Government spending explained in 10 charts; from Howard to Turnbull


Alan Duncan, Curtin University and Rebecca Cassells, Curtin University

Successive Australian governments are usually judged on how they balance the budget and spend taxpayers’ dollars. The stereotypes are that Liberal governments keep a tight hold on the purse strings, while Labor governments are spendthrifts. The Conversation

While total government spending has increased from around A$240 billion in 1998-99 to a predicted A$451 billion in the 2016-17 financial year, it’s also accompanied by an increase in revenue from around A$250 billion to A$417 billion over the same period.

But the pressure on the budget under a Turnbull government is more acute now than ever before, because spending is outpacing revenue. It’s now at an estimated 26.6% of GDP in 2016-17, higher than at any point since before the start of the millennium.

When you look at the mix of government spending over the past fifteen years, you start to see some of the drivers of the growth.

To compare spending over time, we have adjusted for the effect of inflation by using real measures.


The Conversation/Emil Jeyaratnam, CC BY-ND

Social security continues to dominate government spending at A$161.4 billion, constituting around 35% of all government outlays on latest figures. This has fallen from a high of 39% during the Rudd government stimulus package in 2009-10 and is similar to levels at the beginning of the millennium.

In the graph below “other” spending includes the distribution of GST revenues to states and territories as well as spending in areas such as job seekers assistance, industrial relations, vocational training, tourism and immigration. This constitutes the second highest share of government spending, at 18% (A$83.4 billion) of the total spend. General revenue assistance to states and territories accounts for two thirds of spending in this category.

Governments spend almost as much on defence and public safety (around A$32.6 billion) as they do on education (A$34.3 billion), although the states ultimately pick up most of the education bill.

The global financial crisis saw a temporary blip in the mix of general government spending. Social security spending rose by 22% in the year to June 2009, and education expenditure jumped 60% a year later as a result of Rudd’s economic stimulus package.

Government spending on public debt interest has more than tripled in real terms to A$15.4 billion since the start of the global financial crisis, and now accounts for 3.7% of all government spending.


The Conversation/Emil Jeyaratnam, CC BY-ND

Many of the changes in real government spending between 2008 and 2010 were driven by the impact of the global financial crisis, which resulted in a slowdown in economic growth, rising unemployment and a negative hit on the sharemarket.

The Rudd government response was a stimulus package. The main spending increases came from a combination of accelerating public debt interest, increased payments to assist the unemployed, but mainly the government’s stimulus measures channelled through increased spending on education, housing and cash payments to families.

If a spending measure is truly temporary, a rise in real spending should be followed by an equivalent fall in subsequent years when the spending runs out or the program ends. This is evident to some degree for the social security and welfare and fuel and energy portfolios, but less so in other areas.

For example, the 45% rise in fuel and energy spending in 2008-09 was primarily driven by the introduction of the Energy Efficient Homes package within the Rudd stimulus suite. The scheme ended in February 2010, resulting in a 33% drop in spending.

On the other hand, spending on education rose by A$16 billion as part of the Rudd stimulus package, but remained A$10 billion higher than pre-global financial crisis levels in subsequent years.

Overall government spending has continued to grow since 2010-11, but less dramatically than during the heart of the global financial crisis, by around 8% in real terms over the five years to 2015-16.


The Conversation/Emil Jeyaratnam

Social security and welfare spending constitutes the largest spending commitment of any government budget. It has risen by 70% in real terms over the past fifteen years, from A$91 billion at the turn of the millennium in 1999-00 to A$155 billion in 2015-16.

The biggest welfare spending is for assistance to the aged, families with children and people with a disability. Together, these three items make up almost 85% of all welfare spending.

The 2008-09 Rudd stimulus package had a substantial yet temporary effect on welfare spend, with “bonus” cash payments to families in the 2009 calendar year increasing assistance to families by around A$10 billion. Additional cash payments were also made to students, pensioners and farmers under the stimulus program. And 8.7 million Australian workers earning $100,000 or less also received a cash payment.

Australia’s ageing population and increases in both disability prevalence and disability support are the main driving forces behind welfare spending growth. These factors will continue to exert pressure on future government budgets, especially with the full rollout of the National Disability Insurance Scheme (NDIS).


The Conversation/Emil Jeyaratnam, CC BY-ND

More than 40% of the government’s 2015-16 health budget of around A$71.2 billion was committed to community health services spending. At A$28.7 billion, spending in this sector has nearly doubled since the start of the millennium and by a quarter since the start of the global financial crisis in 2008-09.

