If you're going to compare levels of income and welfare, do it fairly

By Greg Jericho Wednesday 20 May 2015

Photo: The budget makes it look like some households have higher disposable incomes than they do. (Tracey Nearmy: AAP)

Don't buy the budget spin - families receiving government payments have a much lower standard of living than single people on average incomes, and are a very long way from being "welfare rich", writes Greg Jericho.

Usually the budget website is pretty dry, which is fair enough given the budget papers mostly consist of very dry economic tables and discussion.

This year, the Federal Government has gussied up the website with so much marketing-style political sugar-coating that it seems to be covered in consultancy fairy floss. The spin is now even within the budget papers themselves, with the inclusion of tables purporting to show the amount different households pay in tax and receive in benefits. The tables, however, provide a very distorted picture, and fail to show a fair comparison of different households' standards of living.

Under Peter Costello and Wayne Swan, the Budget Overview contained tables called "Benefits for families" and "Helping households with the cost of living" respectively.

These tables revealed the impact of the budget on the incomes of various types of households.

Wayne Swan was rather tricky in his version of the table, using 2007-08 as the base year, rather than the previous year, as occurred under Peter Costello.

But last year, there was no such table. However ANU's public policy experts, Peter Whiteford and Daniel Nethery replicated the tables, and found they displayed a fair bit of carnage for all households.

This year's budget didn't see the table return, but instead Joe Hockey asked Treasury to include tables showing "support for households".

This does not show whether the support is greater or less than previous years, just the amount of tax paid and government assistance given to various types of households. The households range from singles with no children, to families with two incomes and three dependents, to pensioners.

Hockey told News Corp's Sunday papers that he just wanted to show taxpayers how many people they were supporting with their tax.

The table for example shows that it requires the equivalent of tax paid from 0.9 workers on average full-time earnings to cover the cost of welfare payments given to a single parent earning $40,000 a year with two children aged between six and 13.

While last year Hockey sought to show taxpayers where their money went through use of the "tax receipt", this table is less about showing where your dollars go towards education and health and defence, and more, as Insiders' Barrie Cassidy suggested, about building resentment towards those who receive welfare payments.

Such a view certainly is in keeping with Joe Hockey's position last year regarding welfare, where, for example, in his post-budget speech to the Sydney Institute he suggested that welfare "payments are too broadly available to too many people".

Given the Sunday papers ran with the headline "Joe blasts 'welfare rich' who have more money to spend than workers", the media are certainly using the figures to run the resentment angle.

To his credit, Hockey on Insiders did argue that he thought "we have an obligation to help people". His table, however, does not give that impression.

For example, the table notes that a single person on $80,000 has a disposable income of $60,853 after paying $19,147 in taxes. By comparison a two income couple on $80,000 with two children pay $11,674 in tax and receives $17,001 in government benefits for a disposable income of $85,327.

The figures take a rather unique view of "disposable income". Not only does it include payments such as Newstart, the Parenting Payment and Family Tax Benefit Part A and Part B, it also includes the child care rebate and benefit.

Given the government has been at pains to suggest its child care subsidy is, in the words of Scott Morrison, "a jobs package, not a welfare package", it is interesting to see it included among the figures for government assistance.

And as the child care payments are dependent upon a person spending money on child care in order to receive the benefit and/or rebate, it is odd that the government suggests they elevate "disposable income" - especially given, as former public servant David Plunkett noted, the figures don't deduct the child care costs from the disposable income total!

But while this approach does suggest households with children in child care have a higher disposable income than they really do, the table is also misguided because the comparison of the households completely ignores that the cost of living for two adults, let alone those with children, is more than for a single person.

When comparing the standard of living for households, the accepted measure is to start with a single person equalling 1, and to add 0.5 for each adult, and 0.3 for each person under 18. Thus, for a family of four (two adults, two children) to have the same standard of living as a single person, their disposable income would need to be 2.1 times that single person (1+0.5+0.3+0.3).

When we use this measure to compare the households in the table, a quite stark picture appears:

Embed: Households with private income of $80,000

For a two-income couple on $80,000 with two children to have an equivalent standard of living to the single person on $80,000, their disposable income would need to be $127,791 - rather above the $85,327 they currently have.

Similarly when we compare a single person on $100,000 who is shown in the table as paying $26,947 in tax and a disposable income of $73,053, we see that for a family of four to have the same standard of living, they would need to take home $153,411 - well above the amount of disposable income of any of the households shown in the table:

Embed: Households with private income of $100,000

Now, no one expects government payments to make up the difference in standard of living between a single person and a family on the same income. But the households presented in the tables provide a pretty distorted picture.

The only household type in the table, for example, that has a better standard of living than the single person on $80,000 is the single person on $100,000 - but nowhere is that made clear, or even considered.

Embed: Comparison of household disposable income

But this doesn't mean all single people are living the life of riley.

The table notes the disposable income of a single person on $40,000 (which is almost half the average full-time income) is just $35,053. That is a lower equivalent disposable income than all non pensioner household types displayed on the table except for two - a couple with one income of $60,000 and one child under 6; and a couple with two incomes equalising $60,000 and with two children aged 6-13.

The tables might have been created to spin the tale that too many people are too dependent upon welfare that makes them better off than single people on the same income. But what they really show is that such families receiving government payments have a much lower standard of living than single people on average incomes, and are a very long way from being "welfare rich".

Greg Jericho writes weekly for The Drum.

If you're going to compare levels of income and welfare, do it fairly - The Drum (Australian Broadcasting Corporation)

Abbott government's post-budget poll bounce is in doubt

Katharine Murphy Deputy political editor

Wednesday 20 May 2015

While ‘Tony’s tradies’ message has been a hit, most voters believe last week’s budget was more about a political reset than about improving the economy

Two-thirds of the poll’s respondents thought last Tuesday’s budget will be good for small businesses, a highlight of Joe Hockey’s 2015 budget measures. Photograph: Mike Bowers for the Guardian

A new survey of voters suggests the Abbott government hasn’t obtained much of a post-budget bounce, with half the Essential sample believing last week was more about a political reset than improving the economy.

The latest Essential poll, released on Tuesday afternoon, has produced a two-party preferred measure where federal Labor remains ahead on 52% to the Coalition’s 48% – a metric unchanged from last week, and broadly in line with post-budget surveys undertaken by Newspoll, Galaxy and ReachTEL.

But the survey does deliver the government some positive news. Two-thirds of the poll’s respondents think last Tuesday’s budget will be good for small businesses, suggesting the prime minister’s “Tony’s tradies” message has cut through.

This time last year, disapproval of the government’s handling of its first budget stood at 52%. This year, that’s down to 33%.

Around one-third of respondents approved of the way the government handled this year’s budget – up 4% compared to the initial post-budget reaction last year.

But while fewer people disapproved than last year, more voters were undecided – 26% of the sample, up 12% from 2014.

A chunk of the survey, 45%, think last week’s budget is better than last year’s, while 15% think it is worse, and 31% thought the two economic statements were much the same.

Fifty per cent of respondents agreed with the statement that the budget was “more about improving the government’s popularity than improving the economy”; 47% agreed with the statement that the budget “favours businesses over workers,; 37% thought the budget didn’t do enough to reduce the deficit, while 18% disagreed with that statement.

Respondents were more likely to disagree with the statement that “this budget fixes the problems in last year’s budget”. Only 20% agreed, while 37% disagreed.

The sample was split over whether the budget is “fair and balanced” or is “the budget Australia needs at this time”.

The view of the sample about whether the economy is heading in the right direction has remained static since August.

Just over half the voters surveyed agreed that there is a budget “emergency” – but that’s down 5% since budget time last year.

