BUDGET 2008

Australia's new centre-Left government has just brought down its first budget. Below are comments from a conservative and a left-leaning viewpoint. For a Leftist government to bring down a surplus budget (i.e. they plan to spend LESS than they raise in taxes) is rather remarkable but it is customary in Australia. The budget is quite mainstream with just a few Leftist flourishes

Budget 2008: mildly encouraging

Comment from a free-market economist below:

"The prices of food and oil are rocketing, so why are we complaining?” This is the question of the day, courtesy of pollster Gary Morgan. Morgan has a point. Australia’s principal exports include coal, natural gas and foods, not to mention iron ore and congealed electricity in the form of aluminium. Australia has the mother of all booms. Inflation is “only” 4 or 5 per cent, government coffers are overflowing with money and we can afford all sorts of experiments in helping battlers, building infrastructure, increasing spending on health and education. The clear risk is that the “mild tightening” that sums up this budget will not take enough pressure off the Reserve Bank and that interest rates will need to rise further yet.

Morgan, like Henry, is concerned that the resource boom with Australia’s current Industrial relations (IR) system is likely to encourage a surge of wage costs. The budget assumes slower growth of employment and increased workforce participation, hence greater unemployment. In “real” terms (i.e. if accurately measured) this problem will be far larger than officially estimated, especially if wage hikes increase. This will create a real problem for the Rudd government.

Like Henry, Morgan thinks governments are inefficient and government departments do not encourage productivity growth.

We’d both like to pay more tax (from higher incomes), but at a lower rate. As Art Laffer showed, that is what happens when tax rates are cut. There are mild cuts for all but those on the highest incomes - keeping the pre-election promise - and this will have mild encouraging effects on labour supply.

Last night’s budget was sold in advance as being “tough”. It is certainly tougher than the later Howard-Costello budgets, but not their first budget. Nor is it as tough as Keating’s Banana Republic budget. Henry applauds the means testing of certain benefits. Wayne Swan told Kerry O’Brien that a principal earner or family income of $150,000 was a “reasonable” cut off point for some benefits. Politically that may be the case, but one cannot reasonably say a family with such an income are battlers who deserve help from taxpayers.

Incidentally, real tax reform - which abolished lots of tax allowances - should exempt many more people than at present from lodging returns, saving transaction and compliance costs.

This budget is mildly encouraging. The risk is that the continued resource boom blows it out of the water, leaving the Reserve Bank to gather up the pieces.

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A surplus budget

Comment from a Left-leaning journalist with an interest in economics

THIS budget is meant to be read two ways, because it tries to have it both ways. It is a change-of-government budget in the most mundane sense of the term, because its main transaction for 2008-09 is $5.7 billion in new revenue measures and spending cuts to pay for $5.3 billion in election promises. No prizes for originality here, unless you count the absence of broken promises as something new.

What is different about this budget is the surplus. It won't go into Peter Costello's Future Fund because that fund is full. Instead, it will be divided three ways, between infrastructure, health and education investments. How and when the money will be spent will be up to the Government. This is a piggy bank like no other.

Wayne Swan has $40 billion set aside for these three policy areas. It is the sum of just two surpluses-2007-08 and 2008-09. There will be more top-ups before the next election. The Treasurer hasn't said yet what he will do with his initial war chest of $40 billion, but he has reserved the right to spend the capital as well as the fund earnings. This is where the real budget story lies, in Labor's flexibility to spend up on infrastructure for the next election and beyond.

Mr Swan is the first treasurer in history with no commonwealth debt to cover. There is no borrowing to pay off, or public service super liability to meet. Just a surplus that has to be returned to voters at some point. This is, indeed, a revolution. Labor has the luxury of thinking long-term because the budget it inherited from the Coalition allows it to.

The budget cuts are not as grand as they seem. The simplest way to unpack the numbers is to see where the budget would have been if Labor wanted to break every one of its election promises apart from the tax cuts. The figure is a surplus $19.7 billion for 2008-09, which, incidentally, is a surplus that would have met Kevin Rudd's January target of 1.5 per cent of gross domestic product.

But Labor implemented every promise because it could. The bill for staying sweet with voters was $5.3 billion in 2008-09. This was offset by $5.7 billion in new savings. A further $1.6 billion in savings had already been flagged at the last election, bringing the total cuts to $7.3 billion. Now subtract the savings of $7.3 billion from the promises of $5.3 billion and you have a $2 billion addition to the surplus, to $21.7 billion. If this looks like small beer, it is. The real budget headline was the $40 billion that Labor has set aside for itself.