This stems from the need to deliver medical services to a growing – and ageing – population, and the increased prevalence of chronic disease. In this respect, Australia is little different to most countries around the world.

Specific measures contributing to this growth included the expansion of health infrastructure, the costs of enhanced primary care attracting higher Medicare rebates, and indexation of health related payments to states and territories. Pharmaceutical spending increased by 12%, from A$1.4 billion year-on-year to A$12.1 billion in 2015-16.


The Conversation/Emil Jeyaratnam, CC BY-ND

Education spending rose dramatically during the global financial crisis, with spending on primary and secondary education increasing 81% to A$24.7 billion in the year to 2009-10 as part of the economic stimulus package.

Rudd’s “education revolution” led to a 12% growth in education spending in the 2008-09 budget, quickly followed by a further 61% spending increase in 2009-10 as part of the economic stimulus package. Spending in the following year fell as the temporary stimulus measures came to an end, but overall, education spending has remained significantly higher in real terms than pre-global financial crisis levels.

Spending on the university sector rose to around A$10.9 billion over the same period, but has remained relatively stable since.


The Conversation/Emil Jeyaratnam, CC BY-ND

Federal government money given to the states and territories

The federal government committed A$60.8 billion in general revenue assistance to states and territories in 2015-16, almost all of which came through the distribution of GST revenue. General revenue assistance spending rose A$3.8 billion in real terms in 2014-15, up 7% on the previous year, but has since stabilised.

Spending on superannuation interest has grown by a quarter since the end of the Howard years, reflecting the increase in the government’s superannuation liability. Lower public sector wages and employment have led to superannuation interest payments stabilising over the last two budgets to around A$9.4 billion in 2015-16.

Immigration spending rose between the Gillard and Abbott governments to a peak of A$4.7 billion in 2013-14, but has since fallen back to around A$3.8billion in 2016 dollars.

Much of the growth in immigration spending occurred during the Rudd and Gillard governments, by an average of 23% annually. This compares to an average of 7% during the previous Howard years. Additional government spending on detention facilities for irregular arrivals was the principal reason for this spending growth.

Natural disaster relief spending spiked between 2009 and 20-11 to assist with the damage and recovery costs from the Black Saturday bushfires in Victoria in 2009, and the 2010 Queensland floods.


The Conversation/Emil Jeyaratnam, CC BY-ND

Government approaches to supporting various industries has typically been applied on an ad hoc basis. Budget spending on specific industries has risen from A$3.2 to A$5.6 billion in real terms. Agriculture, forestry and fishing typically received a greater share of industry spending during the Howard budgets, reaching a high of A$4.8 billion in Swan’s final 2007-08 budget.

Growth in industry spend slowed during the Rudd years, picking up again with the Gillard and Abbott governments, with a greater preference towards spending in mining, manufacturing and construction projects.


The Conversation/Emil Jeyaratnam, CC BY-ND

Spending on housing and community amenities has increased from A$2.7 billion to A$7.6 billion, reaching a high of almost A$12 billion in the Rudd years. Spending in this portfolio increased with the Rudd stimulus package, incorporating a number of housing affordability measures including the First Home Buyers Grant Scheme and a boost in investment in social housing.

Spending on sanitation and protection of the environment also expanded rapidly during the Rudd/Gillard government, relative to the Howard years. The establishment of the Climate Change Action fund introduced by Rudd in 2009-10 and the Clean Energy Futures package in 2010-11 have been the main drivers behind this increase. Spending in each has been pared back since the Liberals came to power with Abbott at the helm.


The Conversation/Emil Jeyaratnam, CC BY-ND

Commonwealth spending on transport and communications projects has more than doubled from A$3.1 to A$7.5 billion over the last 15 years. Spending remained relatively stable under Howard’s government, and then got a further injection on roads in the last two Swan budgets. The Rudd government continued this trend, with Gillard following suit with increases in both road and rail projects.

Spending in this portfolio has been clawed back since the Abbott government, falling from A$9.2 billion to A$7.8 billion between the final Labor government budget (2013-14 financial year) and the first Liberal government budget (2014-15 financial year). The most recent Turnbull/Morrison budget has reaffirmed spending commitments under this portfolio, committing to more than A$11 billion in 2016-17.