Just under 20% agreed with the idea that there was a budget emergency, and the 2015 budget would help fix it – but 32% said there was an emergency but last week’s budget didn’t help, up 8% since May 2014.

Government insiders report the budget has been well received where it needs to be – in the all-important marginal seats.

The Ipsos poll, published by Fairfax Media this week, had the Coalition and Labor neck-and-neck on its two-party preferred measure – making it the slight outlier in all the post-budget polls produced thus far.

An analysis of aggregated polling data over the past 12 months indicates that the government has recorded incremental improvements in its standing since the leadership spill in February, but remains behind Labor.

New survey puts Abbott government's post-budget poll bounce in doubt | Australia news | The Guardian

So Abbott, what happens after the mugs 'ave a go'?

By Mungo MacCallum Tuesday 19 May 2015

Photo: Our Prime Minister is channelling a Sydney cricket fan by the name of Yabba, best known for the exhortation: "Ave a go, ya mug!" (AAP: Mick Tsikas)

The best that can be said for what is a pretty vacuous budget is that it may at least give a boost to confidence, which is very badly needed. But when the applause subsides, what comes next? Mungo MacCallum writes.

Many years ago there was a cricket fan in Sydney or thereabouts who was known as Yabba.

Yabba was permanently ensconced on what was then the Paddington Hill at the Sydney Cricket Ground, and possessed of a foghorn voice, whose invariable exhortation was: "Ave a go, ya mug!"

Tony Abbott is far too young to remember Yabba, but has apparently chosen to channel him as his chosen conduit for the 2015 budget. Of course, he would never call a voter a mug - at least not in public. But the barracking is at least as persistent, and, it must be said, very possibly just as futile.

As the batsmen stoically ignored Yabba, it may well be that the punters fail equally to respond to the somewhat desperate Prime Minister. Certainly the stock market has bounced, in the expectation that small business voters will stock up on the tax-free gadgets on offer; after all, the family can always use a new laptop.

It may well be a bonanza for the tax-shifting multinational floggers of Chinese-made goodies. But to suggest that this will somehow translate to a demand for new jobs and investment is quite a stretch. $20,000 a pop is certainly welcome, but even for the smallest of small business it is hardly serious money. And the same applies to the tax cuts; well worth trousering, but not enough incentive to turn around a sluggish and reluctant economy.

But then, they are not intended to. The aim of the budget is not to make changes, but to produce enough of a warm and fuzzy feeling in the opinion polls so that the beleaguered Government can catch its electoral breath. Real reform, any serious kind of budget repair, is out of the question: too hard and too risky. And in fact, all the necessary tools have already been ruled out.

There is to be no damage done to the family household budget, which means no broad ranging changes to welfare, health or education - the big ticket items. True, there is a bit of trimming at the top of the pension entitlements of the very rich, and some very vague commitments to cuts in the overall health budget sometime in the future, but nothing to scare the horses.

And as for any attacks on the lurks and perks of the super rich - family trusts, negative gearing and superannuation concessions - they remain untouched and untouchable. There is an idea to try to do something about some of the legalised tax evasion practised by some of the multinationals, but in the absence of even the most hypothetical figures, it is little more than wishful thinking.

In the end, the budget is mainly white noise - no budget reform and certainly no vision. It is just another big spending, big taxing manifesto of the kind one would expect of a pre-election platform. Abbott, of course, indignantly rejects this, in spite of the fact that the numbers in his own budget statements confirm it: he simply refuses to accept either the present or the future. Or, for that matter, the recent past: he also said that Joe Hockey and Scott Morrison had never referred to fraud and rort around what he, and they, called the double dipping of parental leave entitlements, which embarrassingly included two of his own ministers.

Abbott falls back on denial as his default option. He tried to retrieve the situation, or at least some of it, by drawing a distinction between the private and public sectors - it was only the shiny bums of Canberra who were really double dipping. Presumably they can be bashed with impunity. The problem there is that public servants also include nurses, police, firemen and other frontline workers as well as pen-pushers, so it didn't help much.

And of course the parental leave scheme depends on budget cuts to other welfare measures previously marked for savings to the budget, which are vigorously opposed by a majority of senators, so they could well not happen at all. And the much trumpeted child care handouts (work-force participation, not welfare) are not even due to cut in for another two years, so not a lot of the immediate gratification the voters crave there.

Which leaves us with the perennial promise to develop the north - if only someone can tell us how. The only targeted funding is to pave a couple of hundred kilometres of dirt roads, not exactly a prospect to fire the imagination of the millions. The best that can be said for what is a pretty vacuous budget is that it may at least give a general boost to confidence, which is very badly needed - but when the applause subsides, what comes next?

Tony's tradies and the like may whip out their credit cards as soon as possible - that is the idea - and will then, presumably, put them firmly away for the next couple of years. And the general malaise will then return, just in time for the next budget, which is why the next budget probably won't happen: there is no money left. Whatever the rose-coloured predictions for the good times ahead, they certainly won't happen before the next election. In fact things will probably get worse, and another spend-a-thon would simply not be credible.

So the likelihood - perhaps even an inevitability - is for Abbott to go for the polls early, at least as soon as next year, and hope like hell the post-budget boost holds up till then. The excuse may be more senate resistance over the welfare cuts, giving him an excuse to reprise the promises of parental leave and child care. It might work, but it might not; he would need a lot of luck, not to mention rather more good management than his gaffe-prone Government would so far suggest is likely.

But in the end, it is hard to see an alternative. There is nothing much left but to follow Yabba's advice: Ave a go, ya mug! But please, this time, even if you are planning to take the voters for mugs, try not to call them mugs. At least not until the election is won and lost - then, of course, all bets are off.

Mungo MacCallum is a political journalist and commentator.

So Abbott, what happens after the mugs 'ave a go'? - The Drum (Australian Broadcasting Corporation)

Will voters see through the post-budget spin?

By ABC's Barrie Cassidy Friday 15 May 2015

Photo: This week, the Government's task was to explain why there had been such a dramatic shift in budget strategy. (AAP: Lukas Coch)

Just as Labor refuses to accept any responsibility for the fiscal handicap the country now faces, the Government resolutely refuses to concede that its performance on debt and deficit is no better, writes Barrie Cassidy.

Journalists who submit themselves year in and year out to a six-hour lockup on budget day are at their most positive on the night itself.

Once trapped inside those committee rooms, they are a captive audience force fed the controlled information flow from the government and the bureaucracy. And there's a lot of it.

Then after they have had an hour or so to absorb the material, the treasurer wanders through, massaging and honing the message. Paul Keating and Peter Costello were the best persuaders in the business, though one-on-one Joe Hockey and Wayne Swan are formidable as well.

Finally - at 7.30pm precisely - they re-enter the real world, all of a sudden exposing themselves to a more sceptical media on the outside; program hosts looking for an angle; a social media that takes over the agenda; an opposition attacking everything from the trivial to the substantial; and scores of interest groups literally lining up in the corridors to put their own spin on things.

In short, within hours perspectives change.

And then the next critical test kicks in - the government's own marketing across the wider media.

Video: Tony Abbott speaks to AM. (ABC News)

This week, the task of ministers was to try to explain to the public why there had been such a dramatic shift in strategy and direction; why a budget that demanded sacrifices last year could so quickly be superseded by one so friendly. That, and why there was no longer any talk of a debt and deficit disaster when the numbers hadn't seemed to change much at all.

And within that framework ministers needed to persuade voters that the Government had a credible trajectory back to surplus.

That task was never going to be easy, especially when the Government got the economics right last year, but screwed up the politics, and then appeared to do the opposite this year.

