Monday, May 12, 2014

Federal Budget 2014

THE Abbott Government will spend a huge $80 billion on new roads, with the states and private sector, in what Joe Hockey has described as the biggest increase in funding in our history.

As he prepares to hand down his first Budget on Tuesday, the Treasurer has confirmed the government will up spending on road infrastructure to be funded by a change in the fuel excise.

“Over the next six years we are going to spend in excess of $40 billion on roads and that will be matched by the states and the private sector with an additional $42 billion,” Mr Hockey told Channel Nine this morning.  “So it is a massive amount of money,” he said.

“Think about it, every time you spend $1 billion it’s like building a brand new major teaching hospital.”

Without going into the detail of an increase on the fuel tax, frozen at 38.1 per cent by former prime minister John Howard, the Treasurer insisted the huge roads construction effort would create work.

“That is tens of thousands of new jobs, but most importantly it is going to address the significant drop-off in investment in construction in Australia, associated with mining investment coming off.”

Mr Hockey said Australians would see work starting soon on new projects, under deals struck with the states. “For example in New South Wales we are not just building WestConnex stage one but also WestConnex stage two, that’s in the budget on Tuesday night. “That’s a massive project involving thousands of jobs, and work starts July next year.”

Building the East West project in Victoria would also begin next year, he said.  “It is hugely important that we move quickly to build this infrastructure to address some of the challenges the economy is going to face over the next three years.”

Shadow Treasurer Chris Bowen said Labor would wait and see what the Coalition “actually delivers” when it came to new roads.

“The previous Labor government increased infrastructure spending very dramatically to make us one of the top performers in the world,” Mr Bowen told ABC TV, accusing the present government of cancelling projects and taking credit for others.

“If they’re serious about infrastructure we’ll be on board for that but we want to see some reality, we want to see some delivery and we want to see concrete plans.”

Despite the Prime Minister pledging before the election to introduce no new taxes and now planning a deficit levy and fuel excise hike, Mr Hockey denied the Government was “breaking promises”.

“Don’t assume they are new taxes,” he said.  “We never said that we were going to never change a tax, or alter a tax.

“In fact we were left with 92 announced but unlegislated tax changes by Labor which we have been methodically going through, and we have been getting rid of the ones that are simply unimplementable.”

He insisted taxes would be lower under the Coalition, than they would have been under Labor if it was re-elected.

Arguing all Australians had to share the burden for the next generation, the Treasurer described his first Budget as a “contribute and build Budget” and defended the Prime Minister.

“He’s an honourable man, and he knows that the most solemn promise that we made to the electorate was to fix the budget and fix the economy so that people can have jobs and we are going to do that.”


Axe to fall on 70 federal agencies

MORE than 70 government agencies will be scrapped or merged in a budget plan to eliminate waste as Tony Abbott seeks to demonstrate big cuts to spending amid a political row over rising taxes.

Four major bodies including the Royal Australian Mint and Defence Housing Australia will be sold to raise several billion dollars in the first step of a program that will find other targets for  privatisation.

In a move likely to aggravate Labor and the Greens, the government will also force cultural agencies such as the National Gallery and National Library to merge their back-office administration in an edict certain to lead to job losses.

Agencies to be abolished include the Australian Renewable Energy Agency and the National Water Commission, two measures certain to anger environmental groups.

The full restructuring plan, obtained by The Australian, is estimated to save $470 million over four years in a two-stage reform in tomorrow’s budget, to be followed by more cuts in a third stage at the end of this year.

The “smaller government” program acts on confidential findings by the Department of Fin­ance that the federal bureau­cracy has swelled to almost 1000 entities, ranging from big agencies to obscure committees.

Labor dismissed fears about the size of government last year when The Australian revealed the list of bodies and “governance relationships” across the public sector, but independent experts warned that it slowed down decisions and added to costs.

Selling Defence Housing Australia is tipped to raise $1 billion while the government will also launch studies into the sales of Australian Hearing and the Royal Australian Mint, worth hundreds of millions of dollars.

The registry business at the Australian Securities and Investments Commission will be put on the block and could recoup another $1bn, as revealed by The Australian last month.

Scoping studies will be launched into each of the sales in the coming weeks while the government’s first big privatisation, a public share offer for Medibank Private, goes ahead in a sale that could raise $4bn.

The Australian was told that the agenda could be expanded over time to include the Australian Rail Track Corporation — said to be worth $4bn — but that Australia Post was not on the list.

Surplus properties will also be sold in a budget initiative that revives the Howard government’s effort to identify land that should be used for housing or commercial developments.

The Labor government extracted savings from the public sector over the past six years by imposing “efficiency dividends” to cut agency budgets but the pressure on small cultural institutions triggered concerns within the Labor caucus and attacks from the Greens.

Finance Minister Mathias Cormann has warned in recent interviews that there was too much duplication in the government and that this blurred the lines of accountability and led to poor co-ordination.

“We asked the commission of audit to look right across government to identify areas of opportunity to essentially ensure that government spending is as ­efficient and as well targeted as possible, to cut waste, to cut duplication and so on,” he told Sky News.

The Prime Minister abolished 23 advisory bodies soon after taking power in September but drew criticism for including the Advisory Panel on Positive Ageing and a Council on Homelessness on the hit list.

In a sign of the political difficulties of cutting committees, the head of the panel on ageing, Everald Compton, attacked the decision and said it left the nation ill-prepared for an “age tsunami” as the population grew older.

Those changes and others, including the merger of AusAID with the Department of Foreign Affairs, removed about 40 entities in what is now considered the first phase of the “smaller government” plan.

The cuts to ongoing expenses will reach $470m over four years, when the first phase is followed by a second phase in Tuesday’s budget. The second phase will eliminate 36 entities, including the Australian Renewable Energy Agency, the National Water Commission and Australian River Company.

