Abbott unveils slash-and-burn agenda… and a new tax!

Tony gbnt

This week Australia’s Liberal/National Coalition government has made two bombshell announcements that reveal their election-winning campaign was a con trick.

Firstly, Prime Minister Tony Abbott revealed that his government is considering a GREAT BIG NEW TAX to help repay the national debt. The “debt levy” would be set at 1% for income earners between $80,000 and $180,000, and 2% for income earners above $180,000. I’m not ideologically opposed to new taxes, but strategically Abbott’s decision to introduce one is mindboggling.

Abbott’s greatest strength in the public eye has always been his authenticity, or as Crikey more accurately put it, his “manufacture of authenticity”. Australians may not have liked his outdated, ignorant, elitist beliefs, but at least he believed in something and stuck to his guns – or so we thought. That appearance of authenticity is fast falling apart.

If there was one thing Abbott claimed to stand for in the election campaign, it was “no new tax collection without an election”. He assured us: “The only party which is going to increase taxes after the election is the Labor Party.” In fact, he went further and promised “tax cuts without new taxes”. Even I believed him. Abbott now claims he really meant no permanent new taxes, and that the debt levy doesn’t count because it will be temporary. Funny, I don’t remember hearing the “permanent” part before the election. Also, there are historical examples of taxes marketed as temporary which turned out to be permanent.

Before the election, Abbott promised “no nasty surprises, no lame excuses”. In a radio interview with Jon Faine on 30 August 2013, no longer available from the Liberals’ website or from the ABC (perhaps because of budget restrictions), I seem to remember Abbott waxing lyrical about how his government would be different from Gillard’s because it would keep its election promises and restore Australians’ trust in government. (UPDATE 20 May 2014: That interview is available here.) And in 2011 he told Parliament:

It is an absolute principle of democracy that governments should not and must not say one thing before an election and do the opposite afterwards. Nothing could be more calculated to bring our democracy into disrepute and alienate the citizenry of Australia from their government than if governments were to establish by precedent that they could say one thing before an election and do the opposite afterwards.

Abbott defeated Julia Gillard’s government by accusing her of a single broken promise or “lie”, which was itself arguable. Abbott has already sprung many surprises and broken multiple promises (eg. “no cuts to education, no cuts to health, no changes to pensions, no change to the GST, and no cuts to the ABC or SBS“, which you can now get as a ringtone). By Abbott’s own standard, his government is now illegitimate many times over, but the debt levy is, so far, the most analogous to Gillard’s “lie”.

Abbott’s supporters are revolting against the debt levy, unsurprisingly since it targets high income earners. It’s already been criticized by the retail lobby, business groups, and several government members. One Liberal MP told the Age: “We didn’t vote for a f—ing Abbott government to increase taxes, did we.” Labor, the Greens, and Palmer United also oppose the proposal.

Abbott followed up the debt levy announcement by finally releasing the Commission of Audit report, completed months ago but held back until the WA re-election was completed. The Commission was a review of the federal budget conducted by a bunch of corporate lobbyists led by the Business Council of Australia’s Tony Shepherd. Treasurer Joe Hockey emphasizes the government hasn’t yet decided which recommendations to adopt, but then perhaps part of the purpose of the report is to make the real budget look moderate by contrast.

Commission of Audit winners and losersThe Commission recommends cuts from the cradle to the grave, to be phased in over the next decade. Its 86 recommendations (listed here and here) include:

  • Cut 15,000 government jobs
  • Review all responsibilities of federal and state governments and minimize duplication
  • Cap tax-to-GDP ratio at 24%
  • Reduce federal personal income taxes from 32% to 22%, and allow state governments to collect income tax at their preferred rate (a return to the pre-war era)
  • Reallocate GST revenue between states
  • Reduce reporting requirements between federal and state governments
  • Lower age pension over 15 years to 28% of average weekly earnings (AWE)
  • Raise pension age to 70 by 2053
  • Include residence value in means-tests for pensions and aged care support
  • Increase age of superannuation access to five years under the pension age (breaking a promise of “no more negative unexpected changes” to superannuation)
  • Include superannuation payments in eligibility test for seniors health care card
  • Slow roll-out of National Disability Insurance Scheme (already scheduled for 2020)
  • Increase Medicare surcharge for high income earners and abolish private health insurance rebate
  • Require Medicare co-payments of up to $15 per visit (which could also be considered a new tax)
  • Cut funding for hundreds of medical services under Medicare Benefits Schedule
  • Limit growth in hospital funding
  • Abolish free medicines under Pharmaceutical Benefits Scheme
  • Allow supermarkets to compete with pharmacies
  • Streamline approvals for new drugs
  • Means-test Family Tax Benefit Part A above $48,837
  • Scrap Family Tax Benefit Part B
  • Lower paid parental leave scheme salary cap to AWE, and use the savings to expand childcare payments to nannies
  • Merge and means-test Childcare Benefit and Childcare Rebate
  • Delegate all responsibilities for schools policy and funding to the states, and cut back federal education department
  • Tighten eligibility rules for disability support pensions and carer payments, and reduce in line with age pension changes
  • Force unemployed childless young people to move within 12 months to areas with more job opportunities or lose the unemployment payment
  • Contain minimum wage growth by tying it to 44% of AWE in each state (ie. the minimum wage will be lower in poorer states such as Tasmania)
  • Increase university fees to 55% of costs (funny, I seem to remember my local Coalition candidate promising to alleviate student fees)
  • Lower student debt repayment threshold to the minimum wage
  • Provide foreign aid based on Australia’s fiscal position rather than funding targets
  • Cut 22 industry assistance programs including Clean Energy Finance Corporation and ethanol subsidies
  • Halve funding for National Landcare Program, Tourism Australia, and Screen Australia
  • Cut R&D funding and abolish sector-specific R&D programs
  • Redirect CSIRO funds to “areas of greatest priority” (you can bet climate change won’t be a priority)
  • Consolidate 150 Indigenous programs into six or seven
  • Review Australia’s membership of international organizations
  • Abolish Australia Network
  • Abolish a drought assistance scheme and replace several natural disaster relief programs with one-off grants (after all, it’s not like extreme weather is increasing)
  • Abolish all federal vocational training programs
  • Limit payments to employees of liquidated firms
  • Abolish, merge, consolidate, privatize, or rationalize hundreds of “non-principal government bodies” and 99 financial management bodies
  • Merge all bodies that review the merits of federal government decisions
  • Privatize Australia Post, National Broadband Network, and at least eight other bodies
  • Develop a whole-of-government user-charging framework
  • Consider outsourcing Centrelink (an action which even the Commission of Audit says entails “significant risks”)
  • Restrict infrastructure spending
  • Expand road tolls
  • Undertake regular audits of public service performance
  • Review all grants programs
  • Reduce Newstart, Widow, and Sickness Allowance payments for people over 60 to working-age rates

All in all, it looks a lot like the radical neoliberal agenda that I accused the Liberals of hiding before the election: austerity, job losses, privatization, deregulation, and decentralization. No wonder business lobbyists are describing the report as “political leadership”. Yet before the election Abbott claimed he had already announced the “bulk” of his proposed cuts and the Commission of Audit wouldn’t cover key policies like paid parental leave.

You’ll notice a major theme of delegating federal responsibilities to the states – a process that Abbott has already begun, signing away his environmental approval powers in December. The report claims this will allow state governments to compete with each other to deliver the lowest-cost services. But the notion of the states competing is absurd: Tasmanian medical patients can hardly relocate to NSW if they don’t like their hospital. And there are often more important things than being cheapest, such as whether a medical treatment works.

The real reason, I suspect, is so corporations can threaten to move interstate if state governments don’t comply with the business lobby’s demands, just as they currently threaten national governments on an international scale. With regards to education and health, I suspect an additional reason is to enable the Christian right to push their anti-science and anti-women agendas at state level where there is less scrutiny. Expect creeping state-level restrictions on abortion and contraception; and attacks on curricula mentioning sex, evolution, and climate change.

Although most commentators seem surprised by the recommendation, the delegation of education policy to the states was quietly announced as Liberal Party policy before the election… in a seminar attended by the business press and in a speech to a Christian school.

Even if you accept the government’s narrative of a budget crisis, there are sensible alternatives to the present proposals. The Government could raise around $10 billion per year by cutting fossil fuel subsidies. It could no doubt gain a fortune by cracking down on tax avoidance through trusts and other loopholes. Furthermore, the Commission of Audit notes: “The detention and processing of Illegal Maritime Arrivals has been the fastest growing government programme over recent years.” The rational response would be to abolish this inhumane system, yet the report merely recommends containing its cost. It’s scandalous that Abbott’s budget audit proposes to cut policies that help people in need while turning a blind eye to the destruction of a stable climate, the creative accounting of the 1%, and the unlawful imprisonment of innocent human beings.

Lies. Broken promises. New taxes, fees, and charges. Cuts to education. Cuts to health. Changes to pensions. Changes to superannuation. Changes to the GST. Cuts to the ABC. Nasty surprises. Lame excuses. It’s as if Abbott’s election campaign never happened.

If he wants to make an honest man of himself, he should call an election.

1 comment

    • Rosemary Glaisher on 3 May 2014 at 10:42
    • Reply

    Incisive and intelligent commentary as always James. Keep it coming!

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