The Conversation/Emil Jeyaratnam, CC BY-ND

The Howard/Costello years were characterised by good economic times, with an extended period of strong revenue growth, yet this prosperity wasn’t matched with any significant spending growth. In fact, overall government spending fell as a share of GDP – from 25.7% in 2000 to 23.6% in 2006-07 – the lowest share since the start of the millennium. And the combination of strong revenue and limited spending commitments under Howard drove down public debt, and public debt interest payments.

We saw some pretty dramatic increases in real spending when Rudd came into power in December 2007. Rudd’s first budget in 2008-09 saw some substantial spending commitments in the area of education but nothing exorbitant.

However, the major turning point in government spending has been driven by the response to the global financial crisis. There were significant spending commitments over the course of the crisis, some of which are still present.

Spending on public debt interest has increased to A$15.4 billion since the global financial crisis – more than the spending on transport and housing combined. And it’s projected to increase further to A$18.7 billion by 2019-20. This just emphasises how high the stakes are for Scott Morrison in delivering a credible budget repair strategy.

The spending of incumbent governments inevitably draw from the commitments of previous administrations, especially for those programs – in infrastructure, education or housing – that involve medium-term funding commitments.

The growth in real spending in areas that directly affect households – social security, NDIS, health or pensions – is an issue that no government can ignore. NDIS costs have been hugely underestimated already, and social security and health spending will inevitably increase with the ageing population.

Set against this context, it’s clear that a piecemeal approach to budget repair is unsustainable. A drop in revenue has ramped up budget pressures, and highlights the compelling need to return to a sustainable spending path and a credible budget repair strategy.

The Turnbull government cannot shy away from making the big decisions that secure a sustainable future for Australia. And the roadmap towards a sustainable future has to include revenue as well as spending as part of the recovery narrative.


The graphs in this article were created by The Conversation’s Multimedia Editor Emil Jerayatnam

Alan Duncan, Director, Bankwest Curtin Economics Centre and Bankwest Research Chair in Economic Policy, Curtin University and Rebecca Cassells, Associate Professor, Bankwest Curtin Economics Centre, Curtin University

This article was originally published on The Conversation. Read the original article.

Government out of touch on housing policies ahead of budget: poll


Ben Phillips, Australian National University

Australians are concerned about housing affordability, so much so that 45.4% say they would be willing to see the value of their home stop growing to improve the situation, only 31.8% of those polled wouldn’t. An ANU poll shows 51.7% of Australians are also in favour of removing tax concessions like negative gearing. The Conversation

The poll surveyed 2,513 people (representative of the population) and found 63.6% were willing to see an increase in supply of public housing. Only 32.3% are opposed to relaxing planning restrictions.

With these numbers in mind, it is perhaps surprising that state and federal governments have done so little of any substance in housing policy for decades, if anything they’ve contributed to the problem rather than improved the situation.

Potential policy changes that many believe will improve housing affordability, including removing or reducing tax incentives such as the capital gains tax discount or removing supply impediments, have all been considered too politically difficult by the current government.

The government has justified this by playing to the fear that the value of people’s home may decline or that more liberal planning arrangements may mean that new buildings may spoil the look and feel of local neighbourhoods.

The latest ANUpoll shows Australians are very concerned that future generations may be locked out of home ownership. Three quarters believe home ownership is part of the Australian way of life.

In terms of their own investments we found that nearly 68% of homeowners cite emotional security, stability and belonging as a reason for becoming a homeowner. In terms of security factors, 51% cite financial security, 42% refer to “renting is dead money” and 41% cite security of tenure and being able to “bang nails in the wall”.

Of those families who have an investment property (17% in this poll) the primary motivation for the investment was a “secure place to store money” (27.4%) closely followed by rental income (24.3%). Only 11.9% cited negative gearing as the primary motivator and 13.7% were motivated primarily by the capital gains discount.

Housing remains easily the most popular investment vehicle, with 30% saying their preferred investment for spare cash would be an investment property, followed by 18.5% preferring to upgrade their own home. Only 12.6% preferred shares as an investment.

In spite of recent talk of a housing bubble the general population is not particularly concerned with immediate price drops, with 85% expecting house prices to rise over the coming five years. Only 5.4% expect prices to fall and just 1.7% expect prices to decrease a lot.

