Health is proving a bone of contention in the 2019 election campaign. Labor has positioned health as a key point of difference, and the Coalition is arguing that Labor’s promises are untrue in one case and underfunded in another.
This cheat sheet will help you sort fact from fiction in two key health policy areas: public hospital funding and cancer care.
In his budget reply, Opposition Leader Bill Shorten promised that Labor would restore every dollar the government had “cut” from public hospital funding.
The government counter-claimed that hospital funding has increased. So who is right?
The short answer is both.
In 2011, the then Labor government negotiated a funding agreement with the states for the Commonwealth to share 45% of the growth in the cost of public hospital care, funded at the “national efficient price”. This price is based on the average cost of the procedure, test or treatment.
The funding share was to increase to 50% of growth from July 1, 2017.
At the 2013 election, the then Liberal opposition agreed to match that promise and, indeed, claimed they were the only ones who could be trusted to keep the promise:
A Coalition government will support the transition to the Commonwealth providing 50% growth funding of the efficient price are hospital services as proposed. But only the Coalition has the economic record to be able to deliver.
However, in the 2014 budget the Coalition scrapped its promise. The 2014 budget papers list the savings that were made by the decision. It was a clear and documented cut that the Coalition was proud to claim at the time.
Since then, the Turnbull government has backtracked on the 2014 cuts to health but only to restore sharing to 45% of the costs of growth.
Labor has estimated the impact of the gap between 45% and 50% on every public hospital in the country, and spruiks the difference at every opportunity.
Hospital costs increase faster than inflation because of growth and ageing population, the introduction of new technologies, and new approaches to treatment.
As a result, the Commonwealth’s existing 45% sharing policy drives increased spending, and so Commonwealth spending is now at record levels, albeit not at the even higher levels that Labor had promised.
Labor’s promise is, appropriately, phrased as an additional quantum of money to the states, sufficient to restore the 50% share in the cost of growth.
The details of how this funding should be operationalised to the states should be left to detailed negotiations after the election as it is not good practice for all the details of your negotiating position to be aired in the heat of a campaign.
So Labor is right to say hospital funding is lower than it would have been if the 50% growth share commitment had been maintained. But the Coalition is right to say the Commonwealth is spending more on hospital care than when it came to office.
The second major element of the Labor campaign was a high-profile A$2.3 billion package to address high out-of-pocket costs for Australians with cancer. The package has three key components:
additional public hospital outpatient funding to reduce waiting times
a new bulk-billing item for consultations
more funding for MRI machines for cancer diagnosis.
Labor did not promise to eliminate out-of-pocket costs for cancer, not even for consultations. It claimed bulk-billing would increase from 40% to 80% of consultations.
This promise has led to another showdown between Labor and the Coalition. Health Minister Greg Hunt claims to have found a A$6 billion black hole in Labor’s cancer policy.
The Coalition has produced a list of 421 Medicare items used for cancer treatment – including treatment in private hospitals – and noted Labor has not allocated funds to cover the fees specialists charge for these items.
But Labor rightly claims the 421-item list is not what it promised. Labor’s promise was about increasing the rate of bulk-billing for consultations and is based on a new item which is only available if the specialist bulk-bills.
Expect more claims and counter-claims in the weeks ahead.
School funding debates in Australia are complex and messy. Stakeholders routinely complain about being hard done by. But the real unfairness is that state schools get less government funding than governments themselves say the schools need, and will continue to do so.
Meanwhile, many private schools are already funded at 100% of their target level, and the rest are on the way.
This fails the playground test: the lament of a five-year-old when an adult says one thing and does another. Australian school funding is unfair because it doesn’t live up to its own rules and standards.
Needs-based funding has broad public and political support. David Gonski’s 2011 report stated differences in educational outcomes should not be the result of differences in wealth, income, power or possessions. It’s written in legislation, which defines each school’s target level of government funding, or Schooling Resource Standard.
Under the SRS, every student receives a base amount of funding. When parents choose a non-government school, base funding is reduced according to their capacity to contribute. Students with higher needs attract more funding, regardless of their parents’ capacity to contribute.
No model is perfect, but the structure of the SRS is sound. Schools get more money if their students need it.
Parents can (generally) afford to exercise their right to choose, because non-government schools that serve disadvantaged communities are nearly fully funded by government. Meanwhile, taxpayers save money – at least in theory – when parents opt out of the state school system.
The discrepancies are not random. Government schools educate the bulk of disadvantaged students, but in 2017 were funded at 90% of SRS on average. The non-government school average was about 95%.
Recent analysis by the ABC shows the funding gap grew over the past decade. Because parents pay fees, non-government schools should never get more public dollars per student than comparable government schools. A decade ago, one in 20 private schools did. By 2016, it was more than one in three.
