Contributed by Joe Montero
It is customary to leak out a few hints about an approaching federal government budget. This time round it is different. The whole thing is being tightly managed, with very little detail getting out, except a hint or two that creates an impression of direction, rather than content.
The budget will be delivered down on 9 May.
The chief signal came out in Treasurer Scott Morrison’s speech about “good debt” and “bad debt”. With this, the road is cleared to justify what seems like a turn away from the standard of hardline neoliberalism and claims of a budget deficit crisis that has been the mantra over quite a few years. But don’t be fooled. There is no fundamental change in direction.
In the first place, government debt is rising and the Coalition’s self-imposed limit of $500 billion will be breached before the end of the year. There is no choice but to remove it and this requires political softening up so that the backflip is not too obvious.
There is also not getting away from the fact that Malcolm Turnbull and his government are incredibly unpopular and would have little chance of winning an election. Hence the need for unusual secrecy around this budget and to use it for a political makeover.
Having said that, the focus on more for infrastructure does have something going for it, depending on exactly what this means. There is also something in Scott Morrison’s mention of the value of investment that builds the economy and produces a revenue stream. But whether any of this is going to be applicable, depends on the detail. It needs to be carefully aimed at providing what Australia really needs.
If infrastructure building happens to be focused on building Australia’s industrial base, raising energy capacity through increasing renewable technologies, new transportation systems and training in new skills, for example, it meets the need. If on the other hand, the focus is on building the fossil fuel industry or increasing reliance on roads, for example, it does not.
Many economists have been pressing for some change in direction, because big time investors are not investing in growing the economy, the level of private debt in Australia is such that it threatens the whole economy and interest rates being at 2.5 percent, a historically low level.
Once again, there is something in this, providing there is some wisdom in its handling and there is no guarantee that this will be the case. Generally neglected is that the economy is more than a bunch of figures. It involves people participating. And they participate to the fullest, when they are in the best position to do so.
In the first place this means jobs. If the government is going to inject more money into the economy, the priority must be to create more decent and permanent jobs. Combining this with proper reward for effort, produces the best condition for participation and growth. The reality is that this has not been where the government has been going. Its direction is the casualisation of work and it has recently moved against penalty rates. There is no sign that the budget is going to reverse this.
It is important, because the wealth a society creates comes about by the labour people contribute and how they work together.
Also important is how citizens behave as consumers. More people can be put to work to do more things, but it is useless unless the person at the end of the line enjoys means to consume. This is why, it is of paramount economic importance that the distribution of income is more even that it has been. A budget that is truly aiming at economic growth must take this on board.
This can be achieved through a progressive taxation system that redistributes national income downward, by the government providing more services and therefore taking up the costs and by paying higher pensions and other allowances. It is clear that this isn’t going to happen either.
These are the areas where the sting is going to be. You can be sure that the government’s high rolling friends will looked after. The rest of us will be left paying the bill.