Brown Study

Brown Study

17 May 2014

9:00 AM

17 May 2014

9:00 AM

It looks as if at long last we have a government that is prepared to make some hard and unpopular, but necessary, decisions in the national interest. The budget contains some pretty serious cuts to government spending, but they will help us get the debt down and restore our finances. It also takes a few tentative steps towards making people rely on themselves and not on the government.

 

For that, I give the budget full marks. But as I said last week, the real test will be whether the government will hold the line when the sustained attacks come, armed, as they will be, with the compulsory pathos and hard luck stories. If the government backs down on a single proposal, it will only encourage more special pleading for compromise and the whole public presentation of the case for stringency will collapse.

 

There were certainly parts of the budget that are tough on individuals. But, to be frank, I cannot see what all the fuss is about. Looking at the cuts and reforms in detail, what strikes me is not that they are harsh, but how governments could have been so extravagant in the past and allowed our social services and the vast range of so called initiatives to get so out of control. For instance, I have always thought it was absurd that I could go to the doctor and be treated virtually free of charge when I could easily afford to pay for the treatment myself. I have also thought it absurd that I could go to the Alfred Hospital as I have done twice, be set upon by five or six doctors and subjected to every test known to mankind (all of which showed there was nothing wrong with me) and get it all completely free; I should have been charged at least something and a modest co-payment is not going to hurt anyone. The tightening up of eligibility for most pensions and social service benefits is well overdue. A lot of foreign aid is such a waste that no one will suffer except the kleptomaniacs who help themselves to a lot of it and the administrators who go through a fair slice of the rest. And what a terrible blow it is to put some restraints on the ABC and SBS by way of an efficiency dividend. There is also a very easy reply to the complaint that the ABC has lost its overseas TV arm: they have got what they deserved all along, since the day they tried to manipulate the tender process.


 

The measures in the budget to encourage self-reliance are also commendable and many of them are overdue. Of course we should provide reasonable unemployment benefits, but the notion that you can turn to the state and expect support the moment you do not have a job is extravagant in the extreme and destructive of any sense of duty to look after yourself. So the proposed six-month waiting period for under-30-year-olds is reasonable and will encourage genuine job seekers and discourage malingerers, as will the proposal to cut the dole after receiving it for six months.

 

The more I look at the details, the more I think there are other areas where expenditure could be reduced. To take just one example, there is a complicated proposal to transfer taxation disputes to the Inspector-General of Taxation. As in the case with the mediation of disputes in Federal courts and tribunals that I put to the Commission of Audit, why not try private mediators for taxation and other disputes? Is it only the government that has the unique skills required to handle such matters? Hardly.

 

More importantly, I would like to have seen something real to encourage people to work more and to start a new business; the budget repair levy is probably necessary, but will be met by a lot of people, like professionals and tradies, by working less, spending more on legitimate deductions and not having a taxable income high enough to have to pay the tax. The Entrepreneurs Infrastructure Programme is on the right track in providing support for the commercialisation of good ideas and that scheme could be used to start a new business. But apart from that, where is the incentive?

 

So the budget, for me, is a good first step. It will clearly reduce government spending and waste. It will turn the country back from the lemming-like course we were on to near insolvency. It will encourage some people to rely on themselves instead of the government. But there is still enormous scope to generate a vigorous free enterprise and entrepreneurial culture.

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