What about the coming decade?
Under the Coalition’s 2017 legislation, federal funding will transition to 80% of SRS for private schools and 20% for government schools. It will be consistent across states – a big improvement. And overfunded schools finally lose funding, something Labor never managed to achieve.
The 2017 legislation also requires minimum contributions from state governments. But based on the recently signed National School Reform Agreement, it looks like most government schools will be stuck at 95% of their target level (20% federal funding, 75% state), while private schools will hit 100% (80% federal, 20% state).
Under Coalition policy, the effective funding for each state school will plateau at 91% of SRS, while non-government schools get full whack. Private schools serving disadvantaged students will continue to get more taxpayer dollars than similar government schools. As a five-year-old might say, it’s not fair.
Labor is on course to deliver fairer funding, having committed to building on the 2017 legislation. Labor should lock in the new model for calculating parents’ capacity to contribute, instigate a broader review of the SRS formula and abolish the Choice and Affordability Fund.
If Labor wins the 2019 federal election, it should leverage its budget war chest to renegotiate the national agreements so states can no longer claim depreciation, transport and regulatory expenditures as part of their schools funding. That would put government schools on track to reach 97.2% of SRS. Not quite full funding, but within touching distance.
For an average government school, the difference between 91% and 100% of SRS is about A$1,500 per student per year. With just half of that money, a typical state primary school could employ two dedicated instructional leaders to improve teaching practice and pay for relief time for other teachers to work with them. Fair funding just might transform the education of the children at that school and the thousands of schools like it.
Prime Minister Scott Morrison is committing A$78 million to protect women and children against domestic violence, in a Monday speech with the theme of “Keeping Australians safe and secure”.
The money includes $60 million – over the next three years – in grants for organisations to provide emergency accommodation for those escaping family violence.
The government says the program will build up to 450 places and help up to 6,500 people annually. It will be structured to get contributions from other levels of government and from private sources.
The other $18 million will go to the Keeping Women Safe in their Homes program, which provides security upgrades and safety planning for women and children who need protection.
“We can’t ask women and children to leave dangerous homes if they have no place to go. And where it is safe, women and children survivors should be helped to remain in their homes and communities,” Morrison says in his speech, a text of which was released ahead of delivery.
He foreshadows more initiatives to deal with what has come to be a central issue for the Australian community. “We have also listened to the front-line workers and survivors throughout the consultations this past year.
“That is why one focus of our measures to be announced soon will be on prevention – on changing attitudes to violence, and on helping those who think violence is an option to stop,” he says.
In his wide-ranging speech covering foreign, local and personal security issues and risks, Morrison says the government has shown “the mettle to make the right calls on our nation’s security”, including by
repairing Australia’s borders
investing in the defence forces
deporting violent criminals
taking on domestic violence
disrupting terrorist attacks, and
restoring powers and resources to police, security and intelligence agencies.
Morrison says the government’s plan to keep people safe and secure “builds on our achievements and addresses the new and emerging threats we face as a country, as communities, families and individuals.
“These threats are both external and domestic.”
He presents a long list: “Regional tensions between the world’s great powers; heightened global instability; stiff headwinds facing the global economy; foreign interference; radical Islamist terrorism; people smuggling; natural disasters; organised crime; money laundering; biosecurity hazards; cybersecurity; the evil ice trade; violence against women on our streets; online predators and scammers; cyber-bullying of our children and elder abuse”.
Our plans and actions are designed to degrade, disrupt and destroy the impact of these threats to our nation’s security.
The government sees the issue of security, in various forms, as a political strength for it. The security plan follows Morrison’s recent speech outlining an economic plan including a commitment to the creation of 1.25 million jobs over five years.
Yesterday morning, the mid-year budget update unveiled research funding cuts of A$328.5 million over the next four years. This budget raid on research was more than double the size expected by the university research community.
This new freeze on growth in research funding and PhD scholarships follows last year’s freeze on funding for student places.
The effect will be felt immediately by the nation’s researchers and their research projects in positions lost and projects slowed, limited or not started. But the damage done will be felt for much longer – in inventions, ideas and opportunities missed.
Why has it been done?
As yet, there has been no adequate public explanation from government, save for two paragraphs in Education Minister Dan Tehan’s media release yesterday:
The decision to pause indexation of research block grant programs for 12 months, along with adjusting growth for RSP (the Research Support Program), will allow the government to prioritise education spending, including on regional higher education.
And this further par:
We have invested over A$350 million since the 2018-19 Budget to support students in regional and remote Australia.
