What Did Australia Get for $1 Trillion? - Speech, Institute of Public Accountants Budget Breakfast

WHAT DID AUSTRALIA GET FOR ONE TRILLION DOLLARS?

INSTITUTE OF PUBLIC ACCOUNTANTS 2020 FEDERAL BUDGET BREAKFAST

CANBERRA

WEDNESDAY, 7 OCTOBER 2020

A trillion dollars is a lot of money – one with twelve zeros after it.

That’s where Australia’s debt will peak. To put it in perspective, when the Liberals launched their ‘debt truck’ scare campaign in 2009, they did so with the figure ‘$315 billion’ emblazoned on the side – one third of the level of projected peak debt under the Coalition today.

On the budget forecasts, there are no surpluses forecast anywhere in the 2020s. The one manufacturing industry that does well out of this budget is manufacturers of red ink, because it’s red ink as far as the eye can see.

So the question is, what do we get from that spending and is the spending that’s being done as part of this budget spending that delivers a Keynesian Double? That both stimulates the economy and sets us up for prosperity in the future? That sets us up to build back better?

It’s important to remember that Australia came into this crisis from a position of weakness. Last year, productivity went backwards, investment was in the doldrums, wage growth was among the slowest on record. We had problems in retail and a downturn in construction. Before the Morrison Recession, Australia was in the Morrison Stagnation.

That means we need to have big aspirations. When Curtin and Chifley sat down at the end of World War II to rebuild the economy, they didn’t say ‘let’s put the place back together the way it was in 1939’. Similarly, our highest aspiration shouldn’t be the way the economy was in 2019.

Our nation needs to set our sights higher. We need to ensure we get maximum value for the spend.

COVID has been a huge hit to human capital. Not just to physical health, but to mental health as well. Education has suffered, particularly among disadvantaged students but also among the quality of education at TAFE and university. In workplaces, we’ve seen what economists call ‘automation forcing’, as firms have replaced workers with machines. In cities, we’ve seen deurbanization, which is going to place massive pressure on the thousands of people who work to support city economies – from building managers to taxi drivers to baristas.

The right response to these challenges would have been to invest in education. But that’s not what we’ve seen. There’s no major investment in schools, despite that fact that Australia’s PISA test scores have been falling for two decades. On vocational education, there’s a plan to create half as many apprenticeships and traineeships as have been lost under the Abbott, Turnbull and Morrison Governments. University funding has been cut and 40 per cent of students will pay more under the Government’s university plan. The reintroduction of student caps  in recent years has made it harder for a talented young person to win a place at university.

At a time when we should be investing in people, the Government has put its priorities elsewhere.

A centrepiece of the budget is a plan to encourage firms to bring forward business investment, and to hire workers aged 35 or under. But there’s little thought about how this will affect older workers. There are 928,000 people aged over 35 on unemployment benefits who are going to be ineligible for the hiring bonuses and vulnerable to automation. According to an Industry Department report, 54 per cent of jobs are vulnerable to automation. The report says that the share of jobs that could be lost to automation is highest in Queensland and Tasmania.

Done right, technology can be a major driver of productivity. But full-employment productivity requires investment in skills and education, and there’s just not enough of that in the budget. Economists Claudia Goldin and Larry Katz say you can think about inequality as being a race between education and technology. If technology gets too far in front, inequality rises. If education keeps up, you can have growth with equity. But right now, we’ve got a budget which is accelerating automation and freezing education. The risk is that as a result, we go further down the path of low-wage America rather than down the path of high-wage Scandinavia.

For Canberra, we’ve seen a mere one-year top-up to the budgets of the national institutions, to make up for the shortfall in visitor revenue. But that’s not going to make up for the 229 jobs at national institutions that have been lost since the Coalition came to office from our national institutions. It won’t make up for the 40 job cuts at the National Gallery of Australia, the 42 job cuts at the National Film & Sound Archive, the 52 job cuts at the National Library of Australia, the 71 job cuts at the National Archives of Australia.

For the public service, this budget asks a lot of budget servants. It provides a temporary top up in public servant numbers in a few agencies. But that won’t make up for the fact that there are 7 per cent fewer public servants now than when the Coalition came to office, despite the fact that public servants are being asked to do more. And the arbitrary public service cap stays in place – driving casualisation, costing the taxpayer more, and acting as an ideological ball-and-chain on the public service.

We also have some looming deadlines. At the end of this year, less than 3 months away, unemployment benefits will snap back to $40 a day – a level that ACOSS, the Business Council, and even John Howard doesn’t think is reasonable. That will affect one million Australians.

The timing is skewiff. Between now and the end of the year, 160,000 people are forecast to lose their jobs. Yet JobKeeper is being cut. Right over the forward estimates, the projections are for unemployment to stay higher than it was last year. There is no plan for tackling insecure work. There’s a miniscule plan for women’s economy security. There’s very little for childcare. There’s nothing substantial for climate change.

From a government that’s delivered Sports Rorts, Reef Rorts, Helloworld, the Paladin scandal, RoboDebt, and WaterGate, we have the risk that new slush funds in the budget could be used for further pork barrelling. In the deepest downturn since the 1930s, and without a federal integrity commission, the budget just can’t afford that kind of waste.

Among marathon runners, there’s a saying: ‘you don’t rise to the level of your hopes – you fall to the level of your training’. The problem with the Coalition is they lack training in good budgeting. For a quarter of a century, going back to Peter Costello, their yardstick of good budgeting has been one question - does it deliver a surplus? As a result, they’ve ignored long-term economic reform. We haven’t seen the Coalition implement a major economic reform in decades.

That lack of training is now showing. Having abandoned surpluses throughout the 2020s, the Coalition is economically floundering. Hope isn’t a plan. Despite over $1 trillion of debt, the 2020 budget fails to set Australia up for a productive and egalitarian future.

ENDS

Authorised by Paul Erickson, ALP, Canberra.


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  • Andrew Leigh
    published this page in What's New 2020-10-07 12:33:18 +1100

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Cnr Gungahlin Pl and Efkarpidis Street, Gungahlin ACT 2912 | 02 6247 4396 | Andrew.Leigh.MP@aph.gov.au | Authorised by A. Leigh MP, Australian Labor Party (ACT Branch), Canberra.