I have a couple of articles responding to the most momentous budget in Australian history. For those who’ve forgotten, it was introduced on Tuesday.
Here’s one in The Conversation on environment and energy policy (heavily edited and done in a hurry, so there are a few points I would have written differently).
And here’s one in Independent Australia, headlined Budget like its 2019, on the government’s failure to learn from the catastrophes of the last year.
6 thoughts on “Budget reax”
Paul Brennan’s opinion piece in the AFR (page 35 9-10-2020) explains how the Treasury misinterpreted Peter Downes economic modelling by limiting the age group eligible for “hiring credits”. This is a big mistake by Treasury economists who should have known better than to got half heartedly into a major stimulus measure.
The budget was mainly about creating jobs. The environment was, appropriately, not the central issue. The very significant job subsidy schemes, the proposals to wriie off capital costs immediately, the proposals for skills training were about creating jobs in the worst downturn Australia has experienced in a century. the budget looked very much like one that could have been propounded by Kevin Rudd – indeed there is hypocrisy evident in the Coalition pushing these massively expansionary policies when they critisised Labor for doing the same during the last financial crisis. Poor Mr Albanese seenms to be caught with his pants around his ankles – he had difficulty working out what else to spend money on. He did scrap the annual subsidy cap of $10,560 per child for families earning between $189,390 and $353,680 a year. That should make the workers in Blacktown happy. To make them even happier childcare subsidies would not be paid to those earning more than $530,000.
You state: “The budget was mainly about creating jobs. The environment was, appropriately, not the central issue.”
Humanity needs a habitable planet to continue to live on – there’s no planet B.
Planet Earth doesn’t need humanity.
If we are not able to urgently solve the climate crisis then we can forget about all the other issues.
See Professor Schellnhuber’s Lecture in the YouTube video in my comment at: https://johnquiggin.com/2020/09/28/no-planet-b/comment-page-2/#comment-228774
This budget is so bad I feel too despondent to respond. Instead, I will crib my whole response from Bill Mitchell over at his MMT website from his topic headed:
“Australia – Treasurer’s fiscal statement 2020-21 – abandons nation building.”
Bill Mitchell lists his pre-budget recommendations and comments after the dash on what the budget actually does, or rather does not, do.
“1. Fast track the shift to a non-carbon economy – virtually nothing in Tuesday’s statement.
2. Fast track the design and contracts for a fast train from Brisbane to Melbourne – virtually nothing in Tuesday’s statement.
3. Reassert NBN Co as a public company and abandon its ‘cost recovery’ constraints and offer free services to retailers at fast speeds and regulate low retail charges – – virtually nothing in Tuesday’s statement. The Government just said it would allow the NBN Co to borrow more to improve regional infrastructure.
4. Abandon JobKeeper and instead directly pay wages and salaries of all workers in line with their previous tax statements – virtually nothing in Tuesday’s statement other than to reassert the planned cuts.
5. Fund TAFE properly to increase its capacity to train apprentices and fund the creation of thousands of apprenticeships across Australia – As the Australian Education Union concluded – “The Morrison government’s budget has failed to provide a single dollar of specific funding for TAFE – in fact it is completely silent on TAFE altogether” (Source).
6. Invest in manufacturing capacity to make Australia more self-reliant in a number of areas – minimal investment proposed in Tuesday’s statement.
7. Increase the funding to universities and regulate the salaries of the managerial class in that sector downwards as a condition for adequate funding of research and teaching. End the trend towards casualisation in the research sector – Some additional support for research but widespread job losses will still occur given the loss of overseas income and no support under JobKeeper.
8. Regulate the GIG economy to bring it in line with other labour market segments – Nothing.
9. Require the Fair Work Commission to restore penalty rates to all workers who have lost them – Nothing.
10. Introduce a Job Guarantee – Light years away.
11. Introduce a state-owned bank that can provide competition to the big 4 and bring down charges, gouging etc – Nothing.
12. Free child care – Nothing.
13. Free public transport – Nothing.
14. Enhance the career public sector in several areas – Nothing.
15. Ensure the CSIRO, the ABC, SBS are adequately funded as public institutions – Nothing.
16. Increase foreign aid substantially – CUT.
17. Abandon the Closing the Gap process, and restart it with proper targets that are properly funded – which will include many of the initiatives outlined above – Nothing.
18. Stop de-funding public education and revise the schooling funding model in favour of public schools – Nothing.
19. Invest in 400,000 or more social houses to meet the massive excess demand and make housing affordable for low-paid workers and their families. This will be a big boost to the construction sector – Nothing. Zero mention by the Treasurer (Source):
20. Retrofit the existing housing stock to make it more carbon neutral. There is a massive amount that can be done in this area to invest in smart housing technology for all families to militate against the climate emergency – Nothing.
Fail all round.” – Bill Mitchell.
I am interested in the childcare policies advocated by Labor. These unambiguously favor the very rich. At first sight, they just look like vote-buying handouts – maybe to rid Labor of its Shorten-induced “class warfare” image or maybe just trying to buy the “woman” vote. But no, according to Chalmers, it’s a reasource-allocative subsidy designed to move wealthy women back into the workforce. From the Oz:
“Dr Chalmers said there was nothing wrong with families earning up to $530,000 receiving extra government support for childcare because it was not a welfare measure but a “key economic reform”.
“This isn’t a welfare measure. This is about making sure more women are participating in work, it is about making sure that more Australian women can grab the opportunities when the economic recovery comes”
Chalmers obviously believes in strong substitution effects in female work effort decisions – indeed such effects are stronger for women than for men generally. But it seems a stretch to believe this is true even in families earning half a million bucks a year in salaries.
Under Labor’s policy, a family earning $70,000 per year would be $35 a day better off while a family earning $360,000 would be $212 a day better off.
Indeed, the benefits accruing to such wealthy families are roughly the same amount that they would get from the Stage 3 tax cuts that Labor has so strongly opposed.
Under Labor’s plan, total childcare subsidy costs will rise from $9b annually to $15b annually. Money well spent?
(AFR, Saturday, p.3).