Michael Keating. Part 2. The Budget and our Values

May 20, 2014

The Budget is always the clearest guide to a government’s priorities and values. In the present instance, the Coalition Government wants to define this budget as being all about “contribution”.  Their rhetoric is that we should all make a contribution towards restoring the nation’s finances. Spreading the burden would be fair and therefore consistent with Australian values. But nothing could be further from the truth. Disadvantaged and low income people are being asked to make very big sacrifices, while most of us will be little troubled, and a few very rich people will be better off as a result of this Budget.

In addition, not only is the Budget unfair, but it also represents a deliberate attack on our social capital. Our aspirations for an inclusive society are being trashed, as first the Government demonised refugees, and now has moved on to demonise unemployed people, and tear up the grants to many community based organisations which are critical to maintaining our social capital and an inclusive society.

As many people recognised immediately, the notion of six months on and six months off unemployment benefit up to the age of 30 is appalling. The Minister for Social Security says that now unemployed people will have to get off their couch and look for work, which shows how little he knows about the circumstances of the people he is meant to be responsible for, and/or just how perverted his values are. Anybody who has worked with long term unemployed people, or who has talked to those who do work with them, would know how much the vast majority of job seekers want a job. The reality is that most often these people are the victims of circumstances beyond their control, and without adequate skills they are simply not suitable for the jobs that are available.

Furthermore, there is nothing new about a policy of “work or learn”.  It has been the official doctrine for many years, but unemployed people cannot learn or work when their training funds have been slashed by over $1billion in this budget. As a partial offset the Government now proposes a modest increase in job subsidies, but years of experience has shown that such subsidies are relatively ineffective and do not lead to continuing employment.

The real problem is that many long-term unemployed people lack basic employability skills, so they are not employable in the modern labour market even with a subsidy, or for that matter with a lower minimum wage. They need training to get these skills, preferably training tied to a job, and in addition, they typically need a lot of support services and mentoring; indeed the reason why they are unemployed is because they suffer multiple disadvantages and all their sources of disadvantage need to be addressed in a coordinated manner.   At present this coordination and associated support services are provided most often by community-based organisations, but this Budget has also slashed the funding of many such bodies. In short if this is Joe Hockey’s ladder of opportunity then he has cut the bottom rungs off.

Other vulnerable groups who will suffer as a result of this budget include some of the world’s poorest people who depend upon the generosity of foreign aid, which was the biggest single cut in the Budget, and indigenous Australians whose funding has also been severely cut. Less tough but still significant is the impost on single income families. An unemployed lone parent will experience a cut in disposable income of 11 per cent. While a single income family living on a near average annual wage of $65,000 will lose almost 10 per cent of their disposable income in 2017-18 because of changes to family benefits and the scrapping of the school kids bonus.

But if the most disadvantaged people are to be hounded and not supported, what about the rest of us, and what are we contributing under this Budget? The fact is that the majority of Australian households are comprised of healthy people with two incomes, plus a further substantial number of healthy one person households. Essentially this majority could spend a dollar or two more a week on health, another dollar on petrol, and several dollars less on electricity after repeal of the carbon tax. In sum the majority are being asked to contribute next to nothing, and no doubt that was intentional so that this majority of households will not have a financial reason to change their vote.

And then if you are in the top 4 per cent of income earners you will have to pay the 2 per cent “temporary Budget repair levy”.  But even if you are in the top 1 per cent income bracket, with an annual income of $300,000, this levy will still only cost you around 1 per cent of your income. While if you are a super rich miner you will be laughing with no mining tax, no carbon tax and, despite the call for a ‘contribution’, the diesel fuel rebate continues.

Other areas of expenditure that have been singled out for cutting are the arts and research other than the always favoured medical research. And of course the War Memorial has had extra funding added to its already very generous base, while all the other national institutions’ funding has been severely cut.

In short this Budget seems to reflect a very narrow conception of society and our duties to one another as citizens. There is still plenty of ‘entitlement’ for those people and organisations that are favoured by the government, but the basic inequality of sacrifice and the bias in the areas targeted for savings in this budget is deeply disturbing. Indeed this Budget seems to reject;

  1. the traditional Australian notion of a ‘fair go’ where those who suffer from misfortune should be given a helping hand, and be assisted to realise their potential capabilities; and
  2. the state has an obligation to assist community-based organisations and to provide adequately for those things that we enjoy collectively, which enrich our culture, and which are critical elements of our social capital.



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