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Saturday, May 17, 2014

Battle of the Budget 2014 - Conscripting the poor to fight on the fiscal frontline

Battle of the Budget 2014 - Conscripting the poor to fight on the fiscal frontline

Raise the flag, sound the warning sirens and conscript the poor to the fiscal front-line of the budgetary battle. 

Joe Hockey, Treasurer of the Lucky Country, delivered his first budget on Tuesday, 13 May 2014. He declared a budget emergency and unleashed a volley of budgetary attacks tantamount to declaring war on those who could least afford them.

So what was this budget emergency from which he had to ride in like a knight in shining armour to rescue the nation by sacrificing the poor to the altar of capitalism?

Well, the emergency was that Australia had a AAA credit rating with net debt at 12% of GDP. What a shocking financial situation! An economy that had been rated the highest that it could be by the three major credit rating agencies in the world.

Of course, Hockey banged on about how bad our debt was: it was 12% of GDP (1). That's equivalent to having a $100,000 income and a $12,000 debt. No-one would panic about spending in that circumstance, nor would they sell the house and the kids in order to pay for it.

The gullible who swallow every deceitful word of the Abbott-led LNP, sincerely believe that Labor stuffed up the country. Let's not forget that it was Labor's Keynesian economics that ensured Australia successfully navigated the Global Financial Crisis with its AAA credit rating intact and it's debt relatively low. It was one of the few OECD countries to achieve this. By comparison, Germany ,who is seen as an economic power-house in Europe, has a net debt that's 56% of GDP. The United States is 89% and Japan is 143% (1).

To achieve this successful and strong economy during a major global economic downturn was no small feat considering that revenue took a hit because of the impacts of a global recession (some would say depression) on business and consumer confidence. In other words, businesses and people spent and invested less, meaning that the government collected less through its revenue measures, therefore driving the deficit up. The government had to invest money in order to keep the economy stimulated. Had it not, it would have gone the way of other OECD nations who decided to adopt austerity measures, rather than Rudd's stimulus measures.

The Rudd and Gillard governments should have been given medals and awards for ensuring the economy stayed strong while subject to demanding internal and external pressures, rather than being castigated by the vile lies and scare-mongering that the Abbott-led opposition was renowned for.

But for the LNP, it was time to raise the flag, sound the warning sirens and conscript the poor to the fiscal front-line of the budgetary battle. It's always the poor, the lower-paid, the young and the workers who pay the price and fight the wars that politicians manufacture.

This 'budget emergency' was actually made worse by the Abbott government in order to concoct a perceived crisis. In the seven months following the election, Abbott increased the debt limit from $300 billion to $500 billion (2). Only the year before, he castigated Labor for daring to raise the debt ceiling from $250 billion to $300 billion, accusing Labor of being addicted to spending. In December 2013, the deficit was around $47 billion. Within seven months of the election, the LNP government borrowed in excess of $70 billion (3). The impact on the deficit was to double it. The LNP doubled Labor's deficit in seven months. (4)

The election in 2013 was underpinned by a campaign centred on honesty and trust. Abbott made much mileage from a so-called lie by Julia Gillard. She had claimed that there would be no carbon tax under her if she won the election in 2010. Prior to the election she did say that she was going to price carbon, but let's not get hung up on semantics. The gullible reacted with shock and horror and feigned moral indignation that former Prime Minister Gillard had 'lied'. Most of those who carried on about it hadn't voted for her anyway.

During the 2013 election, Abbott ran a campaign declaring 'no surprises', 'no lies'. He also made promises such as:
  • no cuts to the ABC
  • no cuts to SBS
  • no changes to the pension
  • no cuts to health
  • no cuts to education

You probably guessed where I'm going with this. The budget made cuts to all of the above. In fact:
  • ABC cut by 1% and loss of $196 million over nine years
  • SBS cut by 1%
  • Pension supplements and concessions slashed by more than $1.3 billion
  • Health cut by $50 billion
  • Education cut by $30 billion

Lies? Well, you be the judge. However, it reeks of Howard's first-term lies when he claimed 'no new taxes, no tax increases and no indirect taxes'. But I digress. Of course, the gullible have made excuses for Abbott's lies even though they refused to extend the same latitude to former Prime Minister Gillard. 

