May 11, 2017

Federal politics

Things don’t always get better

By Nick Dyrenfurth
Things don’t always get better
Commentators are wrong to talk about a “Labor-lite” budget

I’m showing my age – and an embarrassing musical collection – but for a moment on Tuesday night we were back in the mid 1990s. At the heart of Scott Morrison’s 2017 budget was a promise of “better days ahead”, unconsciously referencing pop group D:Ream’s 1993 anthem ‘Things Can Only Get Better’. The chart-topper was adopted by British Labour as its theme for the 1997 election, which saw Tony Blair’s New Labour end 18 years of Tory rule in a landslide victory. ‘Things Can Only Get Better’ soared back into the charts.

Amid the celebrations, the ill-advised nature of Labour’s political soundtrack of choice was slow to emerge. Things don’t always get better.

At this point, ScoMo’s budget has been well received, at least by the commentariat. Its harshest critics appear to be the embittered forces gathered around PM-in-exile Tony Abbott, whose disastrous 2014 budget is widely seen as having been killed off by this year’s effort. “Labor-lite” is the charge they’ve levelled at Malcolm Turnbull’s so-called “tax and spend” agenda, pointing towards a $6.2 billion new levy on the big banks, a new Medicare levy, National Disability Insurance Scheme and health funding, and a “Gonski 2.0” education funding package.

“I don’t think it is credible for the Coalition side of politics to deliver a tax-and-spend Budget,” claimed Abbott’s former chief of staff, Peta Credlin on Sky News. “This is a Labor tax-and-spend Budget, this is not who we are as … Liberals.” The Howard-Costello era was at an end, she mournfully told readers of the Australian. (Never mind that Peter Costello was the highest-taxing, highest-spending treasurer in Australian history.) Former Liberal senator Cory Bernardi, who now leads the Australian Conservatives, said the Coalition was “just another faction of the Labor Party”. About the only measure to receive conservative approval was the plan to drug test new welfare recipients.

Pundits and fringe right-wing senators won’t decide the fate of this budget nor that of the government. That’s the people’s job. And on the available evidence Tuesday night’s budget is far from Labor-lite – the idea that things will simply get better is grotesquely naive.

Let’s start with the bank levy. It’s a spin-laden move, one that would have made Shane Warne at his peak blush, to push back against calls for a royal commission into the sector. The heads of the big banks have already warned that customers and shareholders may bear the costs. In effect, Turnbull has introduced a regressive new tax on most Australians, because we all have to bank somewhere. The budget’s regressive nature does not end there – $24 billion in corporate tax cuts remain at a time when company profits already sit at record highs. The Medicare levy rise from 2% to 2.5% from July 2019 to raise $8.2 billion will disproportionately impact lower- and middle-income Australians. A worker on $65,000 will be taxed an extra $325 a year, but the 2% deficit levy for those earning over $180,000 ends. University students will pay more for their degrees, and start repaying them earlier.

Then there is the small matter of the Commonwealth’s burgeoning debt. The debt ceiling has been lifted to $600 billion. There is almost more chance of the Greens winning majority government in 2020–21 than there is that the budget will have a $7.4 billion surplus that year, a projection based on optimistic growth forecasts amid sluggish wages growth and underemployment.

The spin of Labor-lite also conceals the deceit behind the establishment of a $75 billion, 10-year infrastructure fund underscoring Morrison’s mantra of “good” and “bad” debt. The budget figures actually reveal that Commonwealth infrastructure spending is set to decrease during the next four years: from $9.2 billion in 2017–18 to $5.1 billion in 2020–21.

The Howard-era hangover that is the challenge of housing affordability has been shirked. Older Australians who downsize their family homes will be eligible to divert a non-concessional contribution of up to $300,000 into their super funds from sale proceeds, potentially opening up a space in the housing market for first home owner families. But negative gearing and capital gains tax remain untouched. The proposed First Home Super Saver Scheme allows prospective homeowners to shift pre-tax earnings into super funds to save for a deposit from July 2017. It’s a first home owner grant scheme by another name.

There is some good news. The Coalition has finally admitted we have a revenue problem – only a decade too late – and killed off the simplistic political argument that the only way to return to surplus is by cutting spending. The $1.2 billion Skilling Australians Fund – something that ought to have been established at the peak of the mining boom – isn’t at all bad.

As I argued last week, Turnbull’s penchant for a big policy reset has rarely worked. Good luck to “fairness, security and opportunity”. Don’t forget, the measures contained in the budget need to pass a pesky Senate, to say nothing of Abbott’s expected troublemaking.

“Better days ahead” is a new, slightly more realistic twist on Malcolm Turnbull’s ridiculous, politically unwise assertion upon becoming PM in 2015 that “there has never been a more exciting time”. Yet this is a Coalition budget that, despite claims of a break with that era, maintains the short-termism and regressiveness of the Howard–Costello years.

Labour won three elections in a row, with Blair having moved his party to the so-called centre. His successor, Gordon Brown, was tipped out of office in 2010. By then five million Labour voters had abandoned the party. It’s a number that disastrous Labour leader Jeremy Corbyn will substantially add to at next month’s UK general election. (Corbyn reportedly stormed out of a Labour Party Christmas karaoke party last year after MPs sang ‘Things Can Only Get Better’.) British Labour is effectively dead outside of metropolitan London. So much indeed for things can only get better. Malcolm and ScoMo, you’ve been warned.

Nick Dyrenfurth

Nick Dyrenfurth is the executive director of the John Curtin Research Centre. He is the author or editor of 12 books spanning history, politics and children’s fiction, including Getting the BluesThe Write StuffA Little History of the Australian Labor PartyMateship: A Very Australian HistoryA New History of the AWU and All That’s Left


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