Did you notice what was different, really different, about the budget this year?
This budget, and the debate around it, was not just about looming deficits, the need for belt-tightening and why now is the right time for company tax cuts.
For the first time I can remember, this budget was about what kind of Australia we want and how to pay for it.
The lead up to the budget was dominated by a huge public discussion around calls for a 25 per cent gas export tax. And while there was no gas tax in the budget, questions about why the government didn’t implement this no-brainer revenue-raising measure have dogged the Prime Minister and the Treasurer in post-budget interviews.
What was in the budget was a genuine attempt to address the housing crisis through reforms to expensive and unfair tax concessions for capital gains and negative gearing. Not only will this slow growth of house prices, but it will raise revenue for the government.
This is different. Usually, budget coverage is all about what should be cut. This year, we talked about how to raise revenue. If you’re not a budget tragic, this may not seem like that big a deal, but it is a big shift. There was far less squabbling over what had to be cut (I’ll come back to the NDIS, don’t worry), and far more discussion about how more money can be raised. And the focus has been on raising revenue in equitable ways, unlike regressive tax reforms which would hit the poorest the hardest, such as increasing the GST.
This shift is important because Australia has a revenue problem. We are a low-tax country that does not raise enough cash for the services we want, need and deserve.
Australia may not feel like a low-tax country if you work for a living, but that’s because workers do pay a lot of tax here.
By contrast, Australia has no tax on pollution. Australia barely taxes wealth (though removing the 50 per cent capital gains tax discount is a good start). And state and federal governments choose to subsidise the fossil fuel sector to the tune of $16.3 billion a year. That means, every year, we collect around $140 billion less in taxes than the OECD average. That’s a lot of missing tax revenue.
The gas tax debate again shows how much has changed. Australia chooses to give half our gas exports away royalty-free and, unsurprisingly, charging a gas tax is popular with everyone from Greens voters to One Nation voters. Just a few election cycles back, Tony Abbott won an election campaigning to “axe the tax”. Now the public chants “tax the gas”. It’s quite a narrative shift.
Talking about revenue changes the nature of the conversations Australians are having for the better. If budgets now include conversations about how we can pay for the services we want, it opens up a really different public debate in this country than when we limit ourselves to “living within our means”.
Australia Institute research shows a 25 per cent tax on gas export could raise around $17 billion a year, which is a lot of money. It certainly puts the $15 billion a year cuts to the NDIS into sharp perspective.
The massive cuts to the NDIS announced by Health Minister Mark Butler are expected to impact the most on people who are visually impaired, those with long-term mental health conditions like bipolar and schizophrenia, and people with Down syndrome – because, God knows, they’ve had it too good for too long. Time to tighten their belts.
Talking about the $17 billion a year in revenue a gas export tax could raise, reveals the ugly truth: Australia can afford an NDIS that helps people with blindness or low vision to leave the house more than once a week. We just need to make different choices. If we can change the tax settings for property investors (long overdue), we can certainly change the tax settings for gas export companies too.
But all this talk of revenue, and shifting the balance more towards taxing wealth than taxing work, has definitely ruffled some feathers. The Daily Telegraph likened the budget to the communist manifesto, while a piece in Nine papers lamented that “the fiscal hawk has become an endangered species … They shared a view that tax cuts and social spending – popular as they might be – are secondary to balanced budgets and low public debt. In the global blaze of populism, the fiscal hawk lost its habitat.”
The irony is that the cause of much actual habitat loss for real endangered species is fiscal hawkishness. Inadequate environmental budgets contribute to species loss. Cuts to the NDIS make life worse for people with disability. Inadequate spending on housing contributes to homelessness.
But fiscal hawks aren’t interested in solving these problems. For them, the budget is the problem and cuts to social services are always the solution.
Good riddance to them. The budget and the economy can serve Australians first; a budget surplus or deficit is an economic tool, not an end in itself. Achieving a balanced budget does not win any prizes, but delivering social services like hospitals, aged care and the pension make a material difference to the lives of millions of Australians each and every day.
As Richard Denniss said in his book Econobabble, “Like a waiter explaining a menu, economists can help explain the choices available, and can help us understand the cost of the different options, but just as it is not the job of a waiter to tell us what to eat, it is not the job of economists to tell us what we must do”.
Australia can afford to anything it wants, but it can’t afford to do everything it wants. Determining what’s most important should always be a democratic conversation, not an economic one. If future budgets start with a discussion about the kind of Australia we want, and then a conversation about how we can raise the revenue required to achieve that vision, we’ll all be better off.
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