In the two weeks since the budget, limited criticism – outside of the ideologically irremediable left – has focused on the extraordinary level of spending and the huge deficit that results from it.
Some exclaimed, desperate or admiring, this was not a Liberal budget.
The treasurer disagreed, highlighting (temporary) tax cuts for individuals and businesses and homeownership initiatives, and saying his record level of spending was not just more money, but serious reform ”. The problem is, in many areas this is just not true.
For starters, the government has abandoned all pretense of super reform, industrial relations reform, and left its substantial Stage 3 tax reform package hanging in the air.
The important issue of housing affordability has barely been resolved. This is perhaps the most annoying omission as it leaves the field open to the left’s flawed “tax and spending” plans on the demand side.
The government has increased funding for the child care sector, but has not even recognized that the cost pressures in the child care sector are caused by the pursuit of two fundamentally incompatible goals.
The government may claim that its spending on child care is aimed at putting women back to work, but the child care sector is governed by a framework dedicated to providing ‘quality’ early childhood education. childhood. This framework, which specifies pupil / teacher ratios and requires expensive qualifications, will only continue to drive up costs.
In the absence of real reform to reconcile these goals, soaring costs will continue to have a negative impact on mothers’ decision to return to work.
A similar story can be found in relation to NDIS. As early as 2012, the Center for Independent Studies warned that NDIS would significantly expand its coverage and cost significantly more than the government predicted.
As my colleague at the time, Andrew Baker, observed: “There remain a number of fundamental, structural and political issues that will dramatically increase the real cost of NDIS, until its full implementation and beyond. of the.
Of course, it would be very difficult for a government obsessed with polls and trying to ensure that no one has a bad say about who is in charge to look after vested interests in achieving meaningful reform.
This is the biggest failure of the budget. He is supporting the failing structures with new money, no doubt with a view to passing the next elections.
It also goes to the heart of the “non-liberality” of the budget. It shouldn’t be about how much you spend, but how efficiently you spend it. As New Zealand reformer Bill English made clear: When the fiscal situation is bad, the focus should be on demanding greater accountability and efficiency in public spending.
A government committed to reform must have the courage to follow the evidence. It is those who do not who continue to have to take the credit card out of the country.
A good example of the problems with the “more money, no accountability” approach can be found in Aboriginal affairs. A number of recent reports and speeches have exposed the issues with the focus on race in this area, as it becomes increasingly clear that many of the issues are more about remoteness than race.
As Warren Mundine pointed out in a recent article, “There is a significant gap between Indigenous Australians living in cities … and those in remote areas of Australia … If this disparity is not corrected, Isolated indigenous people will continue to be the poorest and poorest – most disadvantaged people in Australia – and this may be masked by improvements in the lives of those who live in cities. “
Mundine makes it clear that economic participation underlies all areas of Indigenous disadvantage, but when it comes to remote communities, “the natural cycle of supply and demand has been stifled by structures imposed … by legislation, the legal framework of indigenous lands and government programs ”.
He rightly argues that Indigenous politics must return to these core principles with a focus on school attendance, jobs, and creating an environment conducive to Indigenous business creation.
Starting a business – a central part of solving this problem – cannot be done in Canberra. This can only be done in communities. The government would do well to refocus at least part of its efforts on providing goods and services to these communities to foster the capacity of these communities to create their own economic infrastructure.
If the government wanted to do something, it could fix things under its control; especially in the delivery of education.
Cape York Indigenous leader Noel Pearson attributes low expectations and poor education to the poor performance of distant Indigenous students. It’s a theme echoed by Lorraine Hammond, educator from the Kimberley region. She argues that ideological beliefs continue to dominate discussions about Indigenous education, often disseminated by outspoken critics who have never taught in remote communities.
“The result is that children are categorized into a pedagogy defined by race, rather than evidence-based.” she notes.
Get children into school. Get them to stay in school once there. Teach them in a way that works. None of this should be news to the government – or even to the educational profession.
Yet the effort to implement these policies often does not appear in the payments column of the budget. Conventional wisdom dictates that the government that is the most engaged is always the one that spends the most.
If these expenditures do not work, the committed government is not discouraged. More money must be the solution.
It’s not a solution, it’s the definition of insanity.
This budget presented Canberra with a very tempting choice. The unique circumstances of the pandemic, a pre-existing deficit and a significant improvement in the bottom line essentially removed all normal brakes from the decision-making process.
The government could have taken this opportunity to focus on structural reform. Put in place a process that would make the country in 2030 more productive and more prosperous.
Instead, the government has chosen structural spending, so the country will have $ 1 trillion in debt in 2030, but will likely face many of the same issues as it does today.
- Simon Cowan is Research Director at the Center for Independent Studies and a regular columnist.
This story Trillion dollar debt with pretty much the same issues
first appeared on The Canberra Times.