Andrew Leigh

The government has ended the Parliamentary year with its budget in a real mess. In this op-ed for the Daily Telegraph, I've looked ahead to the Mid-year Economic and Fiscal Outlook statement to encourage Joe Hockey and his colleagues to find a better, fairer way.

Meritocracy at risk of becoming a mate-ocracy, Daily Telegraph, 5 December

Early last year, Joe Hockey pledged: "We'll deliver a surplus in our first year and every year after that." For the eighth time, he committed that an incoming Coalition government would never preside over a budget in deficit. Every Coalition budget, Mr Hockey pledged, would be a surplus budget.

Fast forward a year, and the only thing in surplus is red ink. When the Coalition came to office, the Charter of Budget Honesty laid out the state of the books. This year's budget deficit was forecast to be $24 billion.

So much for paying down debt. By the time Mr Hockey had delivered his first budget, he'd pushed this year's deficit up to $30 billion. Now, most informed sources have it blowing out still further when the mini-Budget is released in a few weeks.

Why is the deficit rising? Part of the answer is that Mr Hockey can't resist looking after his mates. A billion dollars to multinationals, a tax break for people with more than $2 million in their superannuation accounts, and soon you're talking real money.  

Mr Hockey was fond of saying in opposition that there was "no revenue problem", but he seems to have created one since coming to office.

To make up the gap, Mr Hockey proposes cutting one in every five dollars of per-student university funding, and has already slashed needs based school funding to states and territories. The result is that Australia's meritocracy risks being turned into a mate-ocracy.

Then there's confidence. Before the election, Mr Hockey said the election of a Coalition government would be an "adrenaline charge".

Instead, over the past year the government has produced more tantrums than a daycare centre at nap time blaming the opposition for opposing, the media for reporting instead of cheerleading, and the business community for failing to sell his Budget.

The result has been a significant hit to confidence. Having a Treasurer trash-talking the economy is one reason the promised economic adrenaline charge is turning out to be more like a dose of Valium.

This government's regressive changes are directly cutting into consumer spending. Poorer Australians spend all their incomes, while the more affluent save about a quarter. So transferring money from the poor to the rich doesn't just offend egalitarianism, it also hurts spending. If you're a retailer, the last thing you need is a government that's Robin Hood in reverse, particularly leading up to the busy Christmas period.

There is a better way. For a start, closing multinational tax loopholes fits with the reform mantra that we should aim to “broaden the base''.

We still don't know what will be in the mini-Budget when it arrives, but it's clear what kind of ethos it will embody. The Abbott government's problem isn't their sales job – it’s the fact that what they're selling stinks.

This opinion piece was first published in the Daily Telegraph on Friday, 5 December 2014.

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