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The Budget: The song remains the same

It seems the moment to move from more theoretical social questions to the relatively mundane topic of the budget, a real world event that both impacts upon and reflects the issues, feelings and thinking involved in all the rest.

The budget seems as much an indicator and barometer for the Zeitgeist of the times as means for setting parameters for public discourse.

For example, in social policy we see a continuance of a soft Howardist pragmatism partly prefaced on notions of deserving versus undeserving poor – no big challenges to the paradigm itself, as to single mothers, the unemployed, and others usually on the outer, this time around. The new government has tinkered round the edges to make things less onerous for these groups – that's common decency, no matter how much the"disciplinists" cavil over it.

But largely the song remains the same: politicians are not prepared to risk public ire concerning those written off as "undeserving" poor. Maternity provisions indicate the point made. "We'll help you if you are working, to engage on this particular project, but forget it otherwise, if you can't afford it, better give it a miss!". Likewise pensions. If you are old or on a disability pension, you are worth some help, but do not expect much if unemployed or a single parent with a kid or two in tow. It's an attempt at a position between two poles: it accepts the reality that people will end up single parenting, or unemployed thru no fault of their own, but doesn't encourage people to go and breed out of wedlock and a job, harbouring the confident expectation that the community will pick up the tab.

This budget reflects the government's definitive move away from its ambit of 2007. It does this under cover of the real issue of the global recession, induced by international financiers in the wake of neolib deregulation, comfortable in the knowledge that this once it can't be blamed personally. We have nation building mainly in the form of big infrastructure, much beloved of unions and big business, but underlyingly the recession has reinforced rather than reduced some less desirable aspects of the economic rationalist bent of a politics coincidentally more than ever tied to the electoral cycle and patronage. But Rudd Labor has the advantage of history and can see where previous governments went wrong. Will they do something novel and actually learn from history?

As with the environment, the debt is being left on the back burner. We do things on the never-never these days: no nasty pain/gain stuff like they had in the Great Depression. The opposition makes a big mistake believing people are fussed about the debt down the track – in the wake of the Wall Street Crash, they are worried about now. Besides, it’s like global warming. People won't believe till the icebergs are actually drifting up Port Phillip Bay. In the meantime there is no problem when people can't see it and people asking for extra tax too urgently for proverbial sandbags will not be looked on kindly. But there is a danger: we nearly got caught out this time and may yet get caught out as we were in 1973 with the oil shock aggravating the recession underway back then. Necessity is the mother of invention,so we've (re)invented credit and fiscal stimulus. But make no bones, the public wants it and has actively conspired with the government for it, rather than cop more of the stringent medicine of hard Thatcherism.

Turnbull and co are wedged now , with only the barren ground of austerity as an opposition alternative. Austerity will come, if necessary, but not before the next election, thank you! The debt can wait as far as Swan is concerned, now that he’s been assured by the boffins that it is manageable. In the meantime, the realities of daily politics have to be right and the government shipshape for the inevitable upcoming poll, and the other lot would be acting no differently if still in power. Those are the realities.

But to presume, to take for granted, that no more future planning or work is needed; just to presume that she'll be apples, put it on the slate, would be to make the greatest mistake of all.

Michelle Grattan's approach to Swan at the Press Club luncheon really summed it up to me.

It's as though she was suggesting "you know what to do, but don't tarry too long doing it. We understand the politics, you are heading in the right direction, but don't forget to do the hard work when the time comes" This also appears to be the Standard and Poor’s response. Swan appeared to look chastened, so he ought to have the brains to know that the public's expectations of government and life must continue to be brought back to a more assured understanding of realities, rather than continue to be raised as occurred in previous decades. Equally, the people want good policy, not just platitudes.

It's a reality that Howard and Costello used to use budgets to sell themselves. They would do well to realise that Labor, during its long and humbling sojourn in the electoral wilderness had ample time to study how the masters did it and, having inherited the full machinery of government, can apply the lessons with gusto. Hopefully, as at least one other current thread at Webdiary points out, if spin is the only thing they've learned they will go the way of Howard – kicked out trying to cling to power when transparently beyond being able to use it constructively. But the new government is physically youthful and at the height of its powers. My hope is they embrace the challenge and do well with the next five or half-dozen years or so, rather than just deteriorate into cynicism, laziness and a siege mentality too soon.