In truth, most of Australia’s regional universities will lose millions of dollars more under the 2017 funding freeze than will be redistributed to them via this latest research cut. And under this new research freeze, they, too, will lose scholarships for PhD students – our next generation of brilliant research talent.
Nationwide, the government will fund up to 500 fewer of these scholarships for PhD candidates next year due to the research funding freeze. That’s 500 fewer people who will dedicate their talent to the creation of new knowledge in the national interest.
The education minister has tried to repair the damage inflicted by the 2017 decision of his predecessor – Simon Birmingham – only to compound the damage with this second freeze. That’s throwing bad policy after bad.
Regional universities were among those hardest hit by the 2017 MYEFO decision to cut funding for student places. And that decision continues to cut deeper each year – it will be felt more in 2019 than 2018, and more in 2020 than 2019.
How this will affect Australian research
The harm this will inflict is manifold.
First, it will cut the research funding program. This scheme enables universities to pay the salaries of researchers and technicians whose work enables ground-breaking discoveries. It also funds keeping the lights on in labs and libraries.
These overheads of research are not funded by competitive grants. For every A$100,000 an Australian university secures in competitive research grants, it must find an extra A$85,000 to be able to deliver that research. Where will universities find these funds?
Second, it will cut the research training program. This funds scholarships for PhD students to enable them to complete their higher degrees – a necessary first step on the way to a career in research. This is a cut into their brilliant careers, and Australia’s future research capacity.
Third, it damages Australia’s standing as a global research leader. Why would a great researcher come to or stay in Australia, when the government has sent a message that, in a time of budget surplus, it’s prepared to cut into research?
Fourth, it will further undermine Australia’s position in research and development investment relative to our economic competitors. China now invests 2.1% of its GDP in research and development – while Australia’s total investment from all sectors in research and development (government, business and research institutions) is now just 1.88% of GDP. China’s economy is ten times bigger than Australia’s, but they’re investing 30 times more than we are.
Our government only spends A$10 billion on research and development each year. Only last Friday, it was revealed Australia’s government spending on research and development was already forecast to fall this year to its lowest level in four decades as a percentage of GDP – to 0.5%. This new research funding cut only worsens this situation.
With the budget in surplus, it makes no sense
University leaders knew research funding was at risk, and so jobs for researchers, technicians and researchers were at risk. But beyond these jobs are the projects they support and the Australians from all walks of life whose lives have or will be transformed by Australian research.
Universities Australia has stories of survivors of stroke, cervical cancer and family violence speaking about how crucial university research has been in the lives of people like them at #UniResearchChangesLives.
With a government budget surplus in sight, it makes no sense to cut the research capacity that will create jobs, income and new industries for Australia.
Malcolm Turnbull is on the brink of a major policy victory after the government mustered ten of the 12 non-Green crossbenchers behind its Gonski 2.0 policy.
The outcome of a week of intense negotiation by Education Minister Simon Birmingham means, barring mishap, the government is set to end this parliamentary sitting on a strong note, at least in policy terms. The Coalition remains in a bad place in the polls.
The new model for schools funding will be much closer to the original needs-based one recommended by the Gonski review, the implementation of which was compromised by a plethora of special deals.
In electoral terms, Turnbull hopes the schools policy will at least partly offset Labor’s usual strong advantage in education. But the fight over schools will still be on, because Labor will be promising a big extra boost to funding.
To get its legislation through, the government has shortened the time frame for delivering funding targets from ten to six years; boosted by $A4.9 billion to $23.5 billion the amount of additional money that will be spent over a decade (including $1.4 billion over the next four years); agreed to establish an independent body to oversee the funding; and endorsed a tight arrangement to prevent states lowering their share of school funding.
In a gesture to a deeply agitated Catholic sector, the government will provide transitional money for it next year, while a review is undertaken of the basis for calculating how much parents should be expected to contribute. Some money will also be available for schools that are part of systems in the independent sector.
This is being couched as transition money so that all systems will come under the new model from the 2018 start. The transition money will amount to $46 million, $38 million for the Catholics.
But the Catholics, who benefited from the previous special arrangements, remain angry. The future political implications of this are yet to be seen.
On Wednesday night National Catholic Education Commission executive director Christian Zahra said that commission representatives had just met with Birmingham who “set out the minor changes” he proposed in response to the Catholics’ “very serious concerns”. But the commission’s position hadn’t changed: the bill “still poses an unacceptable risk to the 1,737 Catholic schools across the country” and should be defeated.
The outcome has left the Greens caught badly short, exposed as under the thumb of the powerful teachers union, the Australian Education Union (AEU).
