A ‘boring’ Budget?

| May 20, 2015

The Budget’s main goal was to position the Government for re-election. Dominic O’Sullivan says the importance of balancing the Budget raises deeply philosophical questions that are insufficiently ‘boring’ to provide political safety.

Budgets are equally concerned with political and economic management. While related, the two are distinct and can present governments with conflicting imperatives. A simple comparison between the Commonwealth’s 2014 and 2015 budgets illustrates the point. In 2014, the Government had an obvious mandate to balance the budget.

However, in practical political terms, the mandate was for an abstract concept. The austere translation of that mandate from the abstract to the immediate was a political step too far and, in 2015, balancing the Budget has lost its political urgency in the same way as Kevin Rudd’s mismanagement of climate change policy saw a rhetorical shift from great moral urgency to political nuisance.

In short, politics constraints principle so that, in 2015, the only budgetary urgency is to position the Government for re-election. It is a Budget focused on the redistribution of wealth for political gain. Small business tax concessions may stimulate jobs and growth, but unless that growth results in further tax revenue beyond that which the Budget itself predicts, it adds to the fiscal deficit.

Joe Hockey promoted the 2014 Budget as one for ‘lifters not leaners’. However, as the recipients of more than 30% of superannuation tax concessions, that Budget confirmed income earners in the highest 10% as the real ‘leaners’. The argument that such an arrangement is fair because it allows people to retire without the support of the state pension is diminished by the absence of policies, requiring people who are able to use their superannuation balances only to generate retirement income and thus guarantee a reduced burden on the state.

Childcare policies intended to improve the labour market participation of parents of young children are important to long-term growth and individual families’ material well-being, but the Budget positioned childcare as only an instrument of labour market policy, not one also of important educational significance. While the educational imperative certainly adds to cost, the question of why it is necessary for a Government to increase subsidies by $30 a week to families earning up to $170,000 a year, raises important policy considerations for relationships between income and cost of living. Solutions are complex, multifaceted and highly contestable to require a more detailed account of ‘fairness’ and are far from ‘boring’ policy, as the Prime Minister said would be the 2015 Budget’s principal characteristics.

In 2015, the Treasurer’s speech avoided discussion of health or higher education, the two policy areas attracting most derision the previous year. Presumably, their omission was in the interests of ‘boredom’ and to avoid thorough consideration of what constitutes budgetary ‘fairness’. However, in both policy domains, the 2015 Budget is significant.

Funding cuts and tuition fee deregulation remain important policy objectives in higher education, but the question of whether or not these are fair remains unsettled in public opinion, and if either measure is to pass the Senate, the ‘boredom’ that the Prime Minister seeks, as code for political safety, will have to be compromised.

For voters, the 2014 GP co-payment wasn’t sufficiently boring, yet the 2015 Budget retains more complicated, equally far reaching cuts to bring balance to health expenditure. In particular, there remains a proposal to reduce Commonwealth support for public hospitals by $50 billion over 10 years. It is these ‘interesting’ measures that create the political space for Opposition parties to set out their alternative visions and for the ALP to look authoritative as an alternative government.

Following a very unpopular Budget in 2014, the ALPs ‘safe and boring’ strategy was one that ensured public attention remained on the Government’s lack of control of the policy process and distance from public sentiment. However, public opinion polls in the last week show that the 2015 Budget has put the Government back into electoral contention to force an alternative strategy upon the Opposition.

So far, that strategy has centred on outdoing the Government in business tax cuts and outspending it in support for science, mathematics, engineering and technology education. Both measures are likely to attract general public support, but they do not provide the basis for a broad and far reaching alternative vision to set Australia’s two main parties apart in ways that robust democratic contest requires.

The ALP has provided differences of emphasis, not differences of substance. Differences of substance, and genuinely alternative policy directions, require that ‘safety’ is not the definition of ‘fairness’, but that well thought out and principled conceptions of justice provide the test. Policy debate focused on the extent to which governments ought to subsidise the costs of childcare or superannuation miss the wider principles and policy relationships that surround each.

Is, for example, childcare just as much an educational concern as it is a pragmatic measure to increase labour market participation? Should it then be directly funded as part of the wider education system? Should superannuation savings be intended for the sole purpose of retirement income and therefore accorded tax treatment consistent with that objective alone? What is the relative importance to be attached to balancing the Budget, not as an abstract objective, but one that has immediate and obvious social implications that raise deeply philosophical questions about what governments ought to do and what they ought to set aside; questions that are insufficiently ‘boring’ to provide ‘political safety’.



  1. kyun67

    June 2, 2015 at 6:15 am

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