And sure enough the degree of difficulty has been beyond most of them, at least up until now.

Too much of it sounds like dodgy salesmanship; much of it reeks of humbug; and the public is probably on to it.

Just as Labor refuses to accept any responsibility for the fiscal handicap the country now faces, the Government resolutely refuses to concede that its performance on debt and deficit is no better.

Take this exchange between the Prime Minister and Michael Brissenden on AM.

PM: Under the former government, expenditure grew at 3.6 per cent real every year. Under this Government, it's growing at 1.5 per cent real.

Brissenden: ...the 3 per cent figure is a 10 year MYEFO figure that includes the NDIS. Your 1.5 per cent that you're quoting is a four-year figure that doesn't include the NDIS.

PM: The 3.6 per cent real is what Labor spent over its time in office...

Brissenden: Yeah, but it's a 10-year forecast.

PM: And the 1.5 per cent real is what we're spending over the forward estimates.

Brissenden: It's apples and oranges though.

PM: I don't accept that, Michael.

End of story then.

Just half an hour earlier the Prime Minister had gone through the same routine with Karl Stefanovic on The Today Show.

PM: They were spending at a rate of 3.6 per cent a year. We are spending at a rate of 1.5 per cent per year.

Stefanovic: Our spending is the same as when we went through the GFC or just slightly lower - that is still a lot of spending.

PM: What we are doing Karl, is getting the deficit down every year...

Stefanovic: But still the spending is astronomical.

PM: It's coming down, that's the point.

Leigh Sales on 7.30 came up against the same resistance when she interviewed the Treasurer, Joe Hockey.

Sales: The Government's spending as a percentage of GDP is 25.9 per cent. That is the same as the previous Labor Government (was) spending at the height of the global financial crisis.

Hockey: Not true. They got to 26 per cent.

Sales: You're at 25.9 per cent!

Semantics.

The approach is not that far removed from the spin out of the intergenerational report that allowed the Prime Minister to claim the Coalition had already halved Labor's debt and deficit - "going forward".

Maybe Australians don't know when their legs are being pulled. We'll see.

Barrie Cassidy is the presenter of the ABC program Insiders. He writes a weekly column for The Drum.

Will voters see through the post-budget spin? - The Drum (Australian Broadcasting Corporation)

Political green shoots require fertiliser - and never mind the smell

By Mungo MacCallum Tuesday 12 May 2015

Photo: The hope for this budget is that Prime Minister Tony Abbott and Treasurer Joe Hockey might get another chance. (AAP: Paul Miller)

The voters aren't mugs; they know things are grim. And Joe Hockey's budget will not - cannot - turn the economy around. But that is not its aim, writes Mungo MacCallum.

A treasurer's lot is not a happy one. His job description is, after all, to be contrarian.

Whatever the popular economic mood is, then he is against it. The bulls are roaring? They must be sedated. The bears are slumbering? Time to stimulate them.

If the country is booming, if wages and profits are soaring and unemployment down, there is a risk of rampant inflation, so the Treasurer needs to inject a note of caution, even of gloom. But if things are down, with spending and investment constrained and recession a possibility, then the Treasurer must be determinedly optimistic, predicting silver linings and good times just around the corner.

Hence Joe Hockey has spent the last few weeks exuding ebullience, however much it has forced him to grit his teeth in doing so. But in the last week his exuberance has got the better of him; as so often with the Abbott government, he has overdone it and drifted into self parody.

When the Reserve Bank once more cut interest rates, bringing them to almost unheard of lows, Hockey was cheering at the news. Bouncing into a press conference, he adjured the punters that this was their opportunity: borrow, invest, spend, spend spend! There were green shoots sprouting, and now the fertiliser was being spread.

Immediately the stock market tanked and Woolworths announced that it was laying off a raft of employees. This was hardly a surprise. Next day, the Reserve Bank spelled it out: far from being good news, the interest rate cut was an attempt to stave off impending collapse: growth was declining and was predicted to get lower, and unemployment was rising and could get worse.

No green shoots there; Hockey's fertiliser was revealed as unadulterated bullshit. And the offense was compounded by the inherent contradiction: while he was urging the already over-stretched borrowers to ramp up their own debts, the government was telling them that its own debts were a disaster and refusing to take advantage of what was, in international terms, effectively money in order to fix some of its own problems.

At the time of the last election - and how long ago that seems - Tony Abbott declared a desire to become known as the Infrastructure Prime Minister, opening up vistas of new projects throughout the wide brown land. In fact, what infrastructure that was going on has basically stalled; just about the only things that are actually being built are the ones the previous Labor government initiated. All Abbott has done is to re-announce some of the ideas proposed by Anthony Albanese, and even those have been confined to roads, mainly around the major cities which is, of course, where the votes are - short term political promises.

An ambitious agenda to persuade state governments to sell off their own infrastructure and replace it with sparkling new models has also come to very little: the jewel in the Liberal crown, Victoria, fell and the East-West connection trumpeted by Abbott before, during and after the last election was shelved on the reasonable grounds that it had never been subjected to a cost-benefit analysis and what examination there had been had denounced it as an extravagant and uneconomic folly.

The only silver lining is New South Wales, where Mike Baird is pressing on with his plans to finance infrastructure through the thoroughly unpopular policy of flogging off the poles and wires of some of the electricity grid. But that will not even be the subject of legislation until August, and if it gets through - which is likely but not certain - they will then have to find buyers and draw up contracts before planning begins. It will be many years from fruition - Abbott's legacy, if he in fact claims it, will be politically posthumous at best.

The voters are not mugs; they know things are grim, and they hardly need the Reserve Bank to confirm the fact. The Bank itself is verging towards the desperate, playing what is probably its last rate cut card in the hope that, in the end, consumer confidence may not return, the Sydney and Melbourne housing bubble finally comes under control and the stubborn Australian dollar declines to what it considers acceptable levels.

So far there has been absolutely no sign of any of this happening, which puts it all back on jovial Joe Hockey and his budget. It will not - cannot - turn the economy around; but that is not its aim. The hope is only that it will provide a bit of political breathing space, that the majority of those who are polled will decide that perhaps, just perhaps, the government is not really quite as hopeless and horrible as they have thought for more than a year, and that Abbott might indeed deserve another chance and that even Hockey, for all his buffoonery, can be tolerated - or, if not tolerated - that he can be decently uncoupled from his prime minister.

The alternative, Scott Morrison, has emerged as an almost acceptable alternative - and as a result, there is possible salvation not only for the government, but for Abbott himself. If there is to be another leadership crisis, which there almost certainly will be unless the government is declared a popular success, it will be in a very different context from the one that prevailed in February. Malcolm Turnbull, still unacceptable to many of his colleagues, has now been joined, if not surpassed, by both Morrison and Julie Bishop. The contenders are divided, and this is seriously good news for the incumbent.

Add in the steady but remorseless decline of Bill Shorten, looking more and more like a cardboard cut-out of an alternative prime minster, and it has to be said that things are starting to look up. Talk of an early election, in spite of the worries about the economy becoming still more dire next year, are almost certainly a furphy; the government is still a long way to genuine recovery. But even if the Reserve Bank can find no green shoots, perhaps Abbott and his colleagues finally can. So pour on the fertiliser and never mind the smell. If the winds strengthens a bit, it just may go away before the punters go to the polls.

Mungo MacCallum is a political journalist and commentator.

Budget 2015: Political green shoots require fertiliser - and never mind the smell - The Drum (Australian Broadcasting Corporation)

Budget 2015: I've read all the winners-losers guides

By Dominic Knight  Wednesday 13 May 2015

Photo: Who wants to spend their birthday wading through financial documents? (AAP)

Don't have time to read all 93 lists about the 2015 budget? Dominic Knight has your back. Here's the definitive guide to why we can expect to see more waterslides, a less comfortable Bill Shorten, and a buoyant smash repair industry.