The government negotiated simultaneously with the Greens and the other crossbenchers. But the Greens were split, unable to finalise a deal even though they did most of the heavy lifting in extracting some major changes and additions to the government’s original $18.6 billion plan.
The result is they’re in the worst of positions. They are unable to claim victory in delivering the more needs-based system. But they have raised the ire of some of their supporters for attempting to reach agreement with the government.
As soon as it knew it had the numbers with the other crossbenchers, the government – unsurprisingly – brought on the second reading vote on the legislation in the Senate.
Greens leader Richard Di Natale said he was disappointed the government had stitched up the deal with the other crossbenchers. The Greens had still been negotiating when the second reading vote was called. “We thought those talks were progressing really well when out of the blue, the bells rang,” he told reporters.
He said the Greens were proud that what they did through their negotiations “was to raise the bar”. But they could not support the “special deal” for the Catholic sector, and had wanted more money for disabled children.
The government is relying on getting the votes of Pauline Hanson’s One Nation, the Nick Xenophon Team, Jacqui Lambie, Derryn Hinch, and Lucy Gichuhi.
Labor has trenchantly opposed the government’s package, saying the $18.6 billion is $22 billion short of what schools would have received under the ALP’s policy.
The opposition’s schools spokeswoman, Tanya Plibersek, says a Labor government would keep the parts of the package that “are practical, like an independent schooling resource body”. It would also retain the cuts to elite private schools.
But Labor has not spelled out how a Shorten government would alter the new model it would inherit and fund more generously.
It says Gonski 2.0 is flawed because it entrenches a skew in federal funding towards non-government schools (traditionally funded by the federal government, which is only the minor funder, compared to the states, of government schools). But that doesn’t deal with the issue of how a Labor government would handle the Catholics.
Labor has taken advantage of the Catholic rebellion. The Catholic sector, having lost the old special deals, would be anxious to extract some new ones from an ALP government that had extra dollars to put around.
So, will Labor give the Catholics any undertakings that in power it would rectify the wrongs it alleges the government will do to the Catholic system? If it won’t, what will be the response of the Catholics?
If, after the dust settles from the Turnbull government making the tough changes, Labor broadly accepts the new model as a basis for its own planned funding, it will have a sound policy position but questions to answer about disingenuous claims we have heard from it in this debate.
They speak to the fact mental health remains chronically underfunded. Mental health’s share of overall health spending was 4.9% in 2004-05. Despite rhetoric to the contrary, funding has changed very little over the past decade.
We lack a coherent national strategy to tackle mental health. New services have been established this year, but access to them may well depend on where you live or who is looking after you. This is chance, not good planning.
The general focus of care when it comes to mental health remains hospital-based services. Inpatient – when admitted to hospital – and outpatient clinic care or in the emergency room represent the bulk of spending. (The Australian Institute of Health and Welfare includes hospital outpatient services under the heading “Community”, which makes definitive estimates of the proportion of funding impossible.)
Outside of primary care such as general practice, or Medicare-funded services (such as psychology services provided under a mental health care plan), mental health services in the community are hard to find.
An encouraging aspect of this year’s budget is the government’s recognition of this deficiency. The largest element of new mental health spending was a commitment to establish a pool of $80 million to fund so-called psychosocial services in the community.
As Treasurer Scott Morrison said in his budget speech, this money is for:
Australians with a mental illness such as severe depression, eating disorders, schizophrenia and post-natal depression resulting in a psychosocial disability, including those who had been at risk of losing their services during the transition to the NDIS.
Yet, the money is contingent on states and territories matching federal funds, meaning up to $160 million could be made available over the next four years if the states all chip in with their share of $80 million. But this commitment was made “noting that states and territories retain primary responsibility for CMH [community mental health] services”. Whether the states agree is another matter.
Partners in Recovery was established in the 2011-12 budget with $550 million to be spent over five years. Personal Helpers and Mentors (along with other similar programs) was established in the same year with $270 million in funding over five years.
With these programs now (or soon to be) cordoned off to recipients of NDIS packages, the 2017 budget measure appears to be designed to offset their loss. However, not all states may choose to match the federal funds. And some may choose to do so but try to use new federal funds to reduce their own overall mental health spending.
States already vary in the types of services they offer. All this raises the prospect that people’s access to, and experience of, mental health care is likely to vary considerably depending on where they live. In a budget espousing fairness, this is a recipe for inequity.
Lack of coherent strategy
The budget does attempt to improve the uneven distribution of mental health professionals by providing $9 million over four years to enable psychology services to rural areas though telehealth. It’s well known mental health services in the bush are inadequate.
This investment seems sensible, but $9 million pales in comparison to spending on the Better Access Program, which I have calculated to be $15 million each week. This program provides Medicare subsidies for face-to-face mental health services under mental health care plans. While this program is available for those in rural areas, accessing it is more difficult than in cities.
