09/05/2012 - 11:10

Look beyond the budget theatre

09/05/2012 - 11:10

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The weight attached to the annual budget, at both a national and state level, goes well beyond their real importance.

The weight attached to the annual budget, at both a national and state level, goes well beyond their real importance.

There was a time, many years ago, when the presentation of the annual budget was a defining event for the government of the day.

It was the document that brought together their spending programs and policy priorities, which were largely set in place for the ensuing 12 months.

Then, during the 1970s and 1980s, governments started presenting mini-budgets, if they decided the policy settings needed to be adjusted mid-year.

These morphed into policy papers with grand titles – things like former prime minister Paul Keating’s One Nation package in 1992 and his 1994 reform package Working Nation.

Over the years, as the world has moved at a faster pace, policy has also evolved more rapidly, to the point where it, increasingly, is made on the run.

Despite this clear trend, there is still a fascination with the annual budget that is out of proportion with its real significance.

Sure, it’s important, there will invariably be some newsworthy policy announcements but does it define the government of the day and does it set a clear path for its future?

Is it not better to step back from this carefully choreographed piece of political theatre, replete with what have become obligatory leaks in the lead-up to the official announcement?

The leaking process seems to reach new heights (or lows) each year. Many details of this year’s budget, including the all-important expected surplus, were well known before the event.

So much so, that treasurer Wayne Swan was selling it, opposition leader Tony Abbott was critiquing and condemning it, and most punters were sick of it, before it had been announced.

Little wonder that a hyperactive press gallery and a cynical public will move on very quickly after the event. This critique applies particularly to the national budget but is also applicable at a state level.

In Canberra, we have had the unhealthy focus on achieving a budget surplus, something Labor felt compelled to deliver.

This has resulted in the perverse situation where politics and perception have been driving economic policy, rather than policy driving perceptions of the government.

Despite the political focus, nobody really expects the budget to make much, if any, difference to the Gillard government’s fortunes.

The die has already been cast. As former Labor powerbroker and current political commentator Graham Richardson observes, people have stopped listening. Their minds are made up.

The Health Services Union scandal, the tawdry allegations surrounding parliamentary speaker Peter Slipper and prime minister Julia Gillard’s leadership will continue to drive perceptions. 

In this context, do we really want to pore over the minutia of the budget papers? 

There are plenty of accounting firms and industry lobby groups doing that and telling us what they think. And they will pick up on small but important changes like the new rules for the living away from home allowance.

But what about the grand sweep of policy reform? What about decisions that have defined the government? We need to remind ourselves of those, if we want to make a considered judgement.

Things like the carbon tax and the planned emissions trading scheme, which will deliver a carbon price of $23 per tonne, higher than any other scheme operating in a major economy around the world but by all reports not big enough to change the behaviour of big industry.

Or the Fair Work Act and changes to the building construction commission, which have tilted workplace power decisively back to unions.

Or the minerals resource rent tax, which is one of the pillars of this and upcoming budgets, even though there are serious doubts about whether the forecast tax payments will eventuate.

It’s worth reminding ourselves how this came about. It started with the Henry tax review, chaired by former treasury secretary Ken Henry.

That was an attempt at long-term, carefully considered and intellectually rigorous reform. The Henry review presented a long and detailed report to government, canvassing a suite of tax changes.

Out of all that, then-prime minister Kevin Rudd and treasurer Wayne Swan selected one proposal, the ill-fated resources super profits tax, which caused a storm of controversy, a change of leader, and a deal with three big mining companies to adopt the questionable MRRT.

That’s the legacy of this government and the 2012 budget will not change much.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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