If that happens let it be naturally, over time and due to honest tiredness and wear and tear, as happened with Hawke/Keating and Howard/Costello.

The public actually does very well in judging when a government is past its best, tired and out of ideas. What this government will be remembered for will be its ability to foresee the possibility of and prepare for, contingencies.

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ideological assumptions?

Hey, anyone have any thoughts on the current story that Rudd took a hit in the polls because of pension changes?

I think some are wondering if the new (ish) government was imaginative enough in what its budget did or did not allocate, where and when, on the basis of the pensions announcement. If deficit reduction (if necessary!!) were not to come from the pension, for example,  where else could these have come from?

Does the reason given, as to deficit cutting, not contradict somewhat the apparently proffered rationale for the stimulus budget in the first place, that the economy is now and prospectively dynamic  and large enough to absorb current levels of  fiscal stimuli and more spending on social infrastructure?

Are pensions not a form of " fiscal stimuli" at least in a negative sense, anyway? 

In that case, we could suspect the origins for some of the sourness in the electorate eg, deficit / debt etc as percentage of GNP and government spending itself as a portion of the whole as against social and other spending?

Borrowing to buy plasma TVs

According to this article in the Australian, I dreamed I saw a truthful treasureronly $1.5 billion is going to be spent in 2009-10 on infrastructure investment.

As analysts work through the hype, I am becoming more and more disheartened.

Déjà vu

I wrote the title tongue in cheek, and came across this article today tying plasma TV sales to the $900 hand-out.

In other news, we see the government looking for money for infrastructure investments. Don’t they realise that for investment they need savings? They promote a credit card culture and expect to build a prosperous nation?


Jay, the Rudd frontbench cannot run the economy, but it seems they can all find their way to the 1st class check-in at the airports.

Deputy Prime Minister Julia Gillard travelled with an entourage of four to the US, Britain and Singapore for more than a fortnight, at a total cost of $158,246.50.

Two years ago I took my wife and two kids on a trip round Europe for 3½ months, travelling 1st class all the way and staying in 5 star hotels, and it cost me nowhere near $158,246.50.

What is more to the point is I could afford it and it was my money, unlike Gillard, Garrett et al.

What did she spend the odd 50c on?

I would love to know how Julia Gillard actually spent the money.

A familiar sound

Alan Curran:  "I would love to know how Julia Gillard spent the money".

Probably with great gusto, like the rest of them.

A fool and his money are easily parted

Paul Walter: "I think we'd agree that you shouldn't expect too much, on the other hand be entitled to hope for some thing better than the worst on every occasion."

Buyer beware, a term too easily assigned to a past age, for the people who need to know it the most - with consequences now seen everywhere.

If people feel Mr Rudd has stiffed them, I'd advise firstly looking at their own processes of decision making, rather than Mr Rudd's or any others "honesty shortcomings".

Now onto the not so good stuff:

The Australian Budget? A fanciful document.

Take the forecast growth figure of 4.5% and make it 2.5% (very optimistic), that will be a much closer estimate of the final figure. If Australia was a listed stock, we'd to a man, all be short.

I'm also extremely sceptical about the mooted future projects. I'd be shocked if more than 25% ever get off the ground (that would be a miracle). If you take a relatively realistic growth forecast, you're left with the question of: where are the funds coming from? The simple answer: They're not coming.

Talk of past mining booms (actually commodity prices are still booming, not though at peak), and structural deficits etc, is economic illiterate claptrap. If a structural deficit was the problem, why wasn't it addressed? One must thus assume that the false idea of inflating out of trouble is the eventual master plan. Again, making a total mockery of any "promised" projects.

PS the telco project on another thread will never happen. It's already dead. The Australian Government has shown three key reasons why it's dead. That's assuming it was ever alive. Any person with experience in debt default or the gambler's fallacy would pick up on the reasons almost instantly.

My only advice to the conservatives would be to start demanding contracts be signed as a token good faith (always call a sucker's bluff), or remove totally from the "serious" agenda, and place it along side other possible projects, such as a colony on Venus.

Never a replacement for thought

Jay Somasundaram: "Don't worry about keeping your election promises".

I couldn't agree more.