If interest rates were to increase by 2 percentage points, 6.4% of mortgage holders expected to be in “a lot” of financial difficulty and 16.7% in “quite a bit”. Only 27.9% would be in no difficulty. While financial difficulty does not mean default, in mortgage markets it may not take a large share of loans to default to cause financial problems for an economy.

As pointed out earlier negative gearing was the least cited reason for property investment which suggests removing the incentive would at least not make a dramatic difference to the level of housing investment in Australia.

The ANUpoll shows that the public are concerned about housing affordability and where policy is directed at improving affordability they are likely to be supportive. The policy options, be they demand side – reducing tax incentives, or supply side – building more dwellings and/or relaxing planning restrictions, are available, but greater political nerve may be required to undertake such options.

Ben Phillips, Associate professor, Centre for Social Research and Methods (CSRM), Australian National University

This article was originally published on The Conversation. Read the original article.

How the politics of the budget might play out for a government in trouble



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This budget, led by Scott Morrison and Malcolm Turnbull, will form part of the government’s repositioning as an advocate of equal opportunity and fairness.
AAP/Mick Tsikas

Carol Johnson, University of Adelaide

Given months of polls that show Labor ahead and damaging internal disunity, the politics of this budget are extremely tricky for the government to manage. The Conversation

It is not just that Tony Abbott’s sniping is causing political headaches for Prime Minister Malcolm Turnbull. Some of the government’s budget problems go back to the 2013 election.

In that campaign, Abbott suggested the budget deficit problems would be easily fixed by simply getting rid of Labor, and the government could somehow do so painlessly without cutting health, education or pensions.

However, as then-treasurer Wayne Swan had noted, Australian budget deficit problems were very complex and included substantial falls in government revenue due to the global financial crisis and the end of the mining boom. They weren’t just due to government spending.

Opponents criticised the size of the Rudd government’s expenditure, including its economic stimulus package designed to counter the GFC. Nonetheless, Kevin Rudd argued that Australian government debt was in fact relatively small compared with many other Western countries in a post-GFC world.

Once he won office, Abbott had to face the difficult realities involved in reducing the deficit. The substantial 2014 budget cuts, including to areas Abbott said would be protected, infuriated many voters and contributed to his poor polls and political demise.

The Abbott government’s woes went beyond the failure to fix a difficult budget situation. Other than attacking Labor, it wasn’t clear what its positive vision for the Australian economy was in terms of how to transition after the mining boom, and how to develop new jobs and new industries at a time of rapid economic and technological change.

Tony Abbott’s sniping continues to cause headaches for Malcolm Turnbull.
AAP/Sam Mooy

Replacing Abbott with Turnbull was meant to provide us with such a positive economic vision. However, Turnbull’s mantra of living in innovative and “exciting times” failed to convince many voters. As one anonymous Liberal MP noted, it actually made some voters highly nervous about what was going to happen to their jobs.

Hence Turnbull turned to promising “jobs and growth” during the 2016 election campaign.

However, the Coalition’s narrow win suggested many voters still weren’t convinced the government knew how to ensure job security and a good standard of living in challenging times. In particular, many voters remained unconvinced that substantial business tax cuts would drive the economic growth and improved government revenues that were promised.

Given current levels of underemployment, unusually low wages growth and with inequality increasing, they had reason to be concerned. There is also international research suggesting that corporate tax cuts don’t have the beneficial results claimed.

Fast forward to the 2017 budget, and the Liberals are desperately trying to develop a more convincing economic narrative around good economic management, nation-building, and fairness.

Despite their attempts to blame past Labor policy and more recent Labor intransigence at passing budget cuts in the Senate, Liberal ministers are still having trouble explaining how government debt has increased from A$270 billion under Labor to some $480 billion under the Coalition.

Fortunately for them, Treasurer Scott Morrison now argues there is “good debt” and “bad debt”. Good debt covers areas such as infrastructure that assists economic growth. Bad debt apparently covers areas such as welfare.

Morrison is partly belatedly accepting advice on infrastructure-funding debt from bodies such as the International Monetary Fund, while trying to argue that the government’s new debt policies will be very different from past Labor economic stimulus ones.

Needless to say, these areas of “good” and “bad” debt aren’t quite as simple to define as Morrison suggests. Furthermore, so called nation-building infrastructure spending is sometimes more electoral pork barrelling than economic necessity. Doubts have already been raised over the economic, rather than political, benefits of a second Sydney airport and inter-capital city rail links.