Budgets are complicated documents in which a multitude of complex changes to expenditure and taxation are delivered in one go. It's for this reason that media organisations helpfully break the detail down into concise lists, usually with groovy little graphics like these ones.

I read every single one of the 93 winners and losers lists published by the Australian media on budget night to bring you this, the most definitive list of all. (Which ​I suspect ​makes you ​a winner and me a loser.)

WINNER: Adelaide

Joe Hockey said that this was "a budget for a start-up business in Adelaide", which is fabulous news for whoever owns it. There will undoubtedly be more, as the City of Churches is inundated by fro-yo shops.

LOSERS: Backpackers

Travellers on working holidays visas will no longer have access to the tax-free threshold that's available to Australian residents, so they will have to pay income tax on all of the non-cash-in-hand income they almost never earn.

WINNERS: Small business

Assets worth less than $20,000 will be able to be deducted immediately. There will also be lots of work for accountants, as the threshold of $2 million will see all major Australian businesses restructured into related entities with turnover of $1,999,999.99.

LOSER: Apple

The US device maker is being targeted, along with 29 other multinationals, in an attempt to bypass its complex tax minimisation and profit-shifting measures. Fortunately, any increased tax it pays will be more than offset by the deluge of small business owners buying tax write-off iPads.

WINNERS: Smash repairers

Not only will they be able to invest in new equipment, but there's a bonanza on the way from all the small business owners who misunderstand Hockey's invitation to go out and write off their assets immediately.

LOSERS: Expats

They will now have to pay back the HECS they're using their degrees to earn money in London or New York instead of here. And if they don't pay it, presumably we'll seize the sweet little apartment they bought themselves with the first home owner's grant. That'll teach you to abandon Australia, brain-drainers. Or encourage some of our smartest people to go to uni elsewhere.

WINNER: Netflix

Sure, customers may have to pay an extra 90c a month to use their service, but does anyone really think that'll make any difference when figures published this week say that their market share is already ahead of Foxtel's? After all, they have Orange Is The New Black, while their local competitors may discover that their new black is red.

LOSER: Indonesia

Along with our ambassador, we just recalled 40 per cent of our aid, presumably because if the country can afford to send air force jets to escort a handcuffed pastor and painter from one prison to another, they don't need so much of our help any more. Although we might want to pay for Joko Widodo to get an answering machine, so he can do a better job of returning Tony Abbott's calls. That said, phones have been a contentious subject in recent years.

WINNERS: Waterslide lovers

The Treasurer promised an "immediate tax deduction for new investment in water facilities", which we can only hope inspires the construction of dozens of aquatic theme parks right across the country.

LOSER: Anti-vaxxers

Their childcare payments will be reduced unless their kids are inoculated, although if their approach to the science of mathematics is the same as their approach to the established science on vaccination, they might not actually notice.

WINNER: Hockey Real Estate

The Treasurer mentioned how his family's family real estate agency "put a roof over our heads" and "gave all of the family a chance at a better life". No doubt the whole country was listening, and thinking hey, why not ask the Hockeys to put a roof over our heads too? No word on whether you get a cigar for a successful transaction.

LOSER: Shadow Treasurer Joe Hockey

Do you remember that guy, who said things like "(Wayne Swan) wants you to believe he can deliver a budget surplus, but as each day goes by there's increasing doubt that he ever will" and "Labor's planned return to surplus is not credible and presents a potential black hole in future budgets"? Being unable to resist the direction of the global economy seems far more forgivable when you're on the Treasury benches.

WINNER: Northern Australia

$5 billion of loans will be made available for anybody who wants to build a port or other major infrastructure up there. Which is presumably the Government saying it can't be bothered, because it's just so incredibly hot and humid up there - but sure, knock yourself out, Gina et al.

LOSER: Bill Shorten

Last year's budget was so unpopular that Bill Shorten went on a months-long spree in the polls. But now the Government has remembered that it needs to make people like it to win re-election, so it's been doling out money to the voters whose support it needs, the way John Howard used to. Which means Bill Shorten's job just got a whole lot harder than it was when he was ahead in the polls as a proxy for "anyone else".

LOSER: Bill Shorten again

This time because it was Shorten's birthday on budget night. Seriously, who wants to spend their birthday wading through financial documents? (Well, Albo would have been up for it, but that's still an awkward subject.)

WINNER: Joe Hockey

After the criticism he's weathered from the media, the pollsters and even some of his colleagues over the past year, it's a huge triumph for him even to be delivering this budget - even though Scott Morrison got to sell the most attractive bits. Nobody can say that Joe didn't follow his own advice and have a go, even if some of his colleagues ultimately conclude he has to go.

Dominic Knight is the NSW/ACT Evenings presenter on ABC Local Radio.

Budget 2015: I've read all the winners-losers guides, which makes me the biggest loser of all - The Drum (Australian Broadcasting Corporation)

Budget 2015: This looks a lot like Swan-style stimulus

By Ian Verrender Tuesday 12 May 2015

Photo: Treasurer Joe Hockey delivers the 2015 Budget in the House of Representatives. (AAP: Lukas Coch)

Just a year ago, the Treasurer railed about the profligacy of his Labor predecessors and the desperate need to rein in spending. Now, his high-risk stimulus strategy looks like the one Wayne Swan used during the GFC, writes Ian Verrender.

The body language gave no hint of apprehension.

Joe Hockey tonight was all smiles, a man brimming with confidence as he toured the hallways of Parliament House, exchanging small talk and pleasantries with the media throng and the tribes of economists brought in to pass judgement on his Salvation Budget, after last year's disaster.

But confidence is a commodity that has been sorely lacking among consumers, business and the electorate generally almost from the moment the Abbott Government took office in late 2013. And it's a commodity Hockey desperately hopes will take root.

This was supposed to be a boring budget. It is anything but. It is a radical shift from Hockey's maiden effort; a sudden lurch from austerity to big spending stimulus that bears all the hallmarks of a government desperately hoping to resuscitate a flagging economy and its own credibility.

And even though that shift may be right for these straitened times, the muddled message - maintaining the Coalition's image as disciples of deficit reduction while providing fiscal stimulus, of advocating spending cuts as expenditure balloons - will continue to confuse and alienate its heartland.

In the Treasurer's words, the budget provides a credible path to surplus.

But it is a pathway paved with assumptions that border on the incredible.

If you believe the budget, deficits will shrink each and every year for the next four years until, bingo, we hit surplus at the end of the decade.

Exactly how is not mapped out.

The key, it seems, is a belief there will be a magical and rapid lift in economic growth.

After slowing dramatically in the past year to 2.5 per cent, the economy suddenly and inexplicably will expand by 2.75 per cent in the upcoming financial year, rising to 3.25 per cent the following year, before miraculously returning to its long-term growth trend of 3.5 per cent.

If true, we could be looking at 30 years of uninterrupted growth, thereby eclipsing Holland for the world record.

But what will drive this sudden growth? Therein lies a mystery.

There are brief mentions of an American recovery, of the rise of India. But vast swathes of the budget documents are devoted to the languishing price of commodities, our major exports. That it's occurring just as the flood of investment into resource development has vanished has only added to the sense of urgency.

There's also heavy emphasis on the slowdown in China, to its deliberate and painful transition away from investment spending - that has fed that nation's voracious appetite for raw materials - towards a consumption-oriented economy.

