Peter Pilt’s Thoughts on the 2014 Federal Budget

The Federal Budget was handed down last Tuesday and there has been much media hype and scare tactics around the measures announced. Here are my thoughts on the Budget:

The Budget Deficit is being reduced from $49 billion to $29.8 billion next year. Joe Hockey has said that the measures in the budget are aimed at reducing Australia’s national debt. I found it interesting that we are currently pay $16 billion a year in interest. That’s a fair swag of money. Our current debt is $660 billion and I have heard people say well that’s only about one third of our GDP so it’s not that much – well sure as long as we are ok with paying $16 billion a year for nothing.

I think PM Abbott has broken his pre-election promise of not introducing new taxes nor changing the pension. His temporary debt levy on incomes over $180,000 is a tax and his changing of the pension to be indexed to inflation not wage growth will also result in less money for pensioners. Abbott has not communicated effectively why he has broken these promises.

The big scare from the media has been around the $7 co-payment for GP’s visit. What we need to get our heads around here – is that an Australian can go to a doctor and it will cost just $7. Free doctor’s visits are simply not sustainable. The average Australian goes to the doctor 12 times a year. This means that the equivalent of 23 million doctors visits happen every month:- paid for by the Government. There is a safety net here with people with a concession card or children – only paying for the first 10 visits in a year – and then they are free. I understand that in extreme cases $7 will be tough for some people to find – but I think on the whole – this is fair. I also like the fact that the money raised from this will be going into a Medical Research Future Fund – to assist Australian medical researchers.

We also need to remember that Doctors have the discretion not to charge the $7 to a patient.

Prescriptions under the PBS will increase by $5 – however if you have a concession card – the increase is just 80 cents.

Another scare from the media is the changes to the Unemployment benefits. I will agree that it seems that 6 months is a long time to wait for benefits. Not sure what the Government expects people to do during that time for money as they will hardly have 6 months income saved up. So this is an issue. However I have been concerned about the level of welfare spending and how sustainable that is in the long term. I love the fact that Australia has a generous welfare system – but it has to be sustainable. We need to keep the perspective that the unemployment benefits are a safety net – not a lifestyle choice. Great to have Work for the Dole back.

I was disappointed to see the reintroduction of petrol excise as this is a regressive tax (ie it effects lower income families more than high income families). The price of petrol impacts food production costs, public transport costs etc and so it has a negative multiplier effect across the economy. The fact that this is indexed twice a year is also unfortunate. The positive of this is that the money will be put into an infrastructure fund. You don’t realise how important infrastructure spending is till you go to a country like Nepal where little to no money is spent on infrastructure.

I was also disappointed to see that the increase in Foreign Aid was being decreased by $7.9 billion over the next 4 years. Australia has the 12th largest economy in the world – with one of the smallest populations – and we have a humanitarian responsibility to play our part in helping the disempowered and displaced people around the world.

The animal welfare agency PETA is being scrapped saving $1.1 million. This is not a positive measure. Paricularly when you see that the $1 million they saved there is being put into building a residence for Melbourne Ballerinas. Now I like ballet and ballerinas but I like no animal cruelty even more. I don’t really like Ballet.

The Abbott Government have also signalled that they are going for a smaller Government with 16,500 jobs going in the public service with 70 Government agencies being abolished and 230 bureaucratic programs cut. I see this as positive. Big Government is intrusive and costly.

There were also some interesting funding things cut such as the Australian Interactive Games Fund – for video gamers – which were receiving $10 million. WOW. Why was this being funded by the Government in the first place and to the tune of $10 million?

Good to see School Chaplains funded for another 4 years. Also good to see the NDIS scheme wasn’t touched and will be funded fully by the Medicare levy increase announced under the Gillard Government.

To assist with small business health the budget reduced company tax by 1.5%. This is significant. There are also plans to reduce red tape which reduces the compliance costs of small business. This is significant too. In fact the Government is planning to have two legislation repeal days a year – where they get rid of excess and cumbersome legislation. The first repeal day earlier this year got rid of 50,000 pages of legislation.