The NBN: ‘good debt’ or ‘bad debt’?
AAP/Mick Tsikas

Meanwhile, Turnbull struggled to explain whether Labor’s National Broadband Network was good or bad debt in terms of building necessary infrastructure.

Australian businesses that are struggling with Turnbull’s cheaper version, with its continuing use of 19th century derived copper wire technology or 1990s pay-TV-derived hybrid fibre coaxial cable technology may be wondering whether the Coalition should have discovered “good” infrastructure debt earlier and supported Labor’s more expensive fibre-optic to-the-premises model.

After all, under Rudd, the NBN was meant to be the nation-building 21st century equivalent of 19th-century government infrastructural expenditure on building railways.

Consequently, the government faces questions about whether its economic policy positions have been consistent, particularly given past Coalition rhetoric about debts and deficits.

Furthermore, while Morrison apparently characterises it as bad debt, providing temporary welfare benefits for those who lose their jobs because of economic downturns or restructuring helps keep up consumption levels. This in turn means it potentially has flow-on benefits for the private sector, as well as the individuals concerned.

It is a central lesson of the Keynesian economics that Robert Menzies’ Liberal Party embraced at its foundation, but was rejected under John Howard in the 1980s.

Does all of this mean that Turnbull is now acknowledging a lesson of the 2016 election: that neoliberalism is harder to sell than it used to be? Are his backdowns on “small-l” liberal values now being combined with back-downs on some of his long-held free-market values?

That seems to be going too far at present, especially given the government’s continued belief in the “trickle-down” benefits of corporate tax cuts and attacks on welfare expenditure.

However, there is some nuancing taking place as Turnbull tries to throw off the image of “Mr Harbourside Mansion” who loves hobnobbing with bright young technology entrepreneurs, and instead stress he is in touch with the concerns of ordinary voters.

Consequently, and much to Labor’s outrage, the government has now repositioned itself as an advocate of equal opportunity and fairness that supports a Gonski-lite needs-based education funding model.

While the government’s cuts to higher education will still have a negative impact on universities, and particularly students, the measures are less harsh than those in the 2014 budget.

It seems likely there will be some attempt in the budget to assist first home buyers. Various options have been canvassed.

Turnbull has already tried to position himself as taking action on household energy costs by criticising renewable energy costs and ensuring gas reserves. Meanwhile, there are suggestions the government will improve Medicare benefits in an attempt to counter Labor’s controversial “Mediscare” campaign at the last election.

All budgets are about politics, not just economics. But this budget will be even more so. Not all the measures are working out politically. Abbott is already threatening dissension over the impact of the education measures on Catholic schools.

This is a government in trouble. On one side it faces internal disunity and pressure from Labor’s emphasis on reducing inequality and fostering “inclusive growth”. On the other it has One Nation’s mobilisation of race and protectionism to appeal to the economically marginalised.

Then there is Cory Bernardi, the Greens, Nick Xenophon and a host of independents and other groups to consider.

After all, the budget is only the beginning. The next test is getting key measures through the Senate, perhaps even wedging Labor by deals with the Greens, so that the Coalition is in a stronger position to face the next election.

Carol Johnson, Professor of Politics, University of Adelaide

This article was originally published on The Conversation. Read the original article.

Government to build second Sydney airport



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Malcolm Turnbull expects the second Sydney airport to inject more than $1.9 billion into the economy during construction.
AAP/Lukas Coch

Michelle Grattan, University of Canberra

The federal government has confirmed it will build Sydney’s second airport after the Sydney Airport Group, owner of Kingsford Smith, announced on Tuesday it would not take up its right of first refusal to construct and operate the Badgerys Creek airport. The Conversation

Sydney Airport Group chief executive Kerrie Mather said despite the opportunities the new airport would present, “the risks associated with the development and operation are considerable and endure for many decades, without commensurate returns for our investors”.

Next week’s budget will give details of the western Sydney project, which will be part of the budget’s major infrastructure focus.

The government has been paving the way for the airport project and its plan to inject funds into a Melbourne-to-Brisbane freight line by distinguishing between “good” and “bad” government debt. In broad terms, it says “good” debt is for investment that brings growth, while “bad” debt is borrowing for recurrent spending.

In a joint statement, Malcolm Turnbull and Urban Infrastructure Minister Paul Fletcher said the project was vitally important for western Sydney, Sydney, and the nation.

