The federal budget was released shortly before News Weekly went to press, so by necessity these are preliminary comments on what is a lengthy and complex document containing, among other things, new taxes on the banks and an increased Medicare levy to offset increased government spending.
At the outset, it should be said that the budget reflects the Government’s intentions, rather than being actual legislation that has passed both houses of Parliament before becoming law.
As we have seen in recent years, there is great uncertainty as to whether the Federal Government will be able to get budget legislation through Parliament, particularly the more contentious items.
These include the Government’s widely promoted school-funding proposals – which the ALP has already rejected – proposals to lift fees for tertiary students and lower the threshold for repayment of student loans, changes to Medicare funding, and the Federal Government’s extraordinary plan to spend some $5 billion to build a second airport west of Parramatta in Sydney.
While planned funding for the National Disability Insurance Scheme and lifting the Medicare rebate have bipartisan support, they will not come cheaply. The increase in the Medicare levy from 2 per cent to 2.5 per cent is effectively an increase in income tax to pay for them.
The Government’s own priorities are open to serious question.
When Prime Minister Malcolm Turnbull and Education Minister Simon Birmingham announced their plan to embrace the Labor funding model of needs-based education, and to cut funding for some non-government schools, it prompted widespread concern in government ranks, and derision from Labor.
By the government’s own estimates, Commonwealth funding for some 24 top non-government schools will be cut, inevitably forcing up fees and making these schools even more elitist.
Other schools may also be affected. Of particular concern is the fear expressed by the Catholic Education Offices that the proposed cuts will hit schools in middle-class and lower socio-economic areas.
One Catholic primary school in Melbourne’s eastern suburb of South Blackburn, which charges students $1,200 per family annually, is expected to have a shortfall of $1,800 per student, requiring a massive increase in school fees.
The Director of Catholic Education in Melbourne, former Liberal MP Stephen Elder, told The Australian that the new proposals short-changed Catholic schools and was a direct attack on parental choice. “Schools face the grim reality of significantly raising fees or cutting programs,” he said.
There is a principled approach that the Coalition could take on school funding, and that is to reward schools that improve their educational outputs, measured by the NAPLAN results that are published every year.
This would at least do something to reverse the steady decline in reading and mathematics skills of school-age children, which, despite rising funding for schools, is gradually pushing Australia down, and creating additional problems for the higher-education institutions that have to deal with the resulting problems.
The Federal Government’s “reforms” of university education – which include increasing student fees and reducing the repayment threshold – are almost inexplicable, and quite retrogressive. There is no chance they will be passed by the Senate; so, why does the Treasurer incur the odium of proposing changes that will never see the light of day?
The proposals are also bad in principle, by saddling even higher debts on young people at the very time when their incomes are low, many have difficulty getting full-time work, and at a time when they wish to marry, start a family and buy a home.
The effect of the measure will be to discourage family formation, at a time when Australia’s national birth rate is well below the replacement level.
There is also a proposal to force New Zealand citizens and permanent residents studying in Australia to pay full tertiary fees. This will seriously disadvantage thousands of people whom we want to see make Australia their home.
As university-educated people earn significantly more, on average, than other Australians, the higher taxes paid over their lifetimes help to meet the cost of their tertiary education.
Other budget proposals, including the commitment to go further into debt to fund Sydney’s second airport at a cost of $5 billion, are bizarre, when there is no funding for base-load power infrastructure that is critically needed for manufacturing industry, the mining sector and households, and threatens Australia’s future development.
Despite $5 billion for the Commonwealth takeover of the Snowy Hydro Scheme and small grants for gas generation, the budget offers no comprehensive plan to secure Australia’s energy future.
No amount of sugarcoating by the Treasurer can obscure the serious danger presented by the lack of a national energy policy. Over all, it is hard to see any coherent strategy behind the 2017 budget.