Budget Reply 2020

Thank you, everyone. This is the Science Party budget reply for 2020-2021 (a lot of twenties). This budget reply comes from the fundamental position that the role of government is to provide the conditions for people to flourish. I will critique parts of the budget presented to us by the Australian federal government, and then present a better alternative. Just to orient ourselves the dollar amount of the Australian government’s federal budget is about $50 [should be 500] billion, so just keep that in mind when we’re talking about $1 billion here and $10 billion dollars there, $500 billion is the total. It’s a little higher this year because the government’s spending big, which we’ll get to.

The budget that we got in 2020 is pretty unique, 00:46 - and that’s fair enough because we’re in a unique situation. A new virus has forced us to change the way we live, to protect life. And if you think we need to be more concerned about the economy: good news for you! The best thing we can do to protect life is to- the best thing we can do for the economy is to protect life on a large scale, because doubling the death rate is very bad for the economy. Some businesses have been restricted by law for the sake of infection control, and a government that exercises that kind of power must compensate people financially to prevent them from falling into poverty. Our federal government boasts that its initial response to the pandemic in included $299 billion dollars in support.

That’s a lot of money, 01:36 - and it’s strange for our liberal national coalition government to be boasting about this because they have spent a lot of time criticizing government stimulus spending, and have tried for seven years to build credibility by claiming it would get the federal budget back into surplus. And it is still taking jabs even today at Labor on social media for [Labor’s] stimulus spending! But in the face of economic disaster caused by the pandemic, completely out of the government’s control, our government turned Keynesian – that is, it embraced government spending to stimulate the economy. This is the immediate solution for the problem we have right now. People have no money; there aren’t enough jobs; giving people money solves that problem. And the consequence is public debt, but we can address that once food is on the table.

02:26 - Pandemic spending to support individuals is set to continue in the coming year or two. JobSeeker (previously known as NewStart) was doubled from $275 to $550 per week, thanks to the Coronavirus Supplement. It was a quick change from, “The best form of welfare is a job,” to, “The best form of welfare is twice what we’ve been paying you until now.” The base rate of JobSeeker (formerly NewStart) is shown on the slide there in light blue, and the supplement is shown in dark blue. [It] still doesn’t get you up to the full-time minimum wage.

03:06 - But it it does have to be asked: if $275 dollars was not enough at the start of the year why is it going to be enough in January (when the coronavirus supplement runs out)? JobSeeker had to be doubled because middle class Australia can’t live on it – because their rent or mortgage payments are too high. And this is the result of two intersecting policies: 1) decades of punitive and stingy welfare and that’s combined with 2) a commitment to policies that push up house prices for the last two decades. There is plenty of support for businesses in the budget, and these businesses will supposedly keep people employed. We have JobKeeper: the wage subsidy available to employers at a flat rate of $750 per week if they’ve lost a substantial amount of their income to the pandemic. But one size doesn’t fit all, given that work is not always regular.

04:04 - If you’re a casual worker who has been employed for less than a year, you’re not eligible for JobKeeper. And that includes many workers in the arts and hospitality sectors, or international visitors who were invited to Australia to work or study – and had been working here and had been paying taxes here. They’re also excluded. Also for businesses: a $4 billion dollar subsidy (not that much in the scheme of things). A $4 billion dollar subsidy to employers who employ young adults who have recently received welfare payments: the JobMaker hiring credit. $100 per week for people in the age range 30 to 35, $200 from- for people who are under 30 years of age if they have been on a welfare payment recently.

04:58 - But does that create new jobs? Businesses tend to hire people when there is unmet demand – they don’t just hire people because it would cost less than usual to do so. There is little evidence that wage subsidies work as intended, and if they do, why does it not extend to workers over the age of 35? Youth unemployment can have long-lasting effects for sure, but anyone who has lost their job to the pandemic was in an industry that needs assistance. One of the biggest budget items is the extension of the instant asset write-off, which lets all but the biggest businesses claim a tax deduction for purchases up to $150 thousand. So this is not your $6,000 dollar toaster (in fact, this is twenty- five $6,000 toasters). It’s set to cost $27 billion over four years and I suppose we can only hope that it’s used by enterprising businesses who just needed a little bit of a leg up.

A business 05:57 - initiative actually that seems better targeted is the loss carryback scheme. This lets businesses claim back tax that they’ve paid over the last two years against their current losses. So usually, businesses would have to make a loss first and then reduce their tax when they return to profit and this goes the other way around. It seems fairly solid and gives a boost to businesses that are usually profitable in the before-coronavirus times. So there’s a lot in there for businesses. Now on to education and training. The budget announced some funding for these sectors.