The Abbott-led government has delivered a budget that breaks promises and slashes spending in essential areas. It is an austerity budget, it is a budget that will cause the economy to contract, not to grow.

Leading up to the budget, Abbott and Hockey manipulated the gullible by declaring the economy a basket-case and that tough decisions must be made. They both said that we need to 'share' the pain.

Sharing. Interesting word. By definition it means 'to divide, apportion, or receive equally'. The budget slashed $12 billion from welfare, $3 billion from high-income earners & $1 billion from big business.

This is not 'sharing', at least not in any realistic sense of the word. There is nothing equitable or fair about taking much from those who have little while taking little from those who have much. Those from a low socio-economic status are carrying the brunt of the LNP's fiscal irresponsibility. To increase revenue fairly, it would have been better to adjust marginal and corporate taxes.

While a number of the cuts are disturbing, perhaps one of the worst is the cut to Newstart. The eligibility age is being increased to 25 from 22. Those who are between 22 and 25 will only receive the Youth Allowance which is $96 per fortnight less than Newstart. However, if you're over 25 it's no bed of roses. In fact, it's even worse. You'll have to wait six months to qualify for Newstart and then it will only be paid for six months of the year until you're 30. Additionally, you'll have to complete 25 hours of 'work for the dole'.

Imagine: no income for six months of the year!

The idea is that people will either 'earn or learn' (another of the inane three-word slogans of the puerile LNP aimed at dumbing down politics for an electorate they treat as fools). Considering that the budget slashes jobs while rewarding businesses to hire older workers, means there is no job creation for young people. In addition, with the budget creating unaffordable higher education and the prospects of crippling university loans through the deregulation of university fees, there will be no incentive or capacity for many in this age bracket to 'learn'. So opportunities for young people to 'earn or learn' have been greatly diminished while their safety net is unavailable for six months of the year or dramatically reduced if they're under 25!

And just to help the belt-tightening situation for the unemployed and lower-paid out even further, the National Rental Affordability Scheme has been axed. Nothing like implementing policy that will increase homelessness and then axing programs that provide affordable housing.

What could possibly go wrong?

There will be increased poverty, homelessness and crime. There will likely be more suicides which is already the leading cause of death in young people (5).

The welfare safety net was introduced to assist people in being able to live while focussing on getting a job or an education. Now they will have nothing on which to survive for six months of the year and their ability to look for work or undertake study is further jeopardised because when they do receive Newstart, they'll be committed to 25 hours per week working for the dole.

Not the LNP's finest moment.

In terms of fixing the so-called 'financial mess' that Abbott and Hockey bang on about ad nauseum, the budget is going to result in less spending, which will affect business revenue and ultimately business investment and confidence. The flow-on effect will be lower government revenue and a resultant increase in the deficit. It is likely to also result in increased government spending to cover the costs associated with increased unemployment, homelessness, poverty, crime and the social issues that stem from those.

There is much more to be said and done in relation to this budget. There are protests planned across the country which people should participate in if they are angry about the unfairness and deceit that underpins this budget. Labor, the Greens and Palmer are talking of blocking elements of it in the Senate, potentially forcing a double dissolution which will enable people to vote while their anger is still fresh.

In closing, here are some of the highlights (6) of this short-sighted budget, starting with the increases in funding, followed by the 'cuts': the decreases in funding or restructuring of charges that will yield the government money at the expense of vulnerable.


1. 'Total Net Debt (% of GDP) Data for All Countries' - 2013, Economy Watch,, accessed 17 May 2014.

2. 'Treasurer Joe Hockey announces debt limit to increase to $500 billion', Jonathon Swan, Sydney Morning Herald, 22 October 2013,, accessed 17 May 2014.

3. 'Borrowing by the Abbott government just hit $70.95 billion', Stephen Koukoulas, 9 May 2014,, accessed 17 May 2014.

4. 'Has the Government doubled the budget deficit?', ABC Fact Check,, accessed 17 May 2014.

5. 'Suicide leading cause of death for young Australians', Rachel Brown interview with Megan Mitchel (National Children's Commissioner), ABC 'The World Today', 31 March 2014,, accessed 17 May 2014. Also refer to 'Statistics on Suicide in Australia', Lifeline which identifies suicide as the leading cause of death for Australians aged between 15 and 44,, accessed 17 May 2014.

6. 'Budget 2014-15', Australian Government,, accessed 16 May 2014.

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