To counter this, the Treasurer wisely has opted to pull in unison with the Reserve Bank, to adopt a dollop of old-fashioned Keynesian stimulus.

A fortnight ago, the RBA slashed interest rates to historic lows and in recent months Glenn Stevens has made no secret that, not only was he running out of ammunition, but there were limitations to monetary policy. The central bank couldn't operate alone.

The question is: Will the small business cash splash be enough? It is designed to get small business to spend, but Australia no longer makes the kind of goods that small businesses buy which potentially could blow out our import bill.

In opposition, the Coalition heaped scorn upon its predecessors and Treasury officials for continually botching forecasts.

Wayne Swan got it wrong on a return to surplus. The mining tax failed to deliver the anticipated bonanza. Spending was out of control. Economic management was best left to the grown-ups.

It was a brutally effective message that resonated with the electorate. But it's a message that has come back to haunt Hockey.

Spending has not been curtailed. At 25.9 per cent of GDP, it is higher than any of Wayne Swan's budgets, bar one.

Just a year ago, the Treasurer railed against the waste and profligacy of his predecessors and the desperate need to rein in spending.

There was little of that tonight. He instead has opted for a high-risk stimulus strategy that looks more like the budget delivered by Swan when the world was gripped by the worst financial crisis in history.

Ian Verrender is the ABC's business editor.

Budget 2015: This looks a lot like Swan-style stimulus - The Drum (Australian Broadcasting Corporation)

Budget 2015: Treasurer Joe Hockey swaps savings for salvation

Analysis by political editor Chris Uhlmann Tuesday 12 May 2015

Photo: Joe Hockey has swapped savings for salvation. (AAP: Sam Mooy)

There is a useful theological term that should be applied to Australia's increasingly polarised political class: scotosis, or intellectual blindness.

Because, across the divide, party members share a common trait.

They all apparently believe their own spin, no matter how much it jars with everyone else's reality.

As proof, take the second Abbott budget. It is utterly at odds with the first, and its apparent unifying principle is self-preservation.

Just a year ago the Government's primary goal was averting a fiscal "crisis" by making big savings and paying down debt.

This was the opening statement in the 2014-15 budget papers: "This budget is about asking all Australians — from households to businesses and the public sector — to make a contribution today to repair the budget and build a stronger, more prosperous future for all".

Treasurer Joe Hockey's speech echoed the theme, repeating the word "contribute" or "contribution" 18 times and declaring: "The days of borrow and spend must come to an end".

You didn't have to be a genius to work out that it would quickly hit rough water, because so much of how everyone would contribute came as a complete surprise.

This column noted that on budget night.

But, suffering a bad case of scotosis, the Government appeared genuinely shocked when the faithless pointed out awkward broken promises.

When, repeatedly, confronted by them, the rote response was "the most solemn promise we made at the last election was to fix the budget and strengthen the economy".

The Government will argue that its small business and workforce participation plans are aimed at strengthening the economy. But how is the solemn promise to fix the budget not now breached?

In delivering this new fiscal blueprint, the Government clearly believes that people will focus on everything it says from now on, rather than everything it said last year and for years before that.

Compared with last year's budget, the combined deficits rise by $55 billion from 2014 to 2018.

Budget cheat sheet: What you need to know

11 key questions you need answered to understand Treasurer Joe Hockey's second budget.

 

The path to surplus slows. In the space of a year, debt has climbed from a peak of 14.6 per cent of GPD in 2016-17 to 18 per cent.

That's $313 billion in net debt, with interest payments of $12 billion a year.

Spending this year will be 25.9 per cent of GDP, higher than in all but one of the Rudd-Gillard years.

Over the forward estimates it falls only marginally to 25.3 per cent.

The target last year was for it to fall quickly to 24.2 per cent before rising to the long-run spending average of 24.9 per cent.

Imagine what a Joe Hockey in Opposition would make of these numbers if they were delivered by Wayne Swan.

In fact it's scary how much of the character of the former Labor treasurer is being assumed by the incumbent.

The Coalition's theme now is "a credible path back to surplus", a line lifted from the Swan playbook.

The Treasurer notes he has lost $90 billion in tax revenue. That was something that also plagued Mr Swan.

But in those days Mr Hockey said Labor had a spending problem, not a revenue problem.

The measures proposed in this budget might be worthy, and they will be discussed at length elsewhere. But, at its heart, the second Abbott budget is aimed at fixing the political crisis created by the first.

Last year's budget was a breach of trust with the electorate. This one is about restoring faith and building confidence.

Then it was all about saving, now is all about salvation.

Budgeted revenue changes

The Government expects to raise $21 billion more in the next financial year compared to the current financial year.

See how revenue changes by

2015/16

• 2015/16 Estimate
• 2016/17 Estimate
• 2017/18 Projection
• 2018/19 Projection

Full interactive: See where every dollar goes.

Budget 2015: Treasurer Joe Hockey swaps savings for salvation - Federal Budget 2015 - ABC News (Australian Broadcasting Corporation)

Budget 2015: Are we looking at an election budget?

By ABC's Barrie Cassidy Tuesday 12 May 2015

Photo: Coalition MPs worried about losing their seats will like this budget a lot more than the last. (AAP: Sam Mooy)

The imperative now for the Government - after a miserable 12 months - is to get back in the political game. As a political document, this budget just might work, writes Barrie Cassidy.

If you take the view that three years is a reasonable timeframe in which to deal with an emergency, then Joe Hockey has just produced a credible budget.

And you need to embrace as well some heroic assumptions that lead to a budget deficit of just $7 billion three years from now.

All this while Australia's economic growth barely flat lines for two years and those of our major trading partners gather pace.

We have known for months now that this was going to be a retreat from a full on assault on the debt and deficit "crisis"; that major structural reform was on the back burner. But still, boldness to boredom in a single year was a bit of a stretch.

The document was so different to last year that journalists in the lockup were asking each other what Joe Hockey would have said had this been introduced by Wayne Swan. Presumably another socialist document that ignored reality.

The imperative now though for the Government - after a miserable 12 months - is to get back in the political game, and as a political document, this budget just might work.

The Coalition, after all, trails on average across the polls by just four points - 48 to 52 per cent, two-party preferred. A budget that stabilises the situation - and maybe even gives a bit of a kick - will be of great comfort to a government that was on its knees embroiled in a leadership crisis just three months ago.

Still the government is asking a lot of the electorate to accept that the numbers outlined in the budget by themselves represent a credible and believable return to surplus and that China will not falter and throw all calculations out of kilter.

That's partly why it feels like the last budget before the next election. That is not to suggest an imminent election or even one this year - but there has to be at least a 50-50 chance now of one before May next year.

In the meantime though ministers will need to do a whole lot better in the coming weeks and months than they did in the 48 hours before the budget was released.

Putting out a child care policy paid for with money they most likely will never raise was one snag. And then accusing mothers who simply took advantage of two complementary parental leave schemes of "fraudulent" behaviour was another.

One thing is certain: a host of Coalition MPs desperately worried about losing their seats will like this budget a lot more than the last.

Barrie Cassidy is the presenter of the ABC program Insiders. He writes a weekly column for The Drum.

Budget 2015: Are we looking at an election budget? - The Drum (Australian Broadcasting Corporation)

How Joe Hockey's disastrous first budget fell apart, brick by brick

Gabrielle Chan Friday 8 May 2015 15.00 AEST

How the budget fell apart, in full

Medicare co-payments plans – modified and sidelined before fin­ally being scrapped

The 2014-15 budget plan to introduce a $7 co-payment was dropped in December. A plan to cut the rebate for some GP visits by $5 for adult non-concession patients but leave the option for doctors to recoup the $5 from patients was dumped. A plan to slash the rebate for short consultations by $20 was also binned in January. Now there is a full review of Medicare, in consultation with doctors and patient groups. Rebates remain frozen until 2018.