It 06:37 - must be said that universities got themselves into a precarious position by accepting so much income from international student fees, which has collapsed. But universities are ineligible for JobKeeper, thanks to a few tweaks that were made to the rules, that seemed targeted at excluding universities. So universities are shedding hundreds of jobs (but four private universities were given an exemption – so the private universities can access JobKeeper). Funding for training includes $1.5 billion in wage subsidies on top of the previous program – $1.5 billion for apprenticeships specifically, as well as a $1 billion JobTrainer program.

07:25 - (I promise that’s the last NounVerber program I’m going to speak about tonight.) JobTrainer: $1 billion dollars for vocational education… but that is nothing new. The government is patting itself on the back for inventing TAFE, which has been gutted for a generation. Now looking at the personal tax side of the budget – what is in it for me? There are $18 billion worth of personal income tax cuts being brought forward – they were scheduled for the next five years, they have been brought forward early. And they are largely a tax break for being moderately rich.

99% of the benefit will go to Australians in the top 20% of incomes. But it must be said that 100% of the benefit will go to people who are paying income tax, so that means you have an income. Specifically, people on a salary of $120,000 stand to benefit the most. Yes, there are people richer than that, and they haven’t had as much of a tax break, but they will over the next four or five years as more of those tax breaks do come in, in the time that they were originally scheduled. So unlike all the other initiatives that I’ve mentioned so far, this is an ongoing change and not a one-off spend.

This is our government baking 08:54 - in less revenue for the future despite insisting that a budget surplus is so important. Are Australians who get a tax cut going to spend their extra cash to stimulate the economy? It might not actually be very likely. We’re saving much more [cash] than usual, there are no overseas holidays and people are paying down their mortgages. Now, I just want to touch briefly on aged care because of the situation that we’re in. It’s pretty rich for the federal government to announce $1.

6 billion in aged care funding 09:27 - as though it is a proactive measure. I is a small patch on a system that has been gutted since the Howard years. Of Australia’s 900 COVID-19 deaths to date, over 670 of them have been in federally subsidised aged care homes. The standards of care are shockingly low thanks to deregulation, and aged care needs funding, higher staffing ratios and higher training requirements. On to what was announced for infrastructure and manufacturing.

10:01 - We are of course glad to see a commitment to building a national broadband network, but always remember that the coalition was dragged, kicking and screaming, to this minimum standard. COVID-19 has shown us the importance of a fast, reliable internet connection for everyone – for work, education, healthcare, and social connections for mental health. $1.5 billion announced for manufacturing is a welcome start, but a drop in the ocean. Apparently we are getting $14 billion in accelerated infrastructure projects, and we can’t fault that… unless it includes gas pipelines. That brings us to the flatulent elephant in the room, which is the supposed gas-led recovery, as pushed by the National Covid Coordination Commission, which was stacked with people connected to fossil fuel companies.

I was pretty shocked and disappointed 10:57 - to see Australia’s Chief Scientist talk about gas as a backup to renewables with no real ambition to push for rapid decarbonisation. Gas will not fuel our future. Gas is fuelling the present, and it is one of the forms of energy that we need to move away from. Australia’s economic activity right now is intrinsically linked to producing carbon dioxide and other greenhouse gases. We have to electrify everything and decarbonise electricity and other parts of industry as well. This this budget was a huge lost opportunity to invest in clean energy; however, for all of the ideological disagreements that I have with the federal budget perhaps the worst aspect of it is that it relies on faith to the point of being negligent.

It assumes that the 11:49 - economy will bounce straight back and grow by five percent in 2021-2022. This is something our government has been doing for years. It projects surpluses thanks to strong tax revenue, which never eventuate because the economy was flopping towards a recession. The current budget assumes that businesses will keep staff on after the subsidies run out, and that the states open their borders to each other both of which are probably dependent on a vaccine for COVID-19 becoming available by the end of next year. It might, it might not. This shying away from reality is as destructive, I think, as the spending choices that the government makes.

12:30 - The budget also does not reflect the $35 billion withdrawn by individuals from their superannuation – that’s an extra [35 billion] on the $228 billion dollars officially spent on welfare. So these are people in financial distress, withdrawing from their retirement savings, completely negating the point of compulsory superannuation, and setting up future budgets for a blowout in the age pension. And we know that that doesn’t affect Australians equally – we know that women and new Australians who have recently migrated here are less likely to have a comfortable superannuation balance to retire on. So, while I believe it is important to critique the budget we had, this brings us to the part that I much prefer, which is to explain what the Science Party would do. We’re sticking with the principles that have served us well to date: funding essential services, and new discovery with the aim of improving the wellbeing of all who live in this country.

The Science Party has not 13:37 - prepared a budget package per se – we believe in our policies at all times of the year, and I’ll share some of these now. We can look at the things that we need during a pandemic – fast and reliable internet, manufacturing capacity, strong education and health care systems, and affordable child care – and safely assume that those things would be valuable outside of a pandemic, and invest in them. Further, every budget from now on, every government initiative from now on, must prioritise decarbonisation, as far as it’s relevant, from now until it is done. So, a few things that we need to focus on are to electrify everything and decarbonise electricity. The Science Party holds a target of 800% renewable energy, 100% being the amount we use.

