How to oversimplify a budget
The Australian public is accustomed to having complicated and complex information spelled out for them in an oversimplified way, and Vice will not divert from that tradition at all. Here are some of the major changes announced in the budget.
First, the deficit. The Treasurer Wayne Swan said over and over again that there wouldn't be one, and it's something the Opposition has seized on. But we knew there would be one, we just weren't sure how big it would be, now we know it's $19.4 billion. Australia's attitude to debt is somewhat paradoxical – we have one of the highest rates of personal debt in the world, and see no problem with borrowing exorbitant amounts to buy McMansions and cars and boats and holidays, but we object to the Government borrowing money to pay our kids' teachers.
Nonetheless, everyone seems very concerned. The explanation from the Government is that we're in deficit because we're not paying as much tax – on average 22.2% less than in 2008. The Australian dollar is at its highest rate since it was floated, which affects exports. We've been through a global financial crisis which crushed a lot of businesses – that explains the drop in company tax revenue. Now that businesses are recovering they're investing money in projects – the more they spend, the less tax they pay. That's another explanation. But you have to think that given the mining tax was projected to bring in $4 billion this year, and it only brought in $200 million, that the Government wasted a huge opportunity by watering down that tax in 2010. Getting our fair share of the mining boom may not have got us into surplus, but it would have cut back a lot of our debt.
If you want to go beyond the fact of the broken promise, the economy isn't looking all that shabby. Australia isn't the only country in deficit at the moment – ours is pocket money in the US, where the deficit is $642 billion, and it's fallen from over a trillion dollars a couple of years ago. Yes, they're bigger, but their deficit represents about 80% of GDP, while ours is about 20%. Canada, which has benefited from the mining boom like us, and has a similar sized revenue base, has four times more debt than we have.
A quick look at the other important economic indicators shows that our unemployment rate is still one of the lowest in the world for rich countries, our average wages are among the highest, our growth rate is good, inflation is low and interest rates are at a record low, despite the Opposition's claims during a previous election campaign that interest rates will always be higher under Labor. Oops!
In reality, all of these economics numbers don't mean much to regular people, so let’s look at who might be affected in a real way.
The fact that the budget includes such a huge amount of money - $14.3 billion – for disability care is something that should be celebrated. It's also something that a Prime Minister can only do when she knows she's about to lose an election and wants one last win.
Education can be seen in a similar way. Changes to education have been presented as kids winning and universities losing. But what's the reality? The Gonski reforms will mean an additional $9.8 billion for schools across the country from the Federal Government. Who does this impact on? Well, 100% of children, and in an overwhelmingly positive way. Better schools means better educated kids which means fewer dumb adults in the future.
Universities say they lose out of the deal – their funding will be reduced by $2.3 billion. Students, lecturers and staff have jumped at the opportunity to hold a protest about something, and they haven't been disappointed by the reaction of the police. At a protest at Sydney University, one uni student said he even had a policeman grab him around the neck, and he almost passed out. Cool!
Do the universities have a point? They say the money would have been spent on disadvantaged kids and medical research and all sorts of good things. So to help them, I've found a couple of classes that could be cut, while at the same time contributing to a reduction in the amount of bullshit that comes out of the mouths of newly graduated hipsters:
'The Creative City' at Melbourne University, where students 'investigate the design of creative spaces, creativity in institutional life, ‘informal creativity’ and the role of creativity in new conceptions of urbanism, such as ‘inter-cultural’ or ‘post-carbon’ cities';
'Situated Media Installation studio', a class at the University of Technology, Sydney, where 'the objective of the interdisciplinary collaborative studio is to encourage dialogue across media boundaries and paradigms of designing, to facilitate trans-literacy in a spectrum of medium.' However, this may need to be replaced with a grammar class.
Latin Dance Party, a class at Queensland University of Technology - 'as an enjoyable and healthy form of social interaction, knowing how to dance these styles is a broadly applicable life skill.' It is indeed, but one that a lot of taxpayers would probably be happy not to pay for.
One of the other changes to higher education is that students can no longer get a 10% discount for paying their HECS upfront. Essentially this means people with rich parents who pay their fees for them can't get ahead of their competition anymore. Well, aside from the fact that they probably get their rent paid for them and don't have to work. And their rich parents will probably set them up with internships so they become one of the 1% of people with Media Production degrees who eventually end up with paid work.
The Government will be deferring an increase in the foreign aid budget for two years, despite its commitment to increase spending to 0.5% of GDP. A lot of young people are concerned about cuts to foreign aid because young people are idealistic and like the idea of helping the poor. However, our foreign aid money passes through so many hands it's questionable how much reaches genuinely poor people. Australia doesn't directly fund anything – it gives money to reputable charities like the Red Cross and less reputable ones like World Vision, and they take it and put together reports and documents showing where it was spent and Ausaid can choose whether to believe them or not.
It's much easier to find ways to cut the aid budget than it is to find ways to spend the money – Ausaid admits this. In their analysis of the Australian Civilian Corps program, which places Australian public servants in advisory roles within corrupt dysfunctional governments overseas, they note that the program is becoming supply driven – that is, that there are more public servants willing to help foreign governments than there are governments willing to have them. And the reasons why are as much about money as they are about concerns for the poor – the Australian Civilian Corps staff are on about $130,000 per year, and when you add the allowance for living in hazardous environments, relocation allowances, holidays, and indexation it becomes a pretty sweet deal. But hey, the rent on a house in downtown Dili is out of control! In reality, the major beneficiaries of a lot of Australia's aid programs are the people who run them – and in the case of the Australian Civilian Corps, the major beneficiaries belong to that severely disadvantaged group in society – highly-paid white men over 50.
One of the budget disappointments for a lot of people is that the Newstart Allowance won't be increased, and the only concession is that if you do work, you can earn up to $100 a fortnight and still get the entire allowance, whereas previously you could only earn $62 a fortnight. Either way, you're still barely earning enough to survive.
There's also bad news if you've been scamming the system, with a crackdown on welfare cheats that the Government hopes will raise $62.4 million. And if you've got kids, you'll no longer be getting an increase in the Family Tax Benefit that was promised last year. And it gets worse if you're an unemployed parent who smokes – all tobacco products will be more expensive.
But the major message to young people from the Treasurer concerns procreation. As of March 1 next year the baby bonus will be over. Which means that if you want it, you realistically need to conceive within the next 2 weeks. So get breeding!
Folow Carly on Twitter: @carlylearson
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