Victoria’s new budget should be the start of a new direction

Photo from the Herald Sun: Victoria's treasurer Tim Pallas in high spirits over his government's new budget
Contributed by Joe Montero

The budget handed down by the Victorian government on Tuesday, is an important step in the right direction. Of course, the final verdict is in the detail and some of this is still missing.

Nonetheless, the injection of roughly $16.8 billion and commitment to improving transport, other infrastructure, TAFE courses to build needed skills, new schools and upgrades, boosting health services, payroll tax relief for battling businesses in regional areas are all positive moves, meeting existing needs and a stimulus for the Victorian economy.

Perhaps the most important aspect of this budget in the longer run, is that it marks a step away from years of ongoing government cuts and austerity. This is important, because these cuts and austerity have contributed to the unnecessary and unfair hurt that a lot of people have been suffering. The old approach has not created new real jobs, boosted the economy or increased the standard of living for all. It needs to go.

As it meets some of the outstanding needs, this budget remains solidly pro-business and provides the private sector with new opportunities. So it is not likely to get too much flack from most of the business sector. Even the response of big business has been fairly muted, even though the main parts of its agenda have not been met.

Although there is a positive side, some significant criticisms can be made. Attention could have been paid to reversing privatisations, which have proved to be a disaster or keep on draining government funds. Although some country roads are in serious need of repair or upgrading, the overall emphasis on transport should not be on roads, but on improving public transport, especially in Melbourne, where the roads are already seriously congested and public transport is insufficient and overcrowded.

It is questionable that such a big outlay on law and order is necessary. Does Victoria need a new maximum security prison? More people are being imprisoned when the serious crime rate is actually going down. Maybe there are better solutions than spending on more stick.

The environment and transitioning to renewable energy sources should not have been ignored.  Attention could have been paid to measures that tackle the problems of unemployment and under employment. Vocational training is still plagued by shonky private providers and this will continue.

Although in the recent past the Victorian government had promised action, the serious housing crisis has been ignored. There is nothing in the budget for public housing, or any other alternative. There are currently more than 40,000 people on the housing waiting list and the level of homelessness is a disgrace. Many more are experiencing housing cost related poverty. Surely ensuring more affordable housing should be high on the priorities list?

But state government has limited resources and power in Australia, and the federal government controls most of the purse strings.

Despite this, some wiggle room has been possible, mainly because the housing price bubble has swelled the government’s stamp duty revenues. This is not sustainable in the long run, and knowing this, the government has factored in a decline in expenditure, after only a few years.

This is a problem, because the new spending initiatives are far from enough to meet future needs. They barely keep pace with patching up on past neglect,  combined with the rapid rate of population increase.

If the expanded needs of the future are going to be met, there must be a much greater shift from the patching up mentality, towards a longer-term planning. This will require more government intervention and far less reliance on the market, and It means setting up new priorities, based on a combination of economic and social needs.

One measure that can be taken, is to end profit guarantee subsidies for what have become private monopolies over former government enterprises. If these private monopolies have difficulty operating without being subsidised with taxpayers’ money, their assets and operations should go back into public ownership. Because of commercial in confidence contracts we don’t know how exactly much money this involves. We do know however, that this could amount to hundreds of millions a year. Public enterprises could provide the government with a new revenue stream.

This is but one example of what can be done.

Budgetary policy should be devoted to the combined aims of meeting outstanding needs, stimulating economic activity and boosting government revenues in an equitable way. This requires creative approaches, to ensure that each person contributes fairly and on the basis of capacity.

 

 

 

 

 

 

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