I am not sure what I think of the change to University funding to a more American Style funding model. In one instance it will provide University’s with the freedom to be more entrepreneurial in what they offer and will therefore be better funded. However if it makes Degrees something that only the rich can afford to do or saddles students with massive debts for the rest of their lives – then it cannot be seen as a positive.

Pity the Government didn’t get rid of the Paid Parental Scheme.

I can’t see how people are going to be able to work to 70. If you are a tradesman or a labourer of any kind – your body at 70 is simply not able to do what it used to do. Apparently people won’t be able to get access to their superannuation till 70 either – so you won’t be able to retire at 65 even if you want to. This is a bad decision and can’t see how it’s going to be workable.

Half a billion has been cut from Indigenous Programs. Now I am not sure what programs these are – but I am not in favour of this cut.

The Business Class Gold Pass for retired long serving MP’s is being wound back and then abolished. The scheme gives these MPs 10 return Business Class Flights a year. The superannuation scheme for these MPs is generous enough – the winding back of this scheme is excellent.

The politicians pay has been frozen for 12 months. A back bencher earns $195,000 a year – so I don’t think the freeze is going to hurt them too much. Maybe should have been frozen for longer.

Some people will no longer be eligible for the Family Payment Part B with the eligibility dropped to people who have children under 6. I think this will put families under pressure.

The government has taken a Bunsen burner flame to three of the country’s bigger science organizations. The CSIRO, which invented WiFi, Aeroguard and extended-wear contact lenses, will be slashed the most, losing $111.4 million over the next four years: which is a significant amount of money for this organization. Australia’s nuclear science body, ANSTO, and the Institute of Marine Science also face hefty multi-million dollar cuts. I don’t see why we are putting billions into Medical Research yet at the same time gutting our other science bodies.

In one of the stranger budget measures: The Clean Energy Supplement will now be called The Energy Supplement. Here is another strange one – the Mushroom Spawn levy has doubled.

Dental healthcare got ripped in the budget with the major schemes either axed or deferred for several years. Poor old Charles Sturt University in Bathurst even had funding for a dental and oral health clinic pulled. Ouch. Savings of $634 million. Make sure you brush your teeth tonight after dinner.

So there’s my thoughts. Winners/Losers and whether it is ultimately good for Australia, time will tell. What we need to understand that at some point our unsustainable welfare system will have to be wound back – and that is always going to hurt.

Categories: Australian, Current Affairs, Political Commentary or Thoughts

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6 replies

  1. $7 doctor visit and other increased cost could have been offset if ALP/Greens agreed to the abolishing of the Carbon tax……But in saying so..First I don’t see why Politicians are so highly paid…second why so many perks after they leave parliament?
    ..their retirement is secure.. how dare they expect Jo public to work for it?

  2. Very good summation and commentary Peter.

    Personally I’m really disappointed in the ‘we didn’t break any promises’ response from Hockey and Abbott.

    I think they’d gain far, far more if they just owned it. However I understand it is the nature of political dialogue to never apologise. It’s unfortunate and hinders our nation’s ability to have decent national conversations.

  3. Love your work Pete! Well advised and well written.

  4. The 12 visits to doctor a year was quoted by govt, however a fact check by either abc or the conversation established that it is actually 4-6 visits to the doctor each year depending on study you look at, the remainder of the ‘visits’ relate to referrals from the doctor to blood testing or scans. Just to clarify that as I until the last twelve months have rarely visited the doctor more than twice a year, so agree with that statement more!