This budget’s commitment to mental health shows a lack of an overarching strategy. Rather than offering a coherent approach to mental health planning, this budget continues Australia’s piecemeal, patchwork structure, where the system is driven mostly by who pays rather than what works or is needed.
The development of a national community mental health strategy would be most welcome now. This would demonstrate how the primary and tertiary mental health sectors will join up to provide the blend of clinical, psychological and social support necessary to finally enable people with a mental illness to live well in the community.
You could be forgiven for thinking that, albeit slowly, the well-known problems in mental health across Australia are being addressed. But the small pool of funding in this year’s budget says otherwise. And the lack of coherent strategy is a shame. You can’t complete a jigsaw puzzle if you keep adding new pieces.
The government hopes to save A$632 million over five years from 2016-17 by strengthening penalties for non-compliance in Work for the Dole programs. Failure to meet requirements will result in suspended payments, and then escalating penalties.
Defence spending will rise to 2% of GDP by 2020-21 as the government increases spending by $50 billion over the forward estimates. The Australian Federal Police will receive $321.4 million over four years to support counter-terrorism, and operations against organised drug imports, violent criminal gangs, cybercrime and serious financial crimes.
Foreign aid has risen with inflation to $3.9 billion in the budget, and will rise again to $4.01 billion in 2018-19. However, it will remain at that level for the following two years.
The current broadcaster licence fees will be replaced with new ones, costing the government $414.5 million over the forward estimates.
The Conversation’s experts respond to these and other aspects of the budget below.
A populist attack on welfare recipients
Ben Spies-Butcher, Senior Lecturer in Economy and Society, Department of Sociology, Macquarie University
For a budget that has shifted considerable ground in areas like education and health – and, to a lesser extent, housing – it strongly plays to existing Coalition themes on welfare. These reinforce punitive welfare measures and the divide between the “deserving” and the “undeserving” poor.
There are some mildly positive reforms for older Australians – enabling access to state concessions – and some additional funds to assist single parents return to work. However, it is strongly punitive towards many of the most vulnerable.
The budget seeks to save $4 billion in new “integrity” and “mutual obligation” reforms. There is no funding to increase what is now a tragically low unemployment benefit (Newstart). Instead, there are new enforcement measures. These are largely constructed around drug and alcohol use. They include measures to force more recipients to access their money through a “cashless welfare card” that directs how people spend their money.
More surprisingly, there are harsh measures that include trials of drug tests, harsher breaching rules (that often leave recipients with no income), and even restrictions on accessing support for disabilities related to substance use.
That reflects a very strong populist attack on some of the most vulnerable. It also reaffirms an important political dynamic in Australia: when we frame action for everyone (as we do with health, education and housing), it is much easier to achieve equitable action. And when action is focused on the very poor, the political instinct is to attack.
Aid gets another cut, but not the unkindest
Robin Davies, Associate Director, Development Policy Centre, Crawford School of Public Policy, Australian National University
The Coalition once again cut overseas aid, as it has done now for several years running. However, the cuts in this budget will not be felt for another two years and are smaller in annual terms than those inflicted in the previous two years.
Aid spending will, as promised last year by Foreign Minister Julie Bishop, increase in line with CPI in 2017-18, rising from $3.8 billion to $3.9 billion, and also in 2018-19, when it will reach $4 billion.
For the following two years, though, the indexation of aid to CPI will be suspended and the resulting savings, $303 million, redirected to “other policy priorities” of the government. CPI indexation, according to the government, will resume thereafter.
Since coming to power in late 2013, the Coalition has fashioned five aid budgets, starting with its revision of Labor’s 2013-14 aid budget. In addition, it has now set notional bottom lines for the next three, out to 2020-21.
Over these aid budgets, aid has been or will be cut in real terms six times. The biggest cuts were in the last two budgets, 2015-16 and 2016-17, where aid was cut by 20.2% and 7.4% respectively.
After the reprieve in 2017-18 and 2018-19, when there will no real growth in aid, the cuts resume in 2019-20 and 2020-21 at the modest rate of 2.5% per year. The cumulative cut in aid from 2013-14 to 2020-21 will be 32.8%: basically one-third.
Australia’s aid as a proportion of its gross national income will stagnate at the historically low level of 0.22% for several years, and could fall to 0.2% by 2020-21. Australia’s aid generosity is now very far below the OECD average of 0.32%. We rank 17th among our peer countries on this measure.
It appears that The Australian was taking some dramatic licence when it reported, just before the budget, that:
The Turnbull government will divert foreign aid funds to boost Australia’s intelligence agencies as part of its escalation of the war on terror.