Situations can only be dealt with as they arise. That's the only responsible course of action. Did Mr Rudd even promise anything? The usage of terms such as dishonest, liar, etc has moved to such a level of misuse that such terms are all but meaningless. That's unfortunate. They once had very real tangible meaning.

This idiot situation of testing, and then finding results, on this one's implied promises and that one's implied promises, is directly to blame for the world's individuals' fast falling critical analysis. Were any of these people even in a position to even keep the promises? Did anyone bother to ask? Or even take a close look? Solely waiting on anothers mythical honesty is a road bound for ruin. A very lazy road.

I like the UK custom of a party announcing its Manifesto. In reality a Mission Statement (ideological standpoint). Mapping out every single road, and every single detail, travelled on a journey, is frankly ludicrous and, face it, impossible. Skepticism as opposed to cynicism is a very healthy situation for any person. Blind faith in earthly beings, and encouraged (non-critical thinking) simplistic concepts of honesty will always result in very avoidable heartbreak.

Paul M

Paul M. If I take your comments as referring to politics in general, with Rudd as an example amongst many involving a hopelesly corrupted and corrupting system and human nature,  rather than the isolated exception to all the "good people",  it seems we might have less to cavill about than usual.

Except I don't think its quite so unreleivedly dark. I see the system and people as between two poles, one dark, one more altruistic. What we get from politicians is the same as what they get from us, some times good, some times bad.

I think we'd agree that you shouldn't expect too much, on the other hand be entitled to hope for some thing better than the worst on every occasion,

The private health insurance rebate – sound policy?

The Rudd government’s half-hearted attempt to tackle the private health insurance rebate is an excellent example of the song remaining the same. I can’t decide whether the rebate is more a corporate subsidy or middle class welfare.

Australia has among the best health systems in the world. By and large, Medicare is both efficient and effective. The government, by running a huge monopoly well, is quite efficient, certainly much more efficient than private health insurers. Just compare their annual reports and work out their percentage spend on administration. Though called an insurance scheme, Medicare is more a public service – a means of ensuring that all citizens get a minimum level of health care. If Australia decides that this minimum is not good enough, and wants a (progressive) tax to fund it, I’d be quite happy to pay. What I don’t like doing is being forced to subsidise an inefficient private health industry.

Insurance is good for minimising the risk of rare, unusual events. Where events are common or likely, the average person pays in what they get out, less administrative costs - it becomes better to self-insure. Self-insurance also encourages taking greater personal responsibility for health and reducing unnecessary tests etc.

It’s been argued that private health insurance reduces hospital waiting lists. This is true. But, it does so by paying a lot more to have these operations done privately. It pays the standard Medicare rebate plus 30% of the top-up the insurance company provides.

Isn’t rebating private health insurance like subsidising private schools? No. The government pays about $5,000 a year to educate a child in a public school. If the government paid $7,000 a year for a private school child, then the two systems would be similar.


An excellent piece, Paul, it touches on so many truths, I don't know which to explore.

Perhaps the most important is "The public actually does very well in judging when a government is past its best.....". Democracy actually works. The public is really not dumb.

There was an excellent cartoon at the end of yesterday's Q & A program, with Swann looking beat and saying no more, and Rudd behaving like a spoilt brat.

We have the government manoeuvring for an early election, on the pretext that they need to have a full house to do what they need to do. My response to Rudd is: "Life's tough. This is the hand you've been dealt. Now play it. Don't come snivelling back to me. I elected you to work with and convince parliament. If you can't do that, you don't deserve the job. Don't worry about keeping your election promises. I chose you to make judgements on things as they happen. Above all, don't be arrogant, work with and listen to others. And wipe that smirk off your face. Try, instead to cultivate an honest belly laugh. It's what your and the country's health really need."


You're quite right, Jay.

It's a bit like waching a Star Trek episode. They've been beamed down to the unexplored planet, and now we wait to see what hops out of the bushes.

I'm  another who would like to see Kevin Rudd loosen up a little, also. He's nothing to be ashamed of and should lose the tentativeness and break out of that Howardesque firewall he's built  or has had built around himself at the PM's dept. He could end up another fart in a bottle like the little bloke in before him.

I guess the other idea I had , was the beginnings of a projection up for Swan. Till now, it's been tacit that Gillard is the heir apparent.

Wonder if anyone will come up with anything on budget proposals...too expensive...not enough spent...


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