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Black rapists of young black girl 'should be jailed'

Multiculturalists really gets themselves twisted into a knot over cases like this: Should they protect black children or black criminals? So far the criminals are winning. That everyone (black and white) should be equal before the law is just a silly old fuddy-duddy idea, of course

QUEENSLAND'S Solicitor-General has called for jail sentences ranging from one to eight years for nine males who were not sent to prison after they pleaded guilty to raping a 10-year-old girl at Aurukun, on Cape York, in 2006. The appeal against the sentence, which began in Queensland's Court of Appeal yesterday, was launched by Attorney-General Kerry Shine after the case was revealed in The Australian last year. Cairns District Court judge Sarah Bradley gave suspended sentences to three men, aged 17, 18 and 25 at the time of the rapes, and ordered that six juveniles, aged between 13 and 15, be placed on probation orders with no convictions recorded.

Mr Shine had previously described the sentences as "manifestly inadequate". Solicitor-General Walter Sofronoff, for the Attorney-General, yesterday argued there had been five "evident errors of law" in the sentencing. He said there were legal precedents that an adult who sexually assaulted a child and a juvenile who raped a 10-year-old should be imprisoned. Mr Sofronoff argued that two of the adult offenders, aged 25 and 18 at the time of the rape, should be jailed for eight years, with a parole eligibility date to be set. He said the third adult, aged 17, should be jailed for seven to eight years. He argued that the six juveniles should receive detention sentences of between one and three years.

Mr Sofronoff said Judge Bradley had not given reasons for handing down non-custodial sentences to the males and had treated all the offenders equally, despite differences in age and criminal history. He said Judge Bradley had failed to take into account the principle of general deterrence, and had placed too much emphasis on Aurukun's social dysfunction as a reason for the offenders' lack of moral standards. It was the Aurukun community's right to "have a sentence that truly deters this offence". "Members of even a dysfunctional society -- if that is what it is -- require and deserve the protection of law," Mr Sofronoff told the court.

He asked the bench -- which comprised Chief Justice Paul de Jersey, Court of Appeal president Margaret McMurdo and Justice Patrick Keane -- to choose a sentence that would assert a "fundamental standard of behaviour in Aurukun".

But Ken Fleming, senior counsel representing the offenders, told the court that his clients should not be imprisoned or detained and said the appeal should be dismissed. Mr Fleming said while the law said a child under the age of 12 was incapable of giving consent, "the complainant had sex with all (of the offenders) without objection". He suggested the "lack of objection" could influence the sentence of the offenders. There was an "uncomfortable tension that it was sex without objection and was actively encouraged" by the victim, he said.

But Chief Justice de Jersey said he had "great difficulty" in accepting that consent or lack of objection from the victim could mitigate the sentence. The suggestion from prosecutor Steve Carter that the girl had given consent to sex in a "non-legal sense" was "nonsense" and an "irrelevant consideration", Chief Justice de Jersey said.

Mr Fleming said there had been flaws in the case from the beginning. He said prosecutor Steve Carter did not ask for custodial sentences. He said the arrangements were made by telephone, with the judge in Cairns and the accused in Aurukun. Mr Fleming said the accused should not have been included in the one indictment, but conceded that while the prosecutor had suggested this, the defence had agreed to it.

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Tough solutions 'ineffective' for Blacks

Nice to see proof of effectiveness being demanded. The truth, of course, is that NOTHING works. It's all been tried before. But only conservatives are capable of saying that there are some problems that governments cannot solve

THERE is no proof that "tough love" solutions, including quarantining welfare payments, are effective means of halting dysfunctional behaviour in indigenous communities, according to two leading Aboriginal academics. The challenge - from high-profile University of Technology Sydney law professor Larissa Behrendt and UTS research fellow Nicole Watson - came yesterday as the Rudd Government prepared to reveal controversial plans for a national welfare card, which would enable a percentage of a family's welfare payments be tied to necessities such as food.

The new electronic ID card, which has been slammed by the Australian Council of Social Service, is to be issued to Aboriginals in selected Northern Territory communities from July, but could be rolled out Australia-wide.

