Zen and the Art of Budgetary Malfeasance (Part 2)

Last time, I spoke about Labor spinning its line on how it is running a “temporary” deficit and expecting us to swallow it. Today, I’m looking at how we are spending this mountain of debt, or to put it another way, what we are getting for maxing out the credit card.

Prior to this budget, we had two stimulus packages – when K-Rudd sent out around 22bn in cash to every man and his dog. By dogs I really do mean dogs as people who left estates to animals in the last year got the cash. Not to mention foreigners who have worked here and bothered to do a tax return. And blokes in prison (they were paid in cigarettes). Oh yeah and also a lazy 14bn on well – painting schools.

That’s about 35bn on basically crap.

I’m not saying that the stimulus didn’t work or cushion the economy a little, but there was evidence that a lot of this cash was saved or used to retire debt which is exactly what you would expect normal people to do when they face uncertainty about their jobs and futures. Of course some of it would have been spent, or rather pissed up against a wall to put it bluntly.

To me this is just like a big night on the cans. Sure it’s fun at the time - you have a few laughs maybe even get lucky. But what do you have to show for it the next day? Nothing really, apart from a bloody big hangover. So right away we have dropped 35bn and have nothing to show for it apart from everyone being digital TV ready and nice shiny school assembly halls all over the country. Now that’s what I call nation building.

Thankfully, the largesse continued in this week’s budget with a 22bn “Nation Building Centerpiece” (see The Hollowmen Series 1, Episode 4 for an incredible example of life imitating art). Naturally, it has its own ridiculously slick, self-indulgent interactive website complete with long and pointless videos of various ministers explaining how they are generously spending money we don’t have. At least this is something that we can point to when we wonder where all the money went.

It’s no wonder K-Rudd wants us all to have fiber-optic broadband in our homes.

Like I mentioned in Part 1, I don’t pretend for a second that I understand the nuances of macro-economic theory but I would have thought reducing the cost of doing business, like say a temporary payroll tax reduction or easing the administrative burden on small business, would be a better way of keeping punters in jobs.

Moving onto the budget itself, I was struck by its inherent internal inconsistency. Whilst a 58bn deficit is certainly stimulatory and right for the times, at the same time we were told that we had to make tough choices i.e. reduce spending which is of course has the opposite effect. No doubt this is a difficult balancing act but what is missing are any sort of coherent arguments or explanation apart from grand sweeping statements about “nation building” and “taking hard decisions”.

It’s a measure of the hubris of this government that we are all expected to swallow everything they dish up as though they are the only ones in possession of all knowledge in this country. This includes going so far as to leave open the possibility of an early election if anyone dare oppose any budgetary measure.

On the specific issue of the private health rebate being means-tested, the very same tax payers received a tax-cut. Apart from the stupidity of potentially putting extra pressure on the already stressed public health system, why break one election promise ahead of another? Surely deferring or reducing tax-cuts - a “hard choice” that was talked about prior to the budget - is medicine that the electorate would be happier to swallow in the name of everyone pulling together in this difficult time.

A second large measure was the increase in the aged pension (can’t really argue with that) but at the same time it was made less tax effective to save for your own retirement through changes to concessional and co-contribution super arrangements. Yep that makes heaps of sense with an aging population and decreasing birth-rates. This budget definitely addresses structural problems in the government’s finances and is not at all self-serving and short-sighted.

This brings me to my final point – just what is Labor’s pathway to getting us back in the black? Well listening to them it’s pretty clear they simply don’t have one. Just saying that you have a pathway doesn’t mean one exists (or that you know what you are doing). Maybe K-Rudd and Swanny have been reading ‘The Secret’. Ironically though, it does actually have precedence: it’s the classic Homer Simpson problem solving technique (Homer Goes to College, episode [1F02]).

Nerd: What are you going to do, Mr. Simpson?
Homer: Actually, I've been working on a plan. During the exam, I'll hide under some coats, and hope that somehow everything will work out.

I don’t think it gets anymore Zen then that.