A Failing Budget [transcript]

Welcome to the New Politics podcast, the place where we analyse everything and anything to do with Australian politics, and more. We’re on iTunes, SoundCloud and YouTube, or you can go straight to our website at newpolitics.com.au

In this episode, we look at Budget 2018, the UN Human Rights inquiry into the Israeli attacks on Palestinians, and we ask the question: will there they an early election? I’m Eddy Jokovich, the editor of New Politics.

And I’m David Lewis, historian, musician, lecturer and general dog’s body.

EJ: As usual, there’s always a lot of things going on in Australian politics and we had the Budget 2018 announced recently. There were tax cuts, forward estimates, Budget replies, figures flying all over the place. But I blinked and now it’s gone, as though it never really happened. What is the real point of the Budget in Australian politics?


DL: From a technical point of view, it is how they’re spending the projected income and managing the projected debt over the next 12 months. From the government’s point of view, I’m not quite sure what they wanted to achieve with this one. It’s not really an election-winning budget. In the context of a Royal Commission, in which the banks aren’t coming out of well, offering a $17 billion tax cut seems to me to be completely almost suicidal.

EJ: I agree with you that it would be suicidal to offer a tax cut of $17 billion dollars to the banks. And this is in the overall context of somewhere between $65 and $80 billion of corporate tax cuts over the next ten years, and those figures seem to keep going up and up and up. But you’re absolutely right: you’re not going to win an election in this current climate if you’re giving a $17 billion tax cut to banks. But are there other things that they might be looking at, such as being able to create a narrative based around surpluses and tax cuts?

DL: I think that the narrative from surpluses is slowly dying. It was a big feature of the Howard government and Howard went to two or three elections, even saying: ‘we are the only party who will deliver a surplus, and the surplus is a good thing’, because he gave most of that surplus away in middle class tax cuts.

EJ: And I believe we are probably still paying for those tax cuts that were offered during the Howard era.

DL: We absolutely are and, of course, Howard didn’t have a bad world economy. The recession had ended by 1996 when he got in and the next major recession was the GFC in 2008, which of course, was managed by the Rudd government. When we look at this Budget, it is a typical Turnbull/Abbott government budget, insofar as it seems to try to want to have a narrative, has an element of poor political judgment, and – we’ll get back to the role of Scott Morris and the Treasurer who, I think, is one of the more disappointing Treasurers of the modern era.

EJ: He seems to be more of a salesperson, rather than an actual Treasurer. He hasn’t actually got an economic background – that’s not a huge impediment to actually being the Treasurer – Paul Keating, famously, didn’t have an economic background; Peter Costello also didn’t have an economic background, but those two Treasurers actually worked quite well within the Australian political context. Not having the economic background, doesn’t really mean that much. It does help, I will admit, but my feeling is that Scott Morrison doesn’t seem to know too much about economics.

DL: I think that’s right. Keating, famously, once he got into parliament, started hanging around Treasury in a big way – meeting after meeting, learning how the mechanics of the Treasury went, and he fell in with a crowd of people who are very close to what he was thinking. And he wanted, of course, that more free market idea that the market ultimately could solve everything. Now, Keating would argue that you needed to manage the market a little bit, as opposed to, say, John Howard, who at heart, would have said the market will run itself. Keating learned a lot from Treasury. I think Costello spent a lot of time with many of the same public servants, learning the job. I don’t know if Morrison has spent a lot of time listening to the details of Treasury. It’s not a Budget that seems to have an understanding of the world outside its own world.

EJ: The role of the Treasurer is to announce the Budget, of course, and to sell the Budget as much as possible. It’s all about political messaging and the key things are the Budget wants the return to surplus: that’s the big narrative that they want to push – and tax cuts – that’s another being narrative that they want to push…

DL: …getting more money with less.

