How to make the budget fairer - PVO NewsHour 5 August

Last night Peter van Onselen and I hashed out some ways the Abbott Government could make its rotten budget fairer. Here's the video and transcript:





SUBJECT/S: Abbott Government’s unfair budget, repeal of Section 18C

PETER VAN ONSELEN: There's a raging economic debate in Australia, and it comes down to whether or not the federal budget has been fair. The government says that it is fair, and that like it or not, cuts do have to come from the lower end of the socioeconomic spectrum because that's where most of the handouts go. The Opposition says that's not true, and they argue now that there's leaked information from Treasury which proves that's the case, but the government says those figures are being distorted. 

One man who understands economics - even if his polemic take on it isn't supported by all of our viewers - is the Shadow Assistant Treasurer Dr Andrew Leigh. He's a former economics professor and I spoke with him earlier today. 

Andrew Leigh, thanks for joining me. The government today had to go through the humiliation of a back down on reforms to Section 18C of the Racial Discrimination Act - you'd have some sympathy for them, wouldn't you, given your recent change of heart on GP co-payments?

ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Peter, the government said they would bring Australians together, and indeed they did over Section 18C. They had Arab and Jewish Australians joining together to speak out against hatred. What we've seen today in George Brandis being rolled by Cabinet. We've seen...

VAN ONSELEN: He was on this program yesterday, actually we really should play a clip of it. He was on this program literally 24 hours ago extolling the importance of Section 18C being removed as unnecessary, vis-a-vis the response to Mike Carlton's column and that inflammatory cartoon in the Sydney Morning Herald. And yet here we sit, 24 hours later and it's gone!

LEIGH: It's pretty extraordinary. But let's hope it’s the first of many back downs by this government. They might also like to reconsider their cuts to health and education. It's a year ago today that the government said they were on a unity ticket with Labor on education funding, and that's been a broken promise...

VAN ONSELEN: Or in the GP co-payment space, where you yourself were, once upon a time, on their side?

LEIGH: Absolutely. I've looked at the evidence, I've spoken to doctors from across the spectrum, and I've come to the view that it's a bad policy. I'd urge the Abbott Government to do the same. Speak to the vulnerable, speak to doctors and health experts - they'll tell you that primary health care is the cheapest part of the healthcare system so you don't want to restrict access to it. So I hope that will be another back down. I'd also like to see a back down on the incredibly unequal budget that the government has handed down.

VAN ONSELEN: Yes, I wanted to talk about that Dr Leigh - you're a former professor of economics, you're unusual amongst our 226 federal parliamentarians in that you know something about economics. So I thought that we might have a discussion specifically about these claims that the budget is unfair. That's what some of this Treasury data appears to show, and I'd agree its certainly unfair because the deficit levy has been passed with bipartisan support yet all the other elements - whether it's to do with pensions, welfare provisions and so forth - they are unlikely to get through the parliament. So only the wealthy get hit in this budget.

LEIGH: Well if you look at the aims of this budget Peter, which I think it's fair to do - and let's not forget that much of the budget is in the Appropriations Bills - but this is a budget which increases inequality. After a generation of rising inequality, this is a budget that makes the problem worse. And we now know, thanks to a Freedom of Information announcement, that the Abbott Cabinet was warned it would do exactly that. So I think that, like the back down on repealing 18C, they should also back down on this unfair budget.   

VAN ONSELEN: If you were a betting man, would you bet that the government would go for a mini-budget, or would they press on and try to avoid that?

LEIGH: Look, I would expect a mini-budget is in the offing, but let's face it: this is a crash-or-crash-through kind of Prime Minister who at school, probably didn't have 'plays well with others' on his report card. So getting a mini-budget would be a first step. But it needs to be a fair mini-budget, not one that takes one dollar in ten out of the pockets of the poorest single parents.

VAN ONSELEN: So what are the alternatives that you would like to see? This is the big criticism that the opposition has levelled at the budget, and in fairness it's still two years out from the next election and I'm sure you'll roll out more details before then, but what are the sorts of thought-bubbles you're interested in to make the budget fairer, that also involve cuts of some order to be able to get the budget back to surplus?

LEIGH: That's exactly the right question to be asking. We can point to decisions we made in government which have been reserved since the Coalition came to office. We had a $4 billion package to tackle multinational profit shifting, they've whittled that down to a $3 billion package. So they've given $1 billion back to multinational companies. At the top, we had proposals that those with more than $2 million in their superannuation accounts ought to pay a higher rate of tax, because at that point they're getting more of a tax break than the full rate of the pension. Again, the government has jettisoned that. So these are just a couple of the measures that we thought, in government, were a fair way of balancing the budget.

VAN ONSELEN: Presumably you'll give us a bigger picture of other, similar measures months, maybe even a year from now as we get closer to the next election?

LEIGH: Absolutely. You would expect to see us rolling out more policies, but we can be very clear about our values now and the sorts of things we would have done differently. This is a government that is cutting the tax rate for people with more than $2 million in their super accounts, at the same time as they're raising the tax rate for people earning less than $37,000. You'd think that the rich had been doing much worse than the poor over the past generation, but in fact the opposite is true. As the gap widens, it becomes even more urgent to have a fair budget, and not this rotten, unfair one. 

VAN ONSELEN: Dr Andrew Leigh, always good to have you on the program. Thanks for your time.



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