However, it had the basic story about right.
The Coalition pledged in late 2013 to increase aid in line with inflation. Last year, implying that it had finished cutting aid, it revived that pledge.
However, the Coalition has only maintained aid in real terms in two of eight years. While it cannot be claimed that aid is funding domestic policing or foreign intelligence, these are prominent among the “other policy priorities” the government is able to pursue by cutting aid.
No news is good news for defence
Andrew Carr, Senior Lecturer in Strategic and Defence Studies, Australian National University
Defence wasn’t expecting anything in tonight’s budget, and didn’t get it. The 2016 Defence White Paper and the 2016-17 budget both proposed minimal changes for defence in 2017-18. This was not because of a lack of support, but because the ten-year funding plan to raise the defence budget to match 2% of GDP by 2020-21 is largely backloaded, and because the Department of Defence is struggling to spend the funds it already has.
The 2017-18 budget papers’ main change was an efficiency reclaim of $304.1 million over the next four years, aimed at:
… reductions in the numbers of consultants and contractors used in Defence, as well as limiting the costs of non-operational overseas and business travel.
There is also $350 million in support for Veterans Health – an important and popular measure that was announced two days ago.
Freed of the need to devote new significant resources, the treasurer’s speech confidently reiterated the government’s commitment to the 2% target. While there are underlying issues with the notion of tying defence spending with the health of your economy — namely the worse the global situation, the easier the 2% target becomes – this stability itself is welcome.
Over the last decade, defence has seen significant promises of spending and some harsh cuts on budget night. So no news is good news.
Many will also be pleased to see the return to surplus remains a priority. While not a defence measure, this provides additional flexibility and resilience, which could be important for Australia’s security in the unpredictable Trump era.
Government levels the playing field for traditional media
Andrew Dodd, Program Director – Journalism, Swinburne University of Technology
There are no big shocks for the ABC in this budget, as the national broadcaster is only one year into its current round of triennial funding. SBS has won a cash injection to make up for lost advertising revenue, and broadcasters in general have won a reprieve from licence fees.
However, it’s women’s sport on pay TV that seems to have done best of all out of the 2017 budget.
The government has levelled the playing field for media companies that are struggling to compete against internet-based media by abolishing licence fees for broadcasters and datacasters that use broadcast spectrum. However, it is also broadening the revenue base through a new regime of apparatus licence fees for broadcasting spectrum. The change is estimated to cost $414.5 million over the forward estimates period.
The budget provides a “transitional support package” for those licensees who will be left worse off. The Treasury estimates state this:
… support package is estimated to have a cost of $24.8 million over the forward estimates period.
And the Australian Communications and Media Authority will receive a small cash injection to make the transitional support package work.
The budget is also providing $30 million over four years to support:
… underrepresented sports on subscription television, including women’s sports, niche sports, and sports with a high level of community involvement and participation.
In addition, $6 million will be spent over two years to support the development of Australian film and television content.
SBS will get $8.8 million in 2017-18 to:
… restore revenue that could not be raised due to the delayed passage of legislation, which would allow SBS further flexibility in the way it advertises.
Science flies under the radar
Les Field, Vice-President & Deputy Vice-Chancellor (Research), UNSW
Science has largely flown under the radar in a restrained budget, with no big spending measures and no major cuts apart from the university funding changes announced last week.
It is pleasing to see an astronomy partnership with the European Southern Observatory that will ensure Australia’s access to world-leading optical astronomy facilities, as well as new funding and administrative improvements in health and medical research, including the first investments from the Medical Research Future Fund.
It is also positive that the tried-and-tested CRC program will benefit from the government’s advanced manufacturing industry focus. But it was disappointing that the budget didn’t include any of the recommendations of the review of the R&D tax incentives.
There are small decreases in indexation of funding across the forward estimates equating to savings of several million dollars per year in agencies such as ANSTO and CSIRO, and funding programs such as the ARC and NHMRC. These will certainly be absorbed, but will add to the challenge of doing important science and innovation in areas of critical national importance.
The science sector will now look ahead to the 2030 Strategy for Science and Innovation, to be finalised by the end of the year, and the government’s response to the Research Infrastructure Roadmap – which will determine priorities for new capital investment.
John Rice, Adjunct Professor, University of Adelaide
As far as science is concerned the 2017 budget could be described as 2014 budget-lite. There is no vision for the role of science and technology in Australia’s future. Instead what stands out are the cuts to universities and to the CSIRO.
The National Innovation and Science Agenda (NISA) made the 2016 budget very exciting, even if a little disconcerting. There wasn’t much new money behind it and what there was largely reversed the disasters of 2014 and 2015.
