I told Ben Davis on 4BC’s Drive program this afternoon that this would be the Federal Budget we needed to have – while we’re not facing an emergency/crisis, if we don’t repair the Budget now, we probably never will. The economy isn’t spectacular, but neither is it weak, and I asked, if we’re running an almost $50 billion deficit now, what would it be if we really faced a downturn?
My impression is that the Budget strategy is good, but there is a wide variance in the desirability of the budget measures contained in it.
The following measures, among others, are good policy:
- tightening of eligibility for Family Tax Benefit B – reducing middle class welfare is a good objective;
- fuel excise indexation – it should go up in line with inflation to maintain the Government’s real revenue from fuel excise;
- $7 co-payment for GP visits – a good demand management measure which is really needed to constrain rapidly growing health care costs;
- cuts to industry assistance/corporate welfare – Treasury’s Industry Policy Unit, in which I once worked, has had a big win here; and
- deregulation of university fees – a brilliant move which will hopefully end the mediocrity that has been enforced upon our public universities by years of strong reliance on the Commonwealth.
The following measures, among others, are, alas, bad policy:
- the inequitable and expensive Paid Parental Leave scheme – see my previous post ABC radio interview on the debt levy and paid parental leave; and
- the temporary budget repair levy – this is mainly for the optics, so wealthy people are seen to be contributing to the budget repair task, and it doesn’t fix the structural deficit.
I’m also worried about the six month waiting period for NewStart for people under 30, which appears designed to encourage people into education and training but seems unduly harsh and runs the risk of encouraging a lot of dodgy training courses being funded to absorb all the young people who would otherwise be denied Government support.
I’m unsure what to think about the cuts to funding in the forward estimates to the States for the purposes of health and education. It could be a good move if it ends up forcing a re-think of the GST, particularly a broadening of the base (see Dr Parkinson right that the GST should be broadened), to raise revenue to make up the lost funding.
These are my initial reactions based largely on the Budget speech and I may reconsider them after a closer read of the Budget papers.