Paid parental leave scheme – dumped
Tony Abbott’s signature policy was dumped this year as a result of opposition within his party room and increasing leadership pressure which ultimately led an attempt to bring about a spill. The PPL scheme was originally estimated to cost $5.5bn a year, though it was only contained in the “contingency” reserve in last year’s budget.

Automotive transformation scheme savings – dumped
The government dropped its plan to axe $500m from the ATS between now and 2017. This was the fund to help component manufacturers transition as the last car manufacturers, Holden and Toyota, leave Australia by 2017. The amount of money that will actually be spent under the ATS remains a matter of contention.

Cuts to frontline community legal aid and other services – dumped
The government dumped its plan for $25m in cuts to legal aid services which affected Indigenous people and domestic violence victims, among others. It also found $230m for a two-year extension of the national partnership agreement on homelessness, which had been due to expire. Similarly, the government found $300m for a year-long extension of funding for mental health services. Alcohol and drug treatment organisations were granted a similar reprieve.

Joe Hockey’s first budget did not win over the Australian public. Photograph: Bloomberg/Bloomberg via Getty Images

The deregulation of higher education – modified then blocked and sidelined
The first in a long list of budget cuts that were blocked by the Senate but remain on the table. The 2014 budget planned to cut public funding for university courses by 20% and potentially increase loans by removing caps on the fees providers can charge. It also forced graduates to pay back student loans sooner but extended fee help to non-university courses such as diplomas and associate degrees. In negotiations, the government offered to abandon its proposal to increase the indexation of higher education loan program debts from consumer price index to the 10-year bond rate. But the Senate still blocked both versions of the bill. The government has vowed to try a third time to deregulate fees.

Changes to unemployment benefits AKA “earn or learn” – blocked and sidelined
Unemployed people under 30 would only be able to claim Newstart or Youth Allowance for six months of the year, and would have to take part in 25 hours a week of work-for-the dole programs if not studying or training. The social services minister, Scott Morrison, says he is open to alternatives.

Changes to indexation arrangements for pensions – sidelined and set to be replaced
Pension rises were to be indexed to inflation rather than a combination of inflation, the pensioner living cost index and as a percentage of average weekly male earnings. Morrison has indicated the government is preparing to scrap the cuts to pension indexation and instead will adjust wealthier retirees’ eligibility to the part-pension. Taper rates, which adjust the reduction in the full pension depending on the recipient’s assets and income, are also now in the spotlight.

Family tax benefit B cuts – modified
Government attempts to cut FTB-B to families with children under six were blocked and dumped. Labor did support cuts to the FTB-B income test from $150,000 to $100,000.

Increase in pension age to 70 – stalled
A bill to increase the pension age, announced in the 2014 budget, is stalled in the Senate.

Cutting seniors supplement – stalled
This measure cut the seniors supplement for anyone holding a commonwealth seniors health card or the veterans’ affairs gold card.

Increase in the Pharmaceutical Benefits Scheme – stalled
Patient contributions for PBS-subsidised prescriptions were set to rise by 80 centres for concessional and $5.00 for general patients above the annual indexation on 1 January 2015. The legislation remains blocked but the health minister, Sussan Ley, has just instigated a review which would remove free over-the-counter medications such as painkillers and antacids for pensioners and concession card holders under the safety net.

Capping redundancy entitlements – stalled
The Coalition planned to cap work entitlements for workers employed by companies that go into receivership. Under arrangements enacted by Labor, such workers were eligible for four weeks’ pay for each year of service. The government wanted to cap the amount at a maximum of 16 weeks, equal to four years of service.

Freeze to childcare benefit income thresholds – stalled
This measure was designed to freeze the childcare benefit income thresholds at 2014 levels for three years. After the Productivity Commission’s report, the government is considering a shakeup of childcare rebates before the budget.

Petrol excise indexation – dumped but revived by other means
Reintroduction of fuel excise indexation would have seen petrol prices rise by an estimated four cents to raise $2.2bn over four years. The Senate blocked the bill so the government introduced it by regulation. The Senate needs to tick it off later this year.

How Joe Hockey's disastrous first budget fell apart, brick by brick | Australia news | The Guardian

Di Natale has yet to make a splash, but Shorten and Abbott should worry

Lenore Taylor Political editor Wednesday 6 May 2015

Most voters have probably never heard of the new Greens leader, but the Labor leader might be just a bit concerned and, eventually, the PM might be too

Newly elected federal Greens leader Richard Di Natale (centre) and his leadership team, Larissa Waters and Scott Ludlam, in Canberra on Wednesday. Photograph: Mick Tsikas/AAP

Most voters have probably never heard of Richard Di Natale, but Bill Shorten might be just a little concerned about the new Greens leader and, in time, Tony Abbott might be too.

In his first outing Di Natale proved he could deliver a progressive political message – zinger free – and without torturously scripted sound bites.

With Christine Milne gone, it's wall-to-wall blue ties in Canberra Jane Caro

Older women in power attract less vitriol, which may have been to Milne’s advantage. Now she’s gone and blokes rule once again Read more

He didn’t say anything different to existing Greens policy. But more to the point he wasn’t saying anything much different to existing Labor policy – he’s against cuts to health and education and reckons they wouldn’t be necessary if we cracked down on multinational tax avoidance and superannuation tax concessions to the very rich.

And he sounded authentic, like he was speaking in sentences he had made up himself.

When he spoke about the environment he wasn’t saying anything different to his predecessor Christine Milne either. An overriding priority was getting Australia’s climate debate “back on track”.

But unlike Milne he was not first known as an environmental campaigner, which probably means he has a better chance of conveying to the electorate that the party has not been single issue for a long time.

He also sounds convincing when he channels public dismay at the way “this place” – Parliament House – conducts itself sometimes, and his willingness to walk away.

“You know, if they want someone who is not going to play the game in that way well, great. And if that doesn’t work out well, I’ll go back to growing some vegies at home.”

The former GP is also likely to be harder for Abbott to dismiss with the Coalition’s usual critique about the Greens being “extreme” and “ideological zealots”, and Di Natale maintained he had “small ‘l’ liberals” in his sights as well. He wanted to convince them that “they can trust us with their vote”.

The big downside for the Greens is that, until Wednesday, Richard Di Natale hadn’t entered the public consciousness much at all.

Di Natale said in his first press conference as leader that the issues of the 21st century are ‘Greens issues.’ Link to video

But he’s taking on the leadership just as the government brings down a budget, which to the extent it does anything at all, does things that can’t be attacked as unfair. That paves the way for potential deals with the Greens on things such as wealthier pensioners losing payments more quickly.

Since 2013 the party has been sidelined somewhat by a government agenda it could seldom support and a Coalition happier to do deals with the assorted independents on the crossbench.

Both Abbott and Shorten initially said the nice things party leaders say when one of their number stands aside.

But Labor pretty quickly switched to attack mode, latching on to allegations from within the Greens that Milne had forewarned Di Natale of her intentions to head off other contenders.

The shadow treasurer, Chris Bowen, said the Greens’ leadership selection process was more secretive than those by which the Catholic church chose the Pope.

“I’m proud to lead the only political party that gives its members their say in choosing their leader,” Shorten said in a statement.

Which is true, but of course, Labor’s system meant he was elected when the votes of the parliamentary party outweighed the grassroots membership’s choice.

