Running from Responsibility: Abbott and the States

In politics one of the cheapest and most cynical things you can do is to stand far away from the scene of the crime – to leave the country while your deputy delivers bad news, to let underlings do the sackings, to pretend core responsibilities have nothing to do with you.

In Australia, the flawed federation facilitates this act – it’s all that much easier to duck accountability when the lines of accountability are blurred.

This week’s budget presents just such a case.

While media commentary focused on the pure numbers – who’ll be taxed and who’ll take the cuts – the reality of this budget is far more complex than that.

The debate so far is exactly the one which the Abbott government wanted us to have. It mightn’t be pretty but it’s a long way from the scene of the crime. Over months now, the government has framed the budget as one simply of tax changes and welfare cuts. They’ve sought to present a “budget emergency” (in a nation that has a AAA credit rating) and have argued repeatedly that the age of entitlement has to end.

The debate might not be going well for them but in focusing on income distribution – like the fact that someone on $190,000 a year will pay $200 a year more in tax while a 23 year old unemployed person will lose $2,340 in Newstart allowance – the media is at least covering the government's preferred ground.

The big story of the budget though is in the things the treasurer has entirely left out. Having for months argued that core public service responsibilities were nothing to do with it, the Abbott government has now cut $80 billion from health and education funding.

The clear strategy is to force the states to call for a rise in the GST. That might be politically smart but Australians could ponder the ethics of adopting such a tack.

Public health and education are core government responsibilities. Less than half the population has private health insurance and two thirds of all Australian students are educated in public schools. To cut their funding is not to play around the edges – it is to attack the fundamentals of services on which most Australians rely.

The $80 billion cut is from a long term funding path. The Labor Government, in an attempt to create service security, had committed to funding growth over the next ten years. With this budget the new government tears up those agreements, returning health and education funding to the states to CPI increases for the foreseeable future.

This decision will have a real human cost. Class sizes in public schools will rise (as the Institute for Public Affairs notably called for last week) and curriculum range, particularly in expensive areas like trade training, will be cut. In the health system, fees for emergency visits will be introduced, hospital staff numbers will be cut and waiting lists for critical procedures from hip replacements to cancer services will inevitably grow.

In adopting such a strategy Tony Abbott borrows directly from John Howard’s playbook. In the Howard years, federal funding for public hospitals fell from 50 to 42 per cent and a state school funding starve alongside a big boost for new, often Christian private schools saw a substantial exodus from public schooling, particularly among lower-middle-class high school kids.

Both Abbott and Howard might have thought they were clever to adopt such a strategy, but the question is: what level of blame shifting is reasonable? Do we really accept political gamesmanship if it comes at a human cost?

Tony Abbott just yesterday raised the stakes in this game. As premiers complained of the unexpected budget axe, he called on them to be “grown up adult governments” and to accept funding responsibility for the services they provide.  

This might be easy politics but it embodies a lie. Australian governance is defined by vertical fiscal imbalance – a century of centralist High Court decisions on constitutional interpretation mean that the commonwealth collects all the cash while the states continue to carry the burden of providing everyday services. The PM can toss around rhetoric but the states have nowhere to go. In Queensland, for instance, GST and commonwealth specific-purpose payments make up 45 per cent of the budget, whereas just a third comes from the payroll, land tax, stamp duties and mining royalties that constitute the state’s residual tax base.

So it is likely that the premiers will indeed be wedged on this. Services will fail, there’ll be an outcry and then a rise in the GST. And that future will flow directly from this deliberate political choice.

It’s true that it’s hard for Canberra to control services in the states. That doesn’t mean that the only antidote is to walk away. A government motivated to fix things would have a range of options – higher reporting standards, guaranteed funds for growth or a commonwealth takeover. Abbott himself proposed a constitutional referendum to centralise service delivery in his book Battlelines, the second edition of which was published less than twelve months ago.

The budget decision to cut health and education funding will have a significant human cost. Sure, the PM can point to the constitution and say “look, health and education are nothing to do with me”, but do we really accept that when we know he has all the revenue-raising levers in his hands? To see health and education cut to avoid political responsibility is an appalling moral step. Tony Abbott might not be standing there when hospital waiting lists blow out but Australians should remember this budget, picture him at this moment and place him at the scene of the crime.

Rachel Nolan

Rachel Nolan was a member of the Queensland parliament from 2001 to 2012 and minister for transport, then finance, natural resources and the arts.

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