EJ: And my feeling is that they could have offered $2 per week in a tax cut. But it was all about just sending out the message that the Liberal Party and the National Party, they are the parties of tax cuts and that’s the narrative that they wanted to push forward, and also a surplus – a budget surplus of $2.5 billion is predicted for the 2019/20 year and that’s also another message that they want to keep pushing.

And, strangely enough, government debt has not featured at all in this budget.

DL: And after howling down the Rudd and Gillard government for – it was $350 billion debt – somewhere around that, might have been a bit more. The current government: that is somewhere around $720 billion, or $730 billion. They’ve effectively doubled the debt in the last four years.

EJ: And quite often, a feature of Liberal/National Parties in opposition is the famous, or infamous, depending on your perspective – the debt truck that they always seem to wheel out around election time. In 2011, Malcolm Turnbull, in his role as Shadow Communications Minister, he was driving around in his debt truck, announcing that there was a $300 billion government debt at that time. And that was announced quite often in the lead up to the 2013 election: We also had the ‘budget emergency’. But I haven’t heard the words ‘budget emergency’ or ‘national government debt’ for some time.

DL: No, and the strategy seems to be when in doubt, kick into the poor. We haven’t had a – and this is on both governments, both sides of politics – we haven’t had a pay rise in unemployment benefits since 1994, which of course, is a massive cutting in income. We’ve had meagre rises in the pensions, we’ve had meagre rises in disability, and it’s harder to get disability pensions. Now we could take all these things singularly and say, well, there are reasons and maybe the disability pension should be hard to get to prevent rorting of the system, to make sure that the people that need it, get it. But put all together, it seems that they’re cutting little bits to hide the fact that they’ve not manage the economy as well as perhaps the other side may have done. Forward estimates, of course, are one of those things that you say, I think it keeps journalists happy because it makes themselves sound smart, and if you’re not terribly good at the job though, they’re pretty much meaningless.

EJ: The idea of forward estimates – that’s actually been around for maybe about four decades or so, ever since the early 1970s – and that to me makes sense. You not only produce the Budget for the next twelve months, but you take into account the cycle after that – the next three years after the next financial year, so that’s looking at a cycle of around four years. Over time the forward estimates has been used is a bit of a smoke-and-mirror trick, where figures are dodged around the place that moved from year to year. On that top of top of factor which means that a budget announcement or a surplus announcement of $2.5 billion in the 2019/20 year, who knows what will happen there because does it contain figures from the following year or the year before or five years’ time? So it’s a little bit dodgy but taking figures ten years in advance? Well that’s even more dodgy.

DL: Given that there will almost certainly be a change of government, whatever your opinions of the government, not many Australian government’s last more than two or three terms, and with three-year terms, we’re talking eight to nine years. The Howard years were an outlier. The Hawke/Keating years were an outlier but mostly it’s about every eight years. And does he really expect an incoming government that is not his, will keep the same policies that he has, and does he really expect it, even if they’re still in, the circumstances will still be the same? It was an odd thing, for a man who’s meant to be this crack salesman, as you pointed out earlier, to try and sell, just doesn’t stand up to very much scrutiny.

EJ: The Budget probably had about two or three days of clear passage through the airwaves in the media, and then, all of a sudden, it was gone. It was out of the picture because a couple of days after the Budget was announced, there were four resignations from Parliament. And this was due to the High Court decision that there were four MPs that were ineligible at the 2016 election. And then there was the Budget reply by Bill Shorten. It was almost like ‘here today, gone tomorrow’, and not many people are talking about the Budget now.

DL: The interesting thing with Budgets is that the current government and the previous government under Tony Abbott have not had a Budget passed. What the strategy in the Senate has been is to let the appropriations through – the contracts, the salaries, the basic mechanics of government – but to stop the policy issues. This has been very smart on Labor. Labor don’t, of course, want to block a Budget after 1975, having seen the damage that that did, I think they’ve realised that it’s much better to stop the Budget, but to keep the Budget that they stopped in the hands of the government – it does much more damage and much more mischief.

