This is the third part of a series arguing against the Abbott government’s first budget. Part 1 summarizes the overall unfairness and debunks the justification offered for this agenda. Part 2 examines how the budget affects climate, environment, fossil fuel subsidies, business, and science. This part examines how it affects the federation, education, and health.
Starving the states
At the time of the last budget, I chastised the then-Gillard government for promising policies that would ramp up years in the future, arguing their delivery could not be guaranteed. This budget shows I was right: many of Abbott’s cuts are to planned growth in spending.
Federal funding to the states has been slashed by $80 billion over the next decade (about $50 billion in health and $30 billion in education). In doing so, the federal government is breaking agreements with the states to ramp up funding on hospitals, dental health, and preventive health; and cancelling the Gonski schools funding for the years when it was scheduled to ramp up. Instead future funding levels will be linked to inflation, a measure of household costs which has nothing to do with running a hospital or school. Because teachers’ and doctors’ wages rise about 1% faster than inflation, this effectively means hospitals and schools will shrink by 1% per year.
The intention appears to be to force the issue of delegating federal responsibilities to the states, possibly including an expansion of the goods and services tax. Abbott says that he will work with states to remove overlap between the two levels of government, related to upcoming white papers on reforming the federation and the tax system. Abbott has already suggested the states could take over all health funding responsibilities.
Erasing easy education
The cuts to education and health don’t end there. Hockey is cutting $1.2 billion from universities including reward funding, allowing universities to set their own tuition fees, allowing student loan interest rates to rise potentially as high as 6%, lowering the income threshold at which students must start repaying their loans to $50,638 per year, and replacing support for apprentices with similar loans they will have to repay. Hockey claims the extra money raised through university fees will be spent on scholarships for disadvantaged students; to be honest I find that difficult to believe.
One need only look at the US to see the implications of a deregulated university fee system. Students will end up stuck with enormous levels of debt that will potentially take decades to pay off:
Numerous educational programs are being abolished, including the Australian Baccalaureate, Better Schools Centre for Quality Teaching and Learning, Child Care Early Learning Projects, Improving Educational Outcomes, Online Diagnostic Tools Programme, and the Commonwealth Human Rights Education Grant (perhaps because it might cast Abbott’s policies in an unfavourable light). There are also funding cuts to the Research Training Scheme, Australian Institute for Teaching and School Leadership, and Tertiary Education Quality and Standards Agency. 10 different skills and training programs will be consolidated into a single Industry Skills Fund.
Yet Abbott has somehow found extra money for school chaplains, abolishing the option for schools to employ a secular student counsellor. Also, private schools are exempted from the cuts to state funding, so the children of government members won’t be affected.
Universal healthcare is being undermined via the introduction of a $7 per GP visit Medicare co-payment (aka GP tax), which also covers emergency department treatments and diagnostic tests such as X-rays (albeit the young and old are exempted after their first 10 visits of each year). Then there’s Pharmaceutical Benefits Scheme co-payments of $5 per prescription drug (80 cents for concession card holders). The budget also reduces the Medicare benefit for optometry, while allowing higher optometry fees, and reduces the number of Medicare locals (a broken promise). Indexation of the Medicare benefits schedule and income thresholds for Medicare levy surcharge and private health insurance rebate will be frozen for several years.
I must credit Labor leader Bill Shorten with making an intelligent argument for once: Hockey’s cost-cutting justification for the GP tax makes no sense because GP tax revenue won’t be spent on medical care today. Instead it will be funnelled into a distant promise of a $20 billion medical research fund. The ramp-up to $20 billion is, like Gonski, a distant promise which could easily be cancelled long before it materializes, with merely $275 million going into the fund in the forward estimates. It looks to me like a thin justification for Hockey’s definite and permanent cuts to health.
Myriad health programs will be abolished (or in a few cases deferred), including GP Education and Training Limited, Pre-vocational GP Placements Scheme, Health Workforce Australia, expansion of the Clinical Training Funding Programme, National Anti-Tobacco Campaign, Australian National Preventive Health Agency, Tasmanian nursing scholarships, Diagnostic Imaging Quality Program, Australian Community Food Safety Campaign, Outreach Support Services for Criminalized Women, Australian Institute of Health and Welfare, Exotic Disease Preparedness Program, National Centre for Farmer Health, over $600 million worth of dental health programs, and several mental health programs. Unfortunately, the latter will likely be needed more than ever in the less equal Australia that this government is in the process of creating.
Australia will also reduce its contribution to the World Health Organization.
The health cuts will cause people to avoid doctor visits and in some cases cost lives.
In Part 4, I will examine how the budget affects welfare, industrial relations, and the size of government.