While I was following the coverage of the federal budget this evening, I made a few notes, most of which were published to Twitter. What follows is adapted from those notes.
- Rather than all of these spending programs, Wayne Swan would be better off delivering a corporate tax cut as the benefits would reach everyone through lower running costs for businesses creating lower prices through competition, plus increased business profit, and higher tax revenue as a result of the increased economic activity. Instead, Wayne is giving some people money directly, money which is being confiscated from many individuals and businesses through taxes. This creates the likelihood of price rises and inflation.
- Wayne Swan claimed that he tried to get a business tax cut through the parliament, but was blocked. This is only partially true. The government tried to tie other tax increases to the business tax cuts, making the package unacceptable and therefore unpassable.
- On the topic of the surplus, it really is a budgetary trick. The proof of that is twofold:
The Defence cuts seem unwise when there is so much economic and political turmoil in the world, and terrorist threats still being uncovered on a regular basis. We should be keeping a strong defence force.
As expected, the carbon tax’s cost on people appears to fall short of the compensation payments by a very long margin…not to mention that the problem with a “tax and compensate” scheme is that it is rebranded “tax and spend” socialism, with all the problems that brings
Oddly, the Bureau of Meteorology is being given $300,000 to trial advertising on their website. This has to be the only time in history when selling advertising space has lost money rather than made money. It makes no sense. On what is this money really going to be spent?
Wayne Swan muttered something about funding for the government's electronic health records scheme. I would like to know if this is an optional or mandatory scheme? I'm quite happy with my paper records NOT being on a government database. I can see how this could benefit some people, but I’m quite capable of having my medical records released to whomever needs them without the government doing it for me, and I would like to keep it that way. And if we’re digitising existing records, I pity the poor clerk who has to decipher my doctor’s handwriting, and I pity the patients who suffer as a result of errors in the deciphering of their records.
More one-off payments in this budget. How many times can you make “one-off” payments before they’re no longer “one-off”? As long as they’re on different budgets, forever it seems.
One thing I did like, subsidies for “green” buildings have been slashed. Pity the carbon and mining taxes weren’t slashed too.
Away from actual budget issues, Wayne Swan repeatedly addressed the acting speaker Anna Burke as 'Mr Speaker' at the start of his speech. It took him a while to recognise the error and to start addressing her as “Madam Deputy Speaker” and variants thereof. Was it in written in his speech, or does Anna Burke look like Peter Slipper to Wayne?
I was watching ABC News 24’s coverage with the sound muted, while listening to the excellent coverage of 2GB with Ross Greenwood. I noticed that during Wayne Swan’s speech, the ABC only displayed tweets which contained a positive opinion of the budget. After the budget the majority of displayed tweets were positive, but some critical tweets were displayed. Interestingly, the critical tweets were rushed through quickly, with most being given barely enough time on-screen to be read in full, whereas the positive tweets lingered on the screen for ages. Green Party people Adam Bandt and Christine Milne were also given lots of air time with their tweets. Twitter was much more evenly divided than the ABC would have you believe.
There are some interesting claims about the government allowing some TV stations and ABC radio to report select details of the budget from 5pm, which for everyone else were details which were embargoed until Wayne Swan’s speech at 7:30. This was apparently done so that the ongoing Craig Thomson and Peter Slipper sagas would not get as much airtime in the pre-budget news bulletins, so as to not distract from the government’s message. Leaks are nothing new as they happen every year, but allowing embargoed details to be reported early as a distraction from scandals, well that’s a new one.
- Some spending was shifted forward from 2012/2013 to 2011/2012. This make the deficit for this financial year higher than expected, while allowing next year’s bottom line to look healthier. Without this trick, 2012/2013 would probably be a deficit. The really interesting thing about this trick is that, if performed in business, it's called fraud.
- When a government is in debt and they have a surplus, they reduce their debt, or at least that’s what normally happens. To the same extent, when you have less debt, you generally have to pay less interest. So, what is to be made of the government’s forecasted interest payments? 2012/2013: $7 billion. 2013/2014: $6.8 billion. 2014/2015: $7 billion. 2015/2016: $8.2 billion. Interest payments are going back up by a significant amount, so debt will be going up too. Wayne Swan’s statement that “the surplus years are here” seems like a prediction of a shortlived period of time.
As you can tell, I’m not impressed by the budget, but it is at least roughly what I expected. I am concerned about the economic consequences though, and I fear that it may take quite some time for future governments to undo the damage being done by this government…and this budget is just one part of the mess.