But NISA was the kind of vision that we ought to expect from a budget, a vision for the economic direction of the country, one that can guide its productive capacity, meet current challenges and show the way to continuing prosperity.
Where did that vision go? There is none of it in the 2017 budget.
A less-than-enthusiastic electorate reminded politicians there needs to be more to an innovation-driven economy than everyone developing an app. Clearly the average citizen needed to understand where innovation-driven automation and other labour productivity improvements leave them in relation to earning a living.
If the 2017 budget does nothing else it confirms that the government has not risen to these challenges, and has lost its faith. In the face of the electoral blowtorch it has simply melted away.
There are a few modest and sensible initiatives that are a legacy of the 2016 rush of blood. Their gestation has been so long, like the activation of the Medical Research Futures Fund, that you would have expected an elephant rather than a mouse, but they are positive moves nonetheless.
What is seriously disappointing is the cutting of funding to the universities and to the CSIRO. Universities contribute probably more than three-quarters of Australia’s basic research. University research is seriously underfunded, and the underfunding is made up via transfers from other areas, particularly teaching. The cuts will make this worse, which leaves no room, let alone incentive, to engage university research and teaching more with industry.
What this budget represents for science is a retreat from any serious vision for an innovation-based economy, and a return to the unthinking cost cutting of the 2014-15 budgets.
The Turnbull government is seeking to seize the political initiative on schools, with a substantial funding injection and the appointment of David Gonski – who delivered the 2011 landmark schools report – to chair a “Gonski 2.0” review on how to improve the results of Australian students.
A day after announcing university students will pay more for their education, Turnbull unveiled an extra A$18.6 billion in funding to Australian schools over the next decade, including more than $2.2 billion in this budget for the first four years.
Turnbull said that, under the government’s plan, “every school will receive Commonwealth funding on a genuine needs basis”.
At a joint news conference with Turnbull and Education Minister Simon Birmingham, Gonski – who is a personal friend of Turnbull’s – said he was very pleased the government accepted the fundamental recommendations of the 2011 report, particularly the needs basis. The proposed injection of money was “substantial”, he said.
Turnbull and Birmingham said the plan would ensure all schools and states moved to an equal Commonwealth share of the Gonski-recommended Schooling Resource Standard in a decade. The federal government would meet a 20% share of the standard for government schools, up from 17% this year, and 80% for non-government schools (currently 77%).
Birmingham said 24 non-government schools stood to lose money (there would be some transition money for a couple of these schools with a large number of students with special needs). They are among some 353 presently over-funded schools which will be worse-off under the plan than they would otherwise have been. Australia has more than 9,000 schools in total across the government, Catholic and independent sectors.
Pete Goss, the school education program director at the Grattan Institute, said: “We still need to understand all the details but the overall shape of the package is very encouraging.
“The minister has set a clear 10-year goal of getting every school funded consistently by the Commonwealth. The additional funding will help ease that transition.
“Some schools that have been on a great wicket for a long time will lose out – and so they should. This is a gutsy call and it is the right call.”
Goss said he understood there had been “an internal debate” in the government to arrive at this plan.
The announcement is a substantial turnaround for the government, which had previously planned more modest funding, and refused to embrace the final two years of Gonski.
But Turnbull was in full Gonski mode on Tuesday: “This reform will finally deliver on David Gonski’s vision, six years ago, after his landmark review of Australian school education,” he said.
Turnbull is trying to take some of the shine off Labor’s political advantage on education which, with health, was at the heart of its 2016 election campaign. Next week’s budget will attempt to neutralise some of the Coalition’s problems on health, which saw Labor run its “Mediscare” at the election.
Birmingham said that over the next four years there would be growth in Commonwealth funding of some 4.2% per student across Australia – “importantly, most of it geared into the government sector where need is greater and the gap to close in terms of Commonwealth share is larger”.
He said the government would legislate the decade-long program, and impose conditions to ensure states did not lower their funding. “We will be expecting states to at least maintain their real funding,” he said. “This is about real extra money to help Australian schools and students.”
What Turnbull dubbed the “Gonski 2.0” review will recommend on “the most effective teaching and learning strategies to reverse declining results, and seek to raise the performance of schools and students”.
It will advise on how the extra Commonwealth funding “should be used by Australian schools to improve student achievement and school performance”, Turnbull and Birmingham said in a statement.
Another member of the original Gonski panel, Ken Boston, will also be on the review, which will report to Turnbull in December.
The government says its new arrangements will replace the patchwork of agreements left by Labor.