  5. i do think they genuinely want to get Australia out of the debt we’re in … so some good budget cuts …but wait for the BUUUTT .. i don’t agree with the young 1’s leaving school not being able to get benefits for 6 months … i think they should have done it the other way round … allowing them to clam for up to 6 month till they either find a job or go on to more education … i also think those who’ve been on ”benefits” for a long long time need to work for their dole or be made to join Navy or Army or something that will teach them a trade …i know some people who are my age & have been on benefits as long as i’ve known them & my theory is your never to old to learn !! Well summarized Peter 🙂

  6. An interesting commentary Peter.
    While I can see you are trying to offer a rational explanation of the Budget cuts to ‘welfare’ spending – and you rightly point out that the national debt is an issue. You do; however, fail to recognise that the Budget does not need to solve the ‘debt crisis’. It is a fallacy created by the Abbott gov. to justify the savage cuts to lower income people. The whole ‘Labor’s terrible debt’ mantra has been consistently disproved by reputable economists, it is merely a media driven story. The Labor borrowing/debt was invested as infrastructure spending into the Australian economy, it provided jobs (which then creates greater levels of PAYE taxation), as well as spending (GST & company tax receipts) etc. The national budget is not simply a ‘bigger version of a household budget’ (thank you PM Howard for offering tis simplistic metaphor to the Australian people). Government funding is based on tax receipts – which is dependent upon money moving around the economy: people being employed, paying tax, spending, GST, businesses making a profit etc. Keynes rightly explained this. Thus, while we may baulk at the thought of people getting ‘hand outs’, it is this funding that is being spent to ensure small businesses etc. remain fiscally viable. By demanding that the ‘poor’ (some commentators have called them “whiners” whingers” and “lazy”) be punished; business operators are in reality removing one of their own revenue streams. I wonder how many small businesses would have survived the GFC if Rudd hadn’t handed out $900 to every Australian family (ensuring currency was flowing through our economy)?

    The opposite is what the Abbott government is professing: austerity measures, less money being spent, less taxation gathered, increasing unemployment and welfare reliance etc. it was this failed economic rationalising that dragged many OECD countries into recession post GFC. The result was, the wealthy became wealthier and the lower classes were further disempowered. This sad state of affairs was amply proven in the Great Depression. Do you truly believe a ‘surplus equals good financial management from a government’? A surplus simply means the citizens of a nation are being over taxed (proven by the fact that John Howard’s LNP gov. was the highest taxing government in Australia’s history).

    Do you truly believe that a government that causes suffering for its poorest and most vulnerable citizens, while actively supporting the growing wealth of corporate entities, is acting in a way that follows the teachings of Christ?
    The ‘trickle down’ economic fallacy is just that, a lie. The ‘cup doesn’t run over’ it just gets bigger.
    (See Pope Francis’ statement on this).

    My main complaint is the way commentators are ignoring the fact that at the same time as the government is cutting funding to the poor, pensioners, students, unemployed etc. it is continuing with corporate welfare (current estimates on the 2014-15 financial year are that the gov. will subsidise the mining industry to the tune of $11 Billion for diesel fuel) while setting the fuel excise to increase in line with CPI every six months. If this government was serious about dealing with the ‘debt crisis’, and, as the treasurer stated ‘the age of entitlement is over’, then why haven’t they had the courage to cease corporate welfare to multi-national corporations who make obscene profits every quarter?
    Where is the fairness in these economic decisions?

    I apologise for appearing blunt Peter, but this Budget seems to me to be aimed at further disempowering the lower classes of Australia while reinforcing the privilege and wealth of the richest members of our society. I do not believe it lines up with the gospel teachings and example of Christ or the early church. As a pastor, I’m sure you would want our national leaders (many of whom proclaim Christian faith) to line up with the Bible.

    On another note, I’m glad you rightly called the cutting of foreign aid a negative decision, what’s worse (and the Rudd/Gillard Labor gov. is just as much to blame) is the more than $8 Billion we will spend on maintaining the off-shore detention camps (an immoral and internationally illegal exercise in xenophobic politics). Clearly Australia is being driven by the politics of selfishness, greed and fear, this concerns me greatly. I’ve recently been reading a biography of Dietrich Bonhoeffer, and the similarities between the current ‘Tea Party’ politics sweeping the Western world and the development of fascism in Germany in the 1930s are scary. What are your thoughts on this – I’m interested in reading/hearing a pastor’s perspective.

    Once again, thank you for attempting to summarise the Budget Winners & Losers, I do; however, feel that your analysis could have had greater scope.


    Simon Day

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