EJ: There were two budget items that I noticed – they were actually in the Budget papers but they weren’t really announced on the night. But they’ve come to light over the past few days and that’s the $444 million grant that was given to the Great Barrier Reef Foundation, and there’s also another grant which seems to be going on for the next four years – it’s a $30 dollars grant to Foxtel. There were no tenders for this process, it was just pretty much a grant given to these two organisations. $30 million dollars – that’s not much, we can accept that sort of process but $444 million dollars to an NGO. Is this a little bit too much?

DL: In some of my roles, I’m applying for grants, and it’s a rigorous process. You’ve got to put in everything. You’ve got to make predictions on things that you’re sure of; you have to dot every ‘i’ and cross every ‘t’. You’ve got to make sure that you fit the grant entirely. The grant is usually paid out very specifically to stop people applying for who are ineligible. I was actually really offended at the $30 million to Foxtel. It’s not a lot of money but Foxtel is a broadcaster and the government already funds two broadcasters in the ABC and SBS to promote women sport. I don’t have Foxtel but I can’t see what Foxtel brings to women sport that the ABC and the SBS already didn’t – I haven’t seen promotions on the new women sports program and they do a lot of promotions.

The Great Barrier Reef Foundation was really interesting. I haven’t seen a lot of information on who they are and what they stand for. How you can get these grants without tenders is beyond me, and I’m certainly not going for $30 million dollars or $290 million dollars tenders – we go for $20,000 and sometimes less. One of the things with the public services is that not only must it be impartial, it must be seen to be impartial.

John Lloyd from the Institute of Public Affairs is another symptom of this in that the government is just giving money out to its friends. It’s putting its friends in the huge positions – this has been probably since the whole Hawke/Keating government push this way, and Hawke was open in his frustration with how he had to select cabinet, saying once that he prefered the American system where you could bring in people from outside to fill your cabinet positions.

Certainly, until Tony Abbott, blatant appointments were avoided as best as possible, and there was often a long massaging period and at least the appearance of some form of due process to give their mates the job. New South Wales famously brought down Nick Greiner for putting Terry Metherell as the head of the EPA – ICAC found that that was corrupt. Greiner was later, of course, cleared by the High Court but it was a very telling action that not only must you be impartial, you must be seen to be impartial. They’re not really being seen to be impartial.

Channel 31 would have loved $20 million or $30 million rather than skating on thin air – NITV as well, let alone the ABC or SBS.

EJ: The community television network was closed down by Malcolm Turnbull. There’s quite a few factors to take into account here. $444 million dollars, that’s not chickenfeed; that’s actually quite a lot of money. $30 million: that’s still quite a bit. But, as I mentioned before, within the government context, it’s not substantial. But just when we look at what else was in the Budget papers, the ABC has received, effectively an $84 million cut back, and Foxtel is receiving a $30 million grant, so it could possibly be a situation where the government wants to privatise the ABC, but they want to nationalise Foxtel. I think that’s the way that it’s working.

DL: Anecdotal evidence suggests that Foxtel is in a lot of trouble. A friend of mine wanted to cancel his Foxtel because you sick of the programming and he could spend his money elsewhere. They talked them into taking a $5 holding over fee because they said lots of people are canceling theirs. They’re trying to keep people in. They’re almost giving Foxtel away at the moment, with very generous entry fees, because Foxtel suits the government. There’s a lot of programs on it that promote the government’s views in a way that is more congenial to the government than, say, the ABC or even Nine or Seven or Ten and it’s not really about the number of viewers, it is about the message you can get out. It’s like the newspapers: a damaging headline will be seen by more people than the detailed story that questions that headline.

EJ: It is an issue that we have to keep monitoring. There have been quite a few requests for the grant of $30 million dollars to Foxtel, that we need to find out more information about that. The Minister for Communications, Mitch Fifield, he has not been very forthcoming at all, so I think we need to keep watching this space.

DL: That’s a great idea.

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