it. And they know that the only people who seemed to like this budget were big business.

Tabloid readers may be very surprised to hear that this is the most “intense scare campaign” ever mounted, when their own newspapers insisted a few years back that a very small change – a freeze in the upper threshold at which the previous higher level of family benefits was paid – amounted to nothing less than all out “class war”.

The government has every right to ask what Labor’s alternative spending cuts would be, since there is clearly a medium-term task to reduce spending or raise revenue, or both, but as long as its paid parental leave scheme is on the books Labor has an cheap and easy answer – keep the company tax rise and ditch the $50,000 per person scheme.

And voters have every right to ask the prime minister why, if the aim is to “build” as well as “save”, the budget removes unemployment payments for six months of the year for under 30s who aren’t “earning or learning”, but also saves about $500m from training (axing of the “tools for your trade” program, introducing a Hecs-style loan scheme for apprentices). Or to ask, if its aim is to undertake urgent fiscal repair to save the national “credit card”, it can salt away $20bn for medical research in a fund that even medical researchers say is poorly designed.

The truth is, the government had a range of choices to meet its quite reasonable fiscal objectives, and it chose things that hit the poor and the vulnerable the most.

And voters have figured it out.