14:24 - The rest can be exported directly, via undersea cable or as hydrogen, or indirectly by producing energy-intensive products like green steel (rather than just exporting unprocessed iron ore). The states and territories are working with private industry to get these projects underway and there are some state and federal investments going on, and we would look to expand those. W also promote research into new forms of nuclear energy, and a price on carbon pollution and other greenhouse gas emissions. Australia has had the Clean Energy Target, the Renewable Energy Target, the National Energy Guarantee… if we want to create jobs, we need to provide a stable regulatory environment for businesses.

A price on pollution is something that businesses can 15:15 - work with, and it does the right thing by the natural world and the people who live in it. Further on industry and infrastructure, it’s not even an election year right now and still, the Science Party supports building high-speed rail. We have also a policy of subsidising 95% of the cost of child care up to a national benchmark, and also to remove means testing, because the aim as we see it is to allow parents to work when they see fit. JobKeeper should be extended to universities, obviously. There is a wealth of experience bound up in university employees and to lose them, especially if they go overseas, is knowledge that would take decades to rebuild.

Also casual workers and non-citizens, 16:10 - migrant workers – there is no reason why they should be denied the same access to JobKeeper, given that they work in the same economy. And on the direct response to the pandemic, one line item from the federal budget that the Science Party supports is the nearly $2 billion spent on working towards a COVID-19 vaccine. We would commit more, given the entire business recovery mentioned so far assumes that a working vaccine will be rolled out late next year. We have a long-standing policy of doubling public research spending and develop- public spending on research and development, from roughly $10 billion dollars a year to $20 billion dollars. And how are we going to pay for it? Turns out discovery pays for itself, with every dollar invested in the right types of research returning about three dollars to the economy.

Again on the 17:10 - direct response to the pandemic: the pandemic has made a case for an Australian Centre for Disease Control, or ACDC, if you will. This is one of the Science Party’s newest policies: to establish an Australian Centre for Disease Control. It would coordinate the response to health crises and perform surveillance, manage preparedness, and coordinate health messaging. The COVID-19 response has unfortunately fallen to a mishmash of: government committees with no real resourcing, partly to research institutes, parts of the public service that still have to do their regular work, private contractors and professional societies. We are going to see more pandemics in this century, and a standing independent national organisation is best placed to oversee this response.

17:56 - On tax: I see no need for the new personal income tax cuts. Our taxation system certainly should be simplified but Australians in the top 20% income bracket do not need a tax break while anyone is living in poverty in this country. We must raise the rate of JobSeeker to give everyone that fabled “fair go” that we’ve heard so much about. We have to correct obvious distortions in the housing market, chief among them the capital gains tax discount which incentivises investment in property – which only increases in price because we all agree. Thanks to the capital gains tax discount, income from buying and selling houses is taxed at a lower lower rate than income from work.

Other inflationary policies include the first home 18:42 - buyers grants. The Science Party is committed to removing the capital gains tax discount and working with states and territories to replace stamp duty with a land value tax. And now some odds and ends. If there was ever a time for finding efficiencies, it’s now. If there was ever a time for ending the school chaplaincy program, it was as soon as it was implemented, but the second best time is now. The federal court in 2014 ruled that it was unconstitutional for the federal government to fund religious chaplains in public schools, but the government continues to do so, via a loophole, to the tune of $61 million a year.

Now that’s a small amount in the scheme 19:22 - of the budget, but completely unjustifiable and counter to the principle of secular government. Science Party policy is to replace the chaplaincy program with trained professional counsellors for the benefit of all students in public schools. Something that is NOT fat to be trimmed is the Australian National Audit Office – an independent agency under the direction of the Auditor General. On a budget of $112 million it exposed some serious problems with government spending over the last year, including- over the last few years, including: $100 million in sports rorts, $19 million spent on the Indue cashless debit card trial rort, the $30 million “Leppington Triangle” rort to do with the Western Sydney Airport, and the year before that the $443 million Great Barrier Reef Foundation rort. The budget of the audit office is being cut by 10%.

20:21 - A Science Party government wouldn’t do that – but then again, we would not do the rorts. This office is one of the few things we have to keep federal government spending accountable at the moment; however, we need a federal ICAC to keep parliament and the public service accountable. So, Budget Night is seen as the economist’s Christmas, it’s a big- for some reason it’s a big day in the Australian political calendar. But it should not be the one night of the year that we get a coherent statement and a bit of an insight into what our government is choosing to fund. Year round, during a crisis or otherwise, people deserve an honest government that works for them. Thank you. .