Thursday, May 12, 2011

That's not a tough budget -- this is a tough budget

You might have picked up a theme in Wayne Swan's fourth budget.  It was tough.  How do we know this?  Because the government told us so.

In a major pre-budget speech, Treasurer Wayne Swan said ''tough decisions are required'' and ''this will be a tough Budget''.  Finance Minister Penny Wong, in an interview in the lead up to the budget, used the word ''tough'' more than ten times, including four times in one answer.

But did the reality match the rhetoric?  In his budget speech, Swan announced $22 billion in ''savings'' over the next four years.  Yet much of those so-called savings are actually tax increases like the flood levy, and regardless, they have been almost completely offset by increased spending in other areas.  They've been roundly criticised already for failing to deliver a tough budget.

So what would a really tough budget actually look like?

Here are eight government programs that could have been easily cut and helped return the federal government to surplus earlier:

  1. Set top boxes for pensioners:  As David Penberthy wrote yesterday, this one is a no-brainer.  If times are as tough and resources as limited as the government argues, can we really spare well over $300 million on retro-fitting old TVs for pensioners?  Many, if not all, would have bought set top boxes of their own -- for as little as $50 -- or new digital-compatible TVs before the analogue switch off in 2014 in capital cities.

    Savings:  more than $300 million over four years.

  2. The Automotive Transformation Scheme:  Governments of all political stripes are guilty of subsidising domestic industries for political reasons and this government is no exception.  For years, the Australian car industry has soaked up literally billions of dollars of taxpayers' money because it often can't compete with international competitors.  But we learnt decades ago that protectionism does not pay in the long run, and these subsidies are an unnecessary cost to the budget.

    Savings:  approximately $650 million over four years.

  3. Buy Australian Campaign:  Like the Automotive Transformation Scheme, this is another brainwave from the Innovation, Industry, Science and Research Department.  This multi-million dollar program encourages Australian businesses to buy other Australian businesses products and helps them work out how to sell their products.  If you need a federal government program to work out how to sell your products, perhaps you shouldn't be in business.

    Savings:  approximately $35 million over four years.

  4. Harmony Day:  You can thank the former Howard Government for this Orwellian-sounding program which splashes around taxpayers' cash in the aim of creating community harmony.  Sure, community harmony sounds like a nice thing to have, but do we really think it will be delivered via federal grants?  Some of the projects which have received cash in the past sound like jokes from a late night TV show -- such as the $50,000 grant given to the Australian Wrestling Federation to encourage wrestlers not to sledge each other.

    Savings:  Harmony Day is just one of the Immigration and Citizenship Department's ''diversity and social cohesion'' programs.  Cutting all of them could save up to $300 million over four years.

  5. Public servant hiring freeze:  In 2010 the Coalition estimated that a freeze on public service hiring, without sacking existing workers, could save the budget billions.  Given the massive expansion of the public service in recent years, it seems reasonable to assume the wheels of government would keep turning without hiring new employees.

    Savings:  up to $3.8 billion over four years.

  6. Community Cabinets:  Did you know that this government road show receives $10 million in funding each year?  Pioneered by Kevin Rudd, these Cabinets have clearly been used for political purposes and have no business being funded from our taxes.

    Savings:  $40 million over four years.

  7. Youth engagement:  As a young person, you may be surprised to hear my life did not change when the Office for Youth was established in 2008.  Nor is it enhanced today by the Australian Government's Youth Engagement program.  I think most young people will find a way to survive without it.

    Savings:  at least $30 million dollars over four years.

  8. International climate change negotiations:  If you thought that international climate change negotiations were a fruitful exercise, hopefully the debacle at Copenhagen disabused you of that notion.  Yet the government is still planning to spend millions of dollars in the vain hope that a massive team of Australian bureaucrats attending these international conferences will affect the outcome.  Instead, Australia could send a skeleton team to future negotiations.

    Savings:  approximately $60 million over four years.

These proposals, totalling more than $5 billion over the next four years, merely scratch the surface of wasteful government spending.  Importantly, none of these are radical measures.  No departments would be closed, and health, defence and education spending would be preserved.  But the federal government's bottom line would be much healthier.


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