We’re seeing signs this year of a mature conversation about the tough budget decisions Australia must make in light of lower tax revenues. But we’re also seeing the usual scaremongering.
Jim’s article was first published by The Drum Opinion on 30 April 2013.
There is only a fortnight to go until Wayne Swan hands down Labor’s sixth budget. Having worked on the first five, I know that the most frustrating part of bedding the decisions down is dealing with inaccurate pre-budget speculation.
Every politician would recognise this frustration: being unable to play the ‘rule-in, rule-out’ game because to confirm or deny one report would make it near-impossible to ignore another, but simultaneously needing to lay the ground publicly for the announcements on budget night.
This is the typical fare of the weeks leading to mid-May each year: stories focused on one potential ‘loser’ or another, often fed by a stakeholder’s in-house lobbyists in the hope that governments get enough of a taste of the likely backlash to not proceed with a saving.
Fortunately for them, and for the journalists that have to write these stories, people rarely go back over the speculation to see if it was right. I’ve lost count of the amount of times big speculative stories were disproved by 8pm on budget night.
Of course, as always, the Government wants to shape the speculation in a way that prepares Australians for what it is to come, and why. Sometimes they even announce things in advance. And as Ross Gittins reminded us in his interesting piece this week, it isn’t just politicians trying to frame the conversation in a way that suits their interests. Everyone is in the framing game. That’s understandable when billions of dollars are on the table.
But there’s a good kind of pre-budget speculation and a bad kind. It’s bad when it is inaccurate, ill-informed, shallow, or badly motivated. It’s good when it feeds the right kind of conversation about budget constraints, national challenges and the fiscal framework. And it’s great when it involves straight-talk from our elected representatives about the sorts of things that might be necessary to fund agreed national priorities.
That’s why it’s so encouraging to see the signs this year of a mature conversation about the trade-offs and choices the country has to make in this budget, in an environment of dramatically lower tax revenues.
This good kind of speculation has been fed by the fact-heavy explanation that formed the core of the Prime Minister’s speech on Monday; and the frank tone of the essay the Treasurer wrote for the Chifley Research Centre in advance of his own pre-budget speech later this week. Anyone wanting to understand the economic and political context of the budget should read both.
Along with a very good discussion of the technical underpinnings of dramatically lower-than-expected tax revenues, Gillard also had the courage to tell Australians that funding big national priorities like school improvement and disability care means looking anew, under every rock, for the taxpayer dollars necessary to foot the bill.
The PM took a risk in expressing her view that even things previously off the table were now being considered. Of course, it attracted a predictable scare campaign about things like death taxes, but her approach should be welcomed by anyone who believes politicians should be more upfront with the people.
When a hole in the revenue bucket has seen $12 billion in forecast taxes seep away, this is the only responsible leadership approach. The current Government rakes in substantially less tax as a proportion of the economy than its predecessors and has the right ambitions for kids, teachers, and people with disabilities. This has been properly and frankly explained by Gillard, Swan and their colleagues.
Contrast this with the Abbott approach: slogans that sometimes imply you can have lower taxes, fewer cuts and more services (even when he is raising taxes via a levy on business and by reducing the tax-free threshold). The suspicion that Abbott would slash and burn Newman-style if he wins government is met with no detailed explanation. He tells us to wait and see – not just until his budget reply but weeks into the election campaign! This approach is the opposite to the Prime Minister’s.
The good debate Australia is having about how we pay for crucial investments in school improvement and disability care would be greatly improved if the man who wants to be prime minister was as upfront about Australia’s economy as Gillard was in her speech this week. Then we’d get even more of the right kind of pre-budget discussion and less of the sneakiness and scaremongering that too often characterises the economic discussion in this country, especially at this time each Autumn.