CANBERRA OBSERVED by national correspondentNews Weekly
High noon for 'End of Entitlements' Joe Hockey
, August 16, 2014
With federal parliament in recess, now is the time for the federal Treasurer, Joe Hockey, to look again at some of the unpopular measures which were included in the 2014 Budget.
These include the Medicare co-payment; cuts to Family Tax Benefit B, which disadvantage single-income two-parent families; excessively onerous new conditions on the unemployed; and possible changes to higher education funding which could severely limit access.
The Treasurer has come under widespread criticism over the way he has allowed himself to be depicted in the recently-published biography, Hockey: Not Your Average Joe, by Madonna King (University of Queensland Press). Whether, in light of this, he is in any position to re-examine his stance on the Budget is still unclear.
The biography shows Mr Hockey as being ambitious for the top job, at a time when he has been showing inflexibility in defending an unpopular budget. This has not helped his cause.
One does not have to be a genius to work out the likely reaction of not only the populist Palmer United Party, but also of the representatives of the four other small parties which hold the balance of power in the Senate.
They will never support policies which are perceived as hurting the disadvantaged or families, particularly at a time when the government is touting a multi-billion paid parental leave (PPL) scheme which will lavish the highest benefits on high income earners, and offer nothing to full-time homemakers.
Equally, it has been entirely predictable that when the government abolished the carbon tax, these same small parties would not abolish the concessions which the previous government was forced to include in order to get the tax through parliament.
Mr Hockey seems to think that a majority of senators should implement the Coalition government’s hard-hitting budget measures, because the senators have in the past expressed concern about the Commonwealth government’s ballooning debt levels.
Actually, they are also motivated by other very different considerations: how to block unpopular budget measures which appear to be discriminatory and insensitive.
The Australian’s columnist, Angela Shanahan, put it this way: “People can see the change in the ideology the government has embraced all right — and they don’t want it.
“Stopping the boats was fine, getting the economy moving is fine, too; but Australians thought they were voting for a ‘Back to the Future Government’, a government with the same social vision as the Howard government, where the family with dependent children was put front and centre of policy, not reduced to welfare dependants.
“Instead they got ‘End of Entitlements’ Joe Hockey, slashing the average family’s tax break and whittling away at Medicare” (The Australian, July 26, 2014).
Leaked Treasury estimates, published in The Australian on August 4, confirm the point. The impact of changes to pensions and family payments will fall most heavily on low-income families earning less than $36,000 a year, compared to middle or high-income families.
Is there any sign that Mr Hockey is listening? It doesn’t look like it.
Rather than responding to the widely-held perception that the budget is inequitable, Mr Hockey is looking at bringing forward Treasury’s budget deficit estimates, in an effort to win over the cross-benchers.
He is also hoping that the early release in October of the Intergenerational Report (IGR), originally due for publication in December, will persuade the Senate to accept the government’s tough budget measures before the chamber rises before Christmas.
The IGR, which is produced every five years, is a Treasury analysis, using computer modelling. It assesses the long-term impact on Australia of current government policies over the next 40 years, taking into account the financial implications of demographic changes. The Treasury says: “The basis for conducting such an analysis is the principle of intergenerational equity — that actions benefiting current generations should not compromise future generations.”
Whatever the theoretical value of such an exercise, the fact is that every budget makes new savings or expenditure commitments, which were not envisaged in earlier budgets.
The Intergenerational Report can at best be seen as a form of star-gazing, based on assumptions which everyone knows will not be fulfilled.
At its worst, the early release of the report will be seen as a crude attempt by the government to scare the community into accepting unpopular budget measures, and as targeting older Australians, who are deemed to be “unproductive”, to pay more towards the rising cost of government services.
The fact is that Australia’s population is ageing, largely because of advances is medical science, as well as the collapse of family size and the long-term decline in the birth-rate.
The underlying causes of these trends are complex. But there can be little doubt that government policies which permit soaring house prices — far above the accepted inflation rate — have put affordable home ownership in the metropolitan area out of the reach of most single-income families. The result is that, to buy a family home, most couples spend most of their reproductive years — which extend from around the age of 20 up to 35 — in the paid workforce.
Is it any surprise that family size is falling, and that, for many couples, having a child is a financial disaster?
The Coalition government’s recently-announced cuts to Family Tax Benefit B and its introduction of Mr Abbott’s national paid parental leave scheme — paid only to women in the paid workforce — will exacerbate that trend.
Front cover photo accreditation: Treasurer Joe Hockey at G20 2014. Photo by Yuri Gripas. Copyright G20 Taskforce, Department of the Prime Minister and Cabinet.