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A politically safe budget lacking in courage to tackle energy prices, fossil fuel profiteering, housing

by Kim Wingerei | Oct 30, 2022 | Comment & Analysis

Jim Chalmer’s first Budget was delivered this week. Politically astute, yet containing few surprises or significant reform measures, it was a budget lacking in courage to tackle the big challenges. Kim Wingerei reports.

The federal Budget is first and foremost a political statement. And even more so when it is the first budget presented by the new Treasurer after Labor’s May election win. There is an overall feeling in Canberra’s press gallery that Jim Chalmers is a steady hand on the tiller of our economy.

Even the AFR hailed the budget’s “admirable moves to slash waste and unnecessary expenditure”, and The Age called it an “aspirational budget.” Some of those aspirations will be hard to implement, though. The promise of at least one nurse in every aged care home round the clock is commendable, except where will those nurses be found? Apart from allowing for modest wage increases, there was nothing announced in the budget to address the shortage of nurses, nor the even more critical dearth of doctors in the regions.

Another glaring health sector omission highlighted by Green’s Senator Jordon Steele-John, was the lack of specific funding for long Covid. $2.6 billion is budgeted for Covid response in general, but nothing for post-viral conditions which experts fear is an underestimated health threat. This is in stark contrast to the United States, where President Biden recently announced $1.5 billion in funding for research and surveillance and appointed a Long Covid Coordinator.

The Australian Medical Association (AMA) is also lamenting the cut of $2.4 billion in public hospital funding over the next four years. AMA President Steve Robson said he was shocked to find that money was being cut when demand for hospital services is at an all-time high:

We know that hospitals are at capacity, with ambulances ramping outside emergency departments and patients waiting years for essential elective surgery … and we know that hospitals are struggling to address the backlog of care that has been created by COVID-19.

According to Health Minister Mark Butler, this is a result of forecast demand from the states as public hospitals remain in the unenviable position of the never-ending funding fight between State and Federal treasuries.

The least anticipated of all the budget measures was the affordable housing initiative. Building one million new homes over five years from 2024 requires a lot more than the best intentions, though. The building industry is hardly keeping up with demand as it grapples with shortages of manpower as well as supply issues.

Then there is the “middle-man” issue, that the government is inviting the investment of super funds in an ambitious “build-to-rent” initiative. When government can borrow more cheaply than super funds and super funds demand a bigger investment return, the issue of profiteering will loom large when the program to ease the homelessness and home affordability crisis rolls out.

An extra $1 billion for fee free TAFE and increased immigration quotas will help solve the labour equation, but how much is the question.

Housing affordability remains one of the most difficult issues in our economy, and no Government of any political colour has shown enough courage in addressing it. Measures such as removal or at least introducing caps on negative gearing are considered political suicide, as is rent control and other market interventions. Leave it to the Reserve Bank to get some inflation happening, increase interest rates and cool the housing “bubble” seems to be the “safe” way of Liberal and Labor economic policy makers alike.

Courage is sorely lacking in other areas, too. As pointed out by MWM, Labor is continuing to subsidise and support fossil fuels, despite the now legislated climate targets. But action speaks louder than words. According to Australian Conservation Foundation CEO, Kelly O’Shanassy:

The Budget [has] continued most of the Coalition’s support for fossil fuel industries, including the Fuel Tax Credits scheme, which subsidises the diesel use of multinational mining companies and will cost taxpayers $39.4 billion over the forward estimates.

Jim Chalmers brings a Budget potpourri: something for everyone, the fossil fuel lobby too

Overall, the Budget did enough to confirm that Labor is fulfilling its election promises, and its commitment to govern responsibly from a budget point of view. And being the first budget in this election cycle, the government did not need to make too many lofty promises. Quite the contrary, Chalmers budget speech was laced with warnings about how dire the economy is, the need for “budget repair” – a euphemism for future spending cuts – and above all the bleak forecasts for energy prices.

Disappointing for some, but expected by most, the Budget did not contain any substantive price reducing measures, except for vague indications of intentions to address things. Or rather, saying what won’t be done – e.g. no introduction of a carbon exports tax or super-profit tax on energy companies – and being at pains to point out how it is out of their control.

Which, of course, it isn’t. But to address it with the only measures that will work – tackling the gas cartel and introducing a domestic reservation policy on the East Coast – even a carbon exports tax – takes real courage. The courage to stand up to the big corporations and multinationals that is, those who are the big beneficiaries of the high prices, the courage to disregard the inevitable cries of sovereign risk from their political donors.

The courage to be different and dare to make real and lasting changes. Real reform.

Better than Buckleys: a real plan to tackle energy prices, climate and the Budget to boot

Kim Wingerei is a businessman turned writer and commentator. He is passionate about free speech, human rights, democracy and the politics of change. Originally from Norway, Kim has lived in Australia for 30 years. Author of ‘Why Democracy is Broken – A Blueprint for Change’.

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