Richard Di Natale has yet to make a splash, but Shorten and Abbott should worry | Australia news | The Guardian

Age pension eligibility criteria tightened in 'sustainable' overhaul

By political reporter Johanna Nicholson Thursday 07 May 2015

Photo: Scott Morrison says he has been consulting with crossbench senators about alternative savings to the pension system. (AAP: Mick Tsikas)

Related Story: Morrison moves closer to tighter assets test for pension

The federal budget will overhaul the age pension, giving more money to pensioners with modest nest eggs and stripping benefits from wealthier retirees.

The Government said the changes will see 172,000 pensioners $30 better off a fortnight.

About 91,000 retirees who own their own homes and have other assets worth more than $823,000 will no longer get their part-pension.

Social Services Minister Scott Morrison said the changes are about helping those most in need.

"We want the welfare system to be focused on those on greatest need and in the pension system, that's with those with low or modest assets," Mr Morrison told the ABC's AM program.

Assistant Treasurer Josh Frydenberg said the changes make the pension system more sustainable.

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"In fact, 3.7 million pensioners or people with their payments linked to the pension will actually be better off or see no particular change," Mr Frydenberg said.

"That's what we want to keep the focus on, is to help the people most in need."

Mr Frydenberg confirmed the Government will scrap last year's unpopular pension policy, which would have linked pensions to inflation rather than average wages.

Seniors groups claimed it would have left pensioners worse off.

"We are getting rid of the change to the indexation for the pension, which would have affected a large number of pensioners," he said.

"We're changing the taper rates, we're changing the asset-free thresholds and our whole rationale for this is to create a sustainable and fair pension system."

Mr Morrison said the changes, along with some other measures, will save the budget around $3 billion.

The changes are due to come into effect in 2017.

From other news sites:

• The Australian: Budget 2015: Boost for 120,000 seniors

Budget 2015: Age pension eligibility criteria tightened in 'sustainable' overhaul - ABC News (Australian Broadcasting Corporation)

Milne resigns as Greens leader and will not recontest Senate seat

Shalailah Medhora Wednesday 6 May 2015

The Tasmanian senator has resigned as the leader of the Australian Greens and announced the party would hold a ballot for a new leader less than an hour later

• LIVE - Greens decide new leader after Christine Milne resigns

Christine Milne: ‘After 25 years in politics, I am looking forward to spending more time in my beautiful home state of Tasmania, with friends and family.’ Photograph: Bloomberg/Getty Images

Christine Milne has announced her resignation as leader of the Greens, and the party will hold a ballot on the new leadership on Wednesday morning.

Milne said she would not seek pre-selection for her Tasmanian Senate seat.

The party’s health spokesman Richard Di Natale immediately announced his candidacy on Twitter and paid tribute to Milne. The current deputy leader Adam Bandt, the Greens’ sole member of the House of Representatives, was another likely candidate and was seen by bookmakers as the favourite. Western Australian senator Scott Ludlam was also a possible contender, as was South Australian senator Sarah Hanson-Young.

“It is with a mix of optimism, pride, excitement and sadness that I am resigning the leadership and leaving the Senate,” Milne said.

“My decision to resign today is one I made with my family. After 25 years in politics, I am looking forward to spending more time in my beautiful home state of Tasmania, with friends and family, and especially as I am soon to be a grandmother.”

She vowed to continue her advocacy of environmental issues.

“Life after parliament is not, however, life after politics. The fight for action on global warming will continue and I will take my passion, and all that I’ve learned, to that fight standing shoulder to shoulder with the community here, and all over the world, for climate justice.”

Milne took on the leadership role in 2012 after party stalwart Bob Brown resigned.

Greens senator Penny Wright paid tribute. “An extraordinary leader. I am privileged to have worked with @senatormilne - integrity, courage, vision, heart. Thank you, Christine.”

“Christine has been a fearless and courageous activist, politician and leader. Party has grown under her leadership. Sad to see her leave,” tweeted another Greens senator, Lee Rhiannon.

Her resignation caught senior government ministers off-guard. “I’m surprised, and I’ll be very interested to know why,” treasurer Joe Hockey said when informed of the decision.

But Kevin Andrews, the defence minister, tweeted: “Does it really matter who will lead the freedom hating Greens. Their anti-family & community destroying policies remain.”

Tony Abbott, on a visit to Perth, was more conciliatory, praising Milne’s “distinguished record” as a senator and “as the leader of a political party which has considerable influence on the parliament”.

Abbott added: “Obviously, we come from very different political traditions but I respect Christine Milne, as I respect all senior members of the parliament. It takes a great deal of commitment and patriotism to offer to serve in the parliament, to serve in senior levels as Christine Milne has done.

“It is a testament to her commitment to Australia. Even though we have far more often than not been on opposite sides of most political arguments, I respect her commitment. We’ve always had good and cordial relations. I understand that she’s soon to be a grandmother and that’s a marvellous time for any individual and I wish her well for the future.”

Milne said in her statement: “I promised a more cabinet-style, collaborative approach to leadership. I am so proud of the way my colleagues have responded. We are a strong, capable, visionary Greens team.

“We have stood strongly for a safe climate and an end to wealth inequality. We have stood with the community against the cruelty of the Abbott Government, with their first budget resoundingly rejected by the people, and the Senate.”

Christine Milne resigns as Greens leader and will not recontest Senate seat | Australia news | The Guardian

Here's a path to surplus that doesn't gouge the poor

By Greg Jericho Wednesday 06 May 2015

Photo: Next Tuesday we get to see if Joe Hockey's abilities as a trustworthy economic guide have improved. (AAP: Daniel Munoz)

With the budget less than a week away, here's how the Government could reap billions in new revenue each year without targeting the poorest among us, writes Greg Jericho.

Oddly, in the week before the budget the talk about the Government's main economic policy document of the year has generally ignored the economy.

Whether the budget is in surplus or deficit and by how much is certainly important, but it rather gets overplayed. As Joe Hockey found to his detriment last year, the politics of the budget is often more about how that deficit or surplus is to be reached, rather than its overall size.

Last year Hockey's budget clearly hit the poorer harder than it did the wealthy, and the pressure for almost the past 12 months has been for the Government to redress that situation.

One significant reason the budget was viewed as unfair is that as more government welfare spending must axiomatically go to poorer households than wealthier ones, a Government that focuses only (or in the main) on broad spending cuts will invariably hit poorer households more than wealthier ones.

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It's why this year when talk comes to welfare and pensions it is more about targeting specific groups on welfare, rather than general cuts to everyone.

But as I have often noted, there is another side to the budget - that involving revenue.

One problem is that tax increases can hurt economic growth as much as spending cuts do.

In its paper "It's the revenue, stupid", the progressive think tank Australia Institute has looked at a number of ways in which revenue can be raised that will have minimal impact on growth. Crucially as well they are measures that pass the fairness test.

The Australia Institute's paper lists four main areas in which they believe revenue could be increased - superannuation, negative gearing, capital gains tax and a "Buffett rule" tax.

The big topic of discussion on tax this year has certainly been superannuation concessions. Currently the system is such that everyone pays 15 per cent tax on their superannuation contributions, except for those earning more than $300,000, who pay 30 per cent:

Income and superannuation tax rates

This means someone earning between $180,000 to $300,000 a year gets a taxation concession of 30 per cent for their super contributions (excluding Medicare levy and the deficit levy), compared to a concession of 17.5 per cent for someone earning between $37,000 and $80,000

For a bit of context, in the most recent taxation statistics released by the ATO last week, only 2.7 per cent of taxpayers in 2012-13 had a taxable income of more than $180,000.