Other agencies to be abolished include the Albury-Wodonga Development Corporation and the Corporations and Markets Advisory Committee, which advises on corporate law.

While the Prime Minister’s Indigenous Business Policy Advisory Group will be shut down, this will not threaten the peak indigenous advisory council led by Warren Mundine.

Dismantling some of Kevin Rudd’s health reforms, the government will merge the agencies set up by the former prime minister to oversee hospital performance. A single group will take on the work of the Independent Hospitals Pricing Authority, the Nat­ional Health Funding Body, the National Health Funding Pool Administrator, the National Health Performance Authority and the Australian Institute of Health and Welfare.

All the functions would continue to be done but the bureau­cracy would be smaller, a government source said.

Most commonwealth employees work for about 100 major departments and agencies but the Finance Department identified 937 bodies and “governance relationships” such as committees in its last public study.

Senator Cormann launched a review of the issue late last year. The latest analysis shows the full tally is closer to 1000 but that public service chiefs have “lost count” of the number of government bodies.

The department analysis found that it cost at least $1m a year to run a very small agency when all the overheads were taken into account, backing the case for closing or merging dozens of bodies.


Labor sells principles to fight deficit levy

If you needed any convincing Labor is a party entirely adrift from its supposed values and purpose, given over now to politicking, expedience and opportunism, just wait for its reaction to Tuesday's budget.

It will vehemently oppose Joe Hockey's deficit levy - no matter how watered down it is by then - and his intention to resume indexing the petroleum excise on the basis of no stronger argument than that they're broken promises.

These are two measures Labor should strongly support if it's sticking to its principles - one that makes the tax system fairer and one that supplements the carbon tax in fighting climate change.

If Labor were truly the social democrat, progressive party it wants us to think it is, it would advocate and fight for bigger government. Bigger not for its own sake, but because there are still many much-needed services and assistance yet to be provided, with governments best placed to provide them.

As we know, Labor can always think of new ways to spend money - the National Disability Insurance Scheme and the Gonski education reforms, for instance - but when it comes to raising sufficient revenue to cover the cost of these genuinely worthy causes, Labor's courage deserts it.

Its conservative critics accuse it of being a big-spending, big-taxing party but, in truth, it's a big-spending, low-taxing party - which can never understand why it has so much trouble balancing budgets.

Labor will carry on about Tony Abbott's ideologically driven plans to destroy the universality of Medicare, but when the scheme's cost grows strongly because the nation wants to take advantage of every new, expensive advance in medical technology, the very initiators of Medicare lack the commitment to do or even say the obvious: if you want better healthcare you have to pay more tax.

You'd think that, lacking the courage of its convictions, not having the guts to raise taxes (the proceeds from the carbon tax and the mining tax were immediately given back, mainly as lower taxes), Labor would be delighted when its opponents did have the courage to stare down the voters' disapproval.

But no, Labor's commitment to principle is now so weak it can't resist the temptation to exploit the unpopularity of an opponent implementing good policy.

By now I can hear the Laborites' plaintive cry: We're only doing what Abbott did! My point, exactly. The party that always claims the high moral ground has descended to the point where its highest claim is: we're no worse than Abbott.

Labor's further descent into political game-playing since it returned to opposition is proof that Abbott is the outstanding politician of his era. The man could not only turn his own side into a party of climate change-denying punishers of boat people and even Australian poor, he can inveigle his opponents into becoming a party than stands for nothing. Getting your own back isn't a policy that much appeals to Australian voters. Nor is opposing everything.

If Labor combines with the Greens to block Abbott's two tax measures in the Senate, it will be doing him a favour: I tried to make the budget fair, but Labor stopped me.

So you won't have to vote against me after all.

By blocking a progressive tax change Labor would force the government to rely more heavily on bracket creep which, because of the strange shape of the tax scale Labor left, will now be highly regressive. Then it will be on to opposing any change in the goods and services tax because Labor is far too principled to support a regressive tax.

Speaking of the Greens, they've gone from naive purity (knocking back Kevin Rudd's original carbon pollution reduction scheme because he'd have no choice but to come back with a better one) to abject populism in opposing measures that make the tax system both fairer and more efficient.

Labor's professed outrage over Abbott's breaking of promises is utterly confected. I mean, have you ever known Labor to break a promise?

The supposed sanctity of election promises is a recipe for bad government.  No one who cares about good policy - as opposed to seeing their side get back to power - would think it smart to hold politicians to promises they should never have made, or which have been overtaken by events.

Much better to do something damaging to the economy or unfair to particular classes of people than to break a promise? Hardly.

The sensible answer isn't to insist on promises being kept come hell or high water, it's to insist politicians stop making promises they aren't certain they can keep.


A Greenie pesticide ban bites the dust in one Australian State

TASMANIA'S new Liberal government is scrapping a ban on the controversial pesticide 1080.  The former Labor-Green government had imposed a ban due to begin next year.

Primary industries minister Jeremy Rockliff said the chemical would not be phased out until a viable alternative was available.
"One of the many challenges facing our farmers is the significant pasture and crop losses caused by some of our abundant wildlife - particularly wallabies and possums," Mr Rockliff said in a statement.

Farmers have applauded the move, saying they lose on average a quarter of their income to browsing animals.

"Animal rights campaigners have suggested fencing is the solution (but) it is enormously expensive and, in many areas, physically impractical," Tasmanian Farmers and Graziers Association boss Jan Davis said.

Green groups, though, reacted angrily to the announcement, saying it went against community sentiment.  "Resorting to 1080 poison is the cheapest, nastiest and cruellest way to prevent browsing by native animals," state Greens leader Kim Booth said.

The poison, also known as sodium fluoroacetate, is widely used to bait foxes in Australia.


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