The budget has destroyed one of the biggest lies told by the Coalition over the past three years and in the time it was in opposition – that there was no revenue problem. But the budget papers themselves reveal another lie that also deserves to be consigned to the bin – the one that suggests those on welfare are bludgers deserving to be bashed.
If one were churlish one could just highlight the times in the past members of this current government decried the type of budget that it has just delivered.
For example, in 2015 the finance minister, Mathias Corman, scoffed at suggestions the government needed to raise revenue. He told reporters: “We have a spending problem, not a revenue problem.” He also scorned the calls for more taxes, saying: “There’s plenty of people out there who want to raise taxes and have a new idea for a tax every single day of the week.”
Well clearly one of those people with a new idea is Scott Morrison, whose idea for a bank levy, and raising the Medicare levy, will increase revenue by $14bn over the next four years.
But just because the Liberal party has finally realised what everyone else has known for nearly a decade, it doesn’t mean we should fall over ourselves labelling this as a progressive budget.
Yes there are measures that are somewhat progressive. The bank levy, for example, is fine as far as it goes. But when put against the context of the company tax cuts, it appears more about targeting a specific style of company that is generally disliked by voters, than about being progressive. After all an easier way to raise money would have been to put off the company tax cuts themselves – which are clearly worth a stonking amount of money.
In Thursday’s question time, the government was forced to admit that the company tax cuts will cost $65.4bn over 10 years – up from the previous estimate of $48.7bn.
The issue is not that is a “blowout” – which it isn’t – but that it highlights just how costly are those tax cuts.
The reason for the increase is that the original $48.7bn estimate was over 10 years from July 2016 and the new $65.4bn one is 10 years from July 2017.
The original figures thus goes to 2027, whereas the new amount goes to 2028 and includes a full year with all companies – on a rate 25%.
So massive are the tax cuts that merely shifting the time period to include the 2027-28 financial year increases the total 10-year cost of the tax cuts by a third.
That one extra year adds $16.7bn to the cost.
Now keep that amount in your head.
For while there were progressive measures in the budget, the government also could not resist returning to its conservative impulse to attack those on welfare – especially the unemployed.
But, perhaps unintentionally, what the budget really shows is that all the talk about bludgers on the dole is really just that. The budget figures implicitly reveal that rather than a bloated level of welfare, our support for the unemployed is actually incredibly thin.
I’m not even talking about the stupid trials for drug testing of those on welfare – that is just a failed policy borrowed from the USA which has nothing to do with budget savings.
No, the big welfare measure in the budget was the introduction of a three strikes “intensive compliance phase” for those on Newstart.
This was the measure that received the front-page splash on tabloids on budget day under the guise of the government getting tough on “shirkers” and “bludgers”.
The government suggests that “around 40,000 people appear to be wilfully and systemically gaming the welfare system with no intention of working”.
As a result it intends to introduce a demerit system of three strikes.
For a first strike of not complying with the obligations of Newstart, people would lose 50% of their payment for a fortnight; 100% for the second strike; and, just in case they still were not down enough, the government would kick them for a third strike by cancelling their payment and preventing them from re-applying for a month.
Bam! Take that all you bludgers! Finally someone is putting an end to all that waste of money going to shirkers!
And rest easy folks, finally the welfare budget is under control.
So what do we get for this new tough on bludgers policy? (Remember now that $16.7bn for one year figure from before.)
Well the government expects to save $632m over 5 years.
Ok, not quite the same amount as the cost of the company tax cut, but let’s be generous, it still sounds like a lot of money – surely a big cut to the welfare budget, right?
No.
The total amount spent on Newstart over that 5 year period is $56.5bn – so at best this will cut just 1.1% of the Newstart budget – hardly suggestive that most of those on the payment are shirking.
But the problem is Newstart only accounts for 6% of all welfare spending – most welfare goes to aged pensioners and now the NDIS. The total amount spent on welfare over the five-year period is $874.1bn.
That means this crack down on dole bludgers, which got such glorified coverage from the compliant media, will save less than 0.1% of the welfare budget.
That is why most of the talk of the need to be tough on welfare is not really about saving money, but about demonising the less fortunate in a desire to score political points.
Australia’s welfare system is very tightly targeted and tested. And when it comes to Newstart, at a mere $535.60 a fortnight for single people, it is already abysmally low.
This budget saw the end of the lie that the government did not need to raise revenue to return to surplus; it should also put an end to the lie that the problem with government spending is bludgers on welfare.