The Australia Institute argues that as superannuation concessions should be targeted so that they encourage lower to median income earners, it suggests lowering the tax on superannuation contribution to 0 per cent for those earning less than $37,000; for those on $37,001 to $80,000 it would be 10 per cent; for $80,001 to $180,000 it would be 22 per cent; and for those earning more than $180,000 a tax of 45 per cent would apply.

In effect this would remove all concessions for superannuation for those in the top income tax bracket.

The Australia Institute estimates this could raise about $9.6 billion a year in extra revenue, and 60 per cent of households would actually be better off:

Impact of proposed superannuation changes by household income decile

With respect to negative gearing - another issue that has been hotly debated in the run up to the budget - the Australia Institute notes that more than a third of the negative gearing rebates go to households in the richest 10 per cent, and more than half go to the richest 20 per cent:

Distribution of benefits of super concessions, negative gearing, & capital gains discounts by household income decile

The distribution of benefits from the discount on capital gains tax is even more weighted to the wealthy.

Since 1999, a 50 per cent discount on CGT is available if the asset was held for more than 12 months. This meant that only half the capital gain on an investment property was subject to tax.

According to the Australia Institute, nearly three quarters of the total of all CGT discounts goes to households in the richest 10 per cent. Those in the bottom 50 per cent account for only 7.4 per cent.

The Australia Institute proposes to end the CGT discount, and allow negative gearing only for newly built housing, for it to only be deductible for 10 years after purchase of new housing, and to grandfather existing negative gearing for five years.

It estimates these changes would raise about $7.5 billion a year.

The last of The Australia Institute's four major proposals is to enact a "Buffet rule" of income tax. This would place a floor on the amount of tax a high income earner (in this case someone on $300,000 or more) would have to pay.

The Institute noted that the minimum average income tax someone earning $300,000 per year with no deductions would pay is 36 per cent. They thus propose setting the Buffet rule tax rate just below this rate - at 35 per cent.

In effect this would stop those high income earners from being able to reduce their income to such a point that they would actually pay little or no tax - such as the 55 millionaires who in 2012-13 paid no income tax.

The Institute estimates the Buffet rule could raise an extra $2.5 billion a year.

All up these proposals would raise $19.5 billion a year - almost half the projected deficit for 2014-15 of $40.4 billion.

Those hit hardest would be the wealthiest - with $14.1 billion of the total (72.5 per cent) coming from households in the top 10 per cent, and 86 per cent of the revenue from households in the richest 20 per cent:

Income distribution of budget savings of four modelled policies

So next Tuesday will bring talk of surplus and deficits. The key question will be what impact it has on people's lives. After two decades of being told a budget surplus is a good and necessary thing, voters are generally predisposed towards a government attempting to either keep a budget in surplus, or move to it from deficit.

But last year Hockey was unable to convince voters his path back to a surplus was one they wished to walk. Next Tuesday we get to see if Hockey's abilities as a trustworthy economic guide have improved.

Greg Jericho writes weekly for The Drum.

Here's a path to surplus that doesn't gouge the poor - The Drum (Australian Broadcasting Corporation)

My internet hell (part two): there is no escape

By ABC's Norman Hermant  Monday 04 May 2015

Photo: Nine kilometres from the CBD, and I have the same average internet speed as Burkina Faso. (ABC News: Nic MacBean)

Not content to live indefinitely with subpar internet speeds, and with no NBN contractors in sight, Norman Hermant was down to one last shot. The enemy. Telstra.

When I last checked in, some readers will recall that when I moved to West Footscray, in Melbourne, I found myself saddled with slow-mo West African internet speeds. I mentioned that I would eventually psych myself up and attempt to find a solution.

Well, it didn't work. I'm trapped.

After discovering my iiNet ADSL "2 +" service was severely compromised, I decided to investigate options. ADSL was not going to work, iiNet explained, because they rely on Telstra infrastructure to get to the nearest exchange. In my case, that distance is more than 4 kilometres. That's too far for good speeds via ADSL - or as iiNet put it, "Your distance to the exchange exceeds our theoretical operational distance."

Cable internet could be an alternative. iiNet doesn't offer it. But Optus does. Aha. I went online (at work - at home would have taken forever) to the optimistically labelled "Optus Yes" page. I entered my address and was told the good news. I could get connected to ADSL 2+. Yay...

I called Optus and explained the exchange distance issue. Cable broadband was a possible solution. But, Optus explained, they'd have to check. A technician would do a "site drive by" to assess whether they could run a broadband cable from the utility pole across the street into our townhouse. I waited.

The next week, I got a call from Optus. The technician had driven by our townhouse. Incredibly, our neighbour on the right hand side - basically the other half of the townhouse - can get cable broadband. Our half of the townhouse can't.

Perhaps sensing my incredulousness, they sent an email, just to confirm:

Hi Norman,

Following up on our discussion today, your address XXXXXXX FOOTSCRAY WEST 3012 is not serviceable via the Optus Cable network.

We have been advised there are 3 reasons as to why the address is not serviceable -
1. Drop will run across windows
2. Height issue
3. Point of Attachment

We regret to advise that these factors mean a service cannot be delivered to you via Optus cable.

I couldn't believe it. Townhouse B can't get cable broadband, but Townhouse A can? I attempted to shame them, tweeting a picture to illustrate the injustice:

Optus responded:

Norman Hermant @NormanHermant

#WeFo #slonet @Optus says twnhse on rt. CAN get cable internet. Twnhse on left CAN'T. No escape from ADSL crawl.

Optus

✔ @Optus

@NormanHermant We may just need to update our cable records Norman Send details via http://goo.gl/uzTUWR - Tris

10:02 AM - 9 Apr 2015

There was hope! Maybe their map just needed updating. Maybe their technician just drove by too fast. Maybe ... maybe ...? Optus? No. Twelve days later, there was this:

Hi Norman,

I'm really sorry to say that the address: XXXXXXXXX FOOTSCRAY WEST 3012 is not serviceable via the Optus Cable network. There was an investigation as part of your previous contact and our network engineers have confirmed that.

So, I was down to one last shot. The enemy. Telstra.

We had been with Telstra's BigPond service in the rented house we had left. It was not a pleasant experience. But hey, if I could escape my 1.55 Mbps average download "speed" via Telstra cable broadband, I'd give it a shot.

I called up Telstra Broadband sales.

"Cable broadband, sir? I can help you with that," said the very nice saleswoman. "I just need your address".

There was a long wait on hold while she checked with back office. The news was not good. Cable was not available.

"They informed me that Telstra will not be building any more infrastructure in your area since everything will be converted to NBN," she said.

"When?" I asked.

"This area is not yet serviceable for NBN. The timeframe for NBN - I don't have in my department."

Instead, I was transferred to the NBN Department. That's right. Telstra has its own NBN Dept. Not that they can tell you much.

"I was able to check. This area is not yet serviceable," said Ben. He continued in somewhat unorthodox syntax, "I am not able to forecast when will be the expected date."

For more detailed information, he suggested, I should turn to the NBN itself. So, off I went to the NBN "Check Your Address" page.

Here's what I got back:

The rollout of the nbn™ network has not started yet in this location.

Yeah, I kind of gathered that. In a final bid for some sort of timeframe, I waited on hold on NBN's general enquiry phone line. Eventually, I spoke with Nathan.

"Educated guess," he said, "you're looking at a minimum of two years. If they started right now, you'd be at least 18 months."

Trust me. They are nowhere near to starting right now.

So, there you have it. Nine kilometres from Melbourne's CBD, and I have the same average internet speed as Burkina Faso - ranked 195 in the world. And there's nothing I can do about it.

It's going to be a long wait for the NBN.

Norman Hermant is the ABC's social affairs correspondent.

My internet hell (part two): there is no escape - The Drum (Australian Broadcasting Corporation)