Professor Behrendt and Ms Watson said yesterday that the "most crucial but neglected question of all" was the issue of proof: "Where is the proof that punitive sanctions are an effective remedy for social dysfunction?" The pair listed a litany of concerns about the new Queensland Family Responsibilities Commission, which, not unlike the Rudd Government proposal, can order, among other things, some or all of a person's welfare payments to be managed by issuing Centrelink with a notice. From July, the commission is to be trialled in Aurukun, Hope Vale, Mossman Gorge and Coen.

Premier Anna Bligh has admitted the approach - the idea of the Cape York Institute for Policy and Leadership which is headed by Noel Pearson - is "a bold experiment - a world first". Professor Behrendt said it was a concern that decisions of the commission - which is to have closed hearings - could not be appealed, except on questions of law. The process also paved the way for a loss of control over personal information, with the commission able to access private information from a range of government agencies.

Professor Behrendt also queried the commission's exemption from the provisions of the Commonwealth Racial Discrimination Act. Other legal and Aboriginal advocates have also raised concerns about the commission breaching legal and human rights. ACOSS president Lin Hatfield-Dodds told ABC radio the $17 million being spent on the national ID card scheme would be better invested in services for families in need. [That response from president hyphen was predictable: "More jobs for social workers" is the translation]

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The glories of public transport in Australia's biggest city

Another reason why most people will stick to their cars

I heard him before I saw him - a young man with hands on his ears standing still amid the churning, lurching chaos that is platform one at Town Hall station. "Can you please just shut up. Christ. Just shut up." It turned out I was not the only one being driven mad by the lecturing, hectoring voice on the platform speakers, the latest horror to confront commuters.

Town Hall at peak hour is a dirty, dangerously overcrowded, stifling hot environment that looks and feels like an accident waiting to happen. But now, in what is presumably an effort to give the impression that something is being done, the captive commuters squashed on the platforms are lectured on safety, crowding, and train-travel etiquette by some insufferable Big Brother.

"Can that man sitting on the steps please move," the invisible voice booms. Then louder. "That man on the steps who is blocking the way. Please move." Then, infuriated: "You, that man in the brown overcoat, there's no reason to block the steps. You are holding up people who want to use the stairs." Finally, the tired commuter who has been held up to us all as the cause of our mutual subterranean unhappiness, realises he has been made the scapegoat. The woes of Town Hall station are all his fault. He slinks off to join the other miserable but upright commuters.

It does not stop there. "The all-stations train to Bankstown is now at Circular Quay . the train should be here in about two minutes. So just be patient," the voice booms. We know that. It says so on the board. "Can passengers please stay behind the yellow line while the train approaches." I would gladly do so if a three-person deep crowd was not exploding behind me.

"Those people crowding the train doors - you are a danger to yourselves as well as to others." No, the real danger here is that nothing has been done to upgrade this station to cater for today's crowds. But on it goes. The voice is relentless, monotonous and narky. "We all want to get home, and pushing and shoving won't make things happen more quickly."

We don't know what's good for us, is the message, and CityRail is going to make sure we understand. If there was any real concern about overcrowding at Town Hall station, built in 1916, then new exits would be created. It can take an eternity in peak hour just to get on the escalator from the bowels of the station. A fire down there would be . well, it's not worth thinking about.

If there was any concern about the risk of commuters falling from platforms the station would be redesigned so those waiting were not forced on top of one another. And if there was any thought at all about commuter comfort there would be more than just token seating (I, too, have had to sit on the stairs - when eight months' pregnant) and a real attempt to fix the stifling conditions.

In 2005, when RailCorp announced a multi-million-dollar plan to upgrade Town Hall, the tender package warned that the station was a serious danger to the public. Last month the Herald revealed that a report by Parsons Brinckerhoff found the station "cannot currently be fully evacuated in the morning and evening peaks within times stipulated by [the fire safety standard]".

RailCorp said a widening of the main concourse and ticket barrier expansion had improved access, but the projected commuter growth remained unaccounted for. Within eight years 168,000 people would pass through the station each day, up from about 140,000 now. By 2021 there will be 178,000.

For more than 10 years I have used the station to get to work, but it is only this year that have had to do so in peak hour. In that time I have had trouble breathing in sauna-like conditions; had to tiptoe around pools of blood and been caught on overcrowded trains where people were forced to travel to the next stop while jammed helplessly against the doors. Many times I have thought how easy it would be to fall off the narrow platforms, or to be accidentally pushed off. Just one person losing their footing would do it or - perhaps more likely - just one person losing their mind.

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