But Labor’s education spokeswoman Tanya Plibersek said this was “a smoke and mirrors, pea and thimble effort to hide the fact that instead of cutting $30 billion from schools over the decade, this government will cut $22 billion from schools over the decade”.
“The big picture here is that in the 2014 budget, Tony Abbott promised a $30 billion cut to our schools and in the 2017 budget, Malcolm Turnbull wants a big pat on the back for changing that cut to a $22 billion cut,” she said.
“A week out from the federal budget this is taking out the trash,” she said. “They want clear air on budget night.”
There seems to be an ever present struggle for a share of the revenue government collects, not only between states but also between the different levels of government.
In each year’s budget, the federal government allocates funds for federal programs (such as defence) and for some programs operated at a state level (such as school education, public transport, and hospitals). It has this role because it also collects more revenue from taxpayers than the states.
The reason for this all relates back to (at least in part) the Australian constitution.
The division of power between the federal and state governments
The federal parliament can only legislate (that is, make laws) in certain areas, known as “heads of power”, most of which are listed in sections 51 and 52 of the Constitution. This gives the federal parliament the power to legislate with respect to matters such as defence, external affairs, immigration, invalid and old-age pensions, and marriage.
In contrast, there is no equivalent limit on the legislative power of the states. The states may legislate in any area. However, section 109 of the constitution provides that where there is an inconsistency between a federal law and a state law, the federal law will prevail. In simple terms, this means that if the federal parliament has made a law dealing with a particular matter, state governments are unable to legislate in ways that conflict with the federal law.
The federal government’s control of revenue
The state and federal governments all have the power to collect tax, subject to some exceptions. Notably, section 90 of the Constitution gives the federal government exclusive power over the lucrative revenue streams of customs and excise duties (taxes on goods, such as alcohol, tobacco and fuel).
Until the Second World War, Australians paid income tax to both state and federal governments. However since 1942, the federal government has been the sole collector of income tax.
The federal government has also collected company tax for over 100 years, and the GST since 2000. The states could still collect income tax if they wanted to, but choose not to for political reasons.
Prime Minister Malcolm Turnbull tried to explore the possibility last year of both the federal and state governments collecting income tax, but this was quickly rejected by the states. While the states generate some revenue – for example through gambling, property and payroll taxes and mining royalties – they are unable to collect anywhere near the same amount as the federal government.
This creates a “vertical fiscal imbalance” between the federal and state governments. Conversely, the federal government is in the opposite position: while the federal government collects extensive revenue, its power to spend and directly fund programs is more limited.
Testing the government’s power to spend on certain programs
Until recently, the federal government thought it could spend money more or less as it pleased. However, the High Court clarified and restricted the federal government’s power to spend money and limited its ability to fund directly some programs.
Its power to spend was tested in 2012 and 2014 in two legal challenges to the government’s funding of the national school chaplaincy program. Prior to the legal challenges, the federal government had entered into agreements with religious service organisations – such as Scripture Union Queensland – to provide chaplains in schools.
The High Court held that (with some small exceptions) the federal government’s power to spend money is limited to where the authority to spend money is expressly conferred by legislation. The legislation authorising the spending must also be supported by one of the “heads of power” granted to the federal parliament by the constitution.
In the case of the chaplaincy program, the court rejected the arguments that the legislation could be supported by the power in one section of the Constitution to make laws for the “provision of…benefits to students” or by the corporations power in another section of the Constitution. To continue the funding of the national school chaplaincy program the federal government turned to the states for assistance.
How the federal government gives money to the states
Section 96 of the Constitution provides for the federal government to provide a significant proportion of its revenue to the states:
…the Parliament may grant financial assistance to any State on such terms and conditions as the Parliament thinks fit.
This distribution of revenue takes two forms – general revenue assistance (“untied funding”) and payments for a specific purpose (“tied funding”).
The untied funding that states receive from the federal government is largely made up of the money that the federal government collects from the GST. The states can spend this money as they see fit.
However, the passing on of the GST revenue is not unconditional. It’s conditional on the states giving up the collection of a number a number of states taxes.
The federal government may also provide funding to the states for a specific purpose. The states have to consent to receiving the funding (which is not usually a problem), but it does mean that the federal government cannot impose programs on the states that they vehemently oppose.
This funding is tied to a particular project, where the federal government provides the funds and the state carries out the project. Grants such as these have been used regularly to fund education and health projects in the states. These specific purpose grants may be conditional on states meeting regular reporting requirements or achieving certain milestones.
Providing funding to the states through specific purpose grants allows the federal government to have great influence on policy areas that have traditionally been within the purview of the states.
The federal system of government created by the constitution divides power between the federal and state governments. While at times this might seem inefficient, it also provides checks and balances on government spending.