They said the airport would inject more than A$1.9 billion into the economy during the construction phrase. “It is expected to deliver 9000 new jobs to western Sydney by the 2030s, and 60,000 in the long term,” they said.

They said the government had been planning for either the acceptance or rejection by the Sydney Airport Group, and was “well positioned to move forward”.

Jennifer Westacott, chief executive of the Business Council of Australia, said often governments had to step in for the early stages of a nation-building project but that always should be a catalyst for private sector investment in the longer term.

Michelle Grattan, Professorial Fellow, University of Canberra

This article was originally published on The Conversation. Read the original article.

The government’s multicultural statement is bereft of new ideas or policies – why?



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Malcolm Turnbull often claims Australia is the world’s most successful multicultural nation.
AAP/Lukas Coch

Andrew Jakubowicz, University of Technology Sydney

The slogan for the federal government’s newly released multicultural statement – United, Strong, Successful – sounds somewhat like a soundbite from Donald Trump’s presidential campaign. The Conversation

It starts with an untruth – that Australia is the world’s most successful multicultural nation. Canada would win that race on any rational criteria. But the new policy stays fairly much in the place where government rhetoric has been located for the past generation – social control and integration.

Conservative multicultural policies in Australia tend to stress social integration into the pre-existing social order, aspirational core values, and signing on to “Team Australia”. More progressive policies tend to stress social, economic and political participation, social justice, and access to education.

What’s in it and where did it come from?

Labor’s last multicultural policy in government in 2011 began with similar statements about multiculturalism meaning a fair go. It noted the importance of reciprocity and recognition. It also emphasised the rule of law and the importance of English as the national language.

The policy created an anti-racism partnership. Its key message was social inclusion.

Since then, a parliamentary committee on migration unanimously supported key innovations in its 2013 report. These included a strong national research program, the promotion of multiculturalism as a policy of rights, responsibilities and obligations in community languages, the promotion of inter-faith and intercultural dialogue, and a focus on employment-related issues.

The Federation of Ethnic Communities’ Councils of Australia, a peak body of many multicultural groups, has criticised the Coalition government’s new statement for not tackling the need for either a national Multicultural Australia Act – which was first foreshadowed in 1989 – or a national language policy. This would mirror some of the benefits created for Canada by its own legislation from the early 1980s, and in the Australian states since 1978.

The statement accepts many of the traditional rhetorical elements of the multicultural narrative. “Fair go” reappears, for one. Three groups of values are presented – respect, equality and freedom. These grow from the seven values espoused by the Howard-era Citizenship Council report and the four principles in Labor’s policy.

However, the statement has no interest in social justice. Multiculturalism seems to depend on maintaining the Nauru and Manus Island offshore detention options in order to have strong borders.

In the examples given of how multiculturalism is being implemented, the anti-racism strategy created by the previous government and continued until now is no longer mentioned. The statement offers no new policy initiatives – only a beefing up of the surveillance and integration priorities.

The idea that cultural difference creates productivity which ensures greater wealth and prosperity perhaps reflects Prime Minister Malcolm Turnbull’s input.

“Multiculturalism” as a philosophy is never mentioned. “Multicultural” is defined through its application to a lot of people of different cultural backgrounds living in the same society.

What now?

The statement claims the government will “condemn people who incite racial hatred”. But the ongoing attempts by many government MPs to reduce the protections Section 18C provides against this suggest the level of racial hatred that will be condemned will need to meet a much higher test than now exists.

There is something for nearly everyone in the rhetoric. Even One Nation likes it. But there’s nothing for anyone in terms of new ideas or actions.

The statement’s main effect will be inaction. The critical need for an Australian Multicultural Act to ensure a strong espousal of values and strong and funded delivery to implement them has once more been rejected.

The sector is left without any program bite, just more rhetoric. Its limited and highly vulnerable projects can be abandoned at the government’s whim.

Multicultural Australia remains on the very edge of government, the most junior of the junior assistant ministries. It’s dependent for any movement on weak product champions for its cause scattered through other parts of government.

There’s much ado about not very much at all in this announcement. And key areas like anti-racism are always at risk of disappearing in the next round of budget savings.


Further reading: Interculturalism: how diverse societies can do better than passive tolerance

Andrew Jakubowicz, Professor of Sociology, University of Technology Sydney

This article was originally published on The Conversation. Read the original article.

How the law allows governments to publish your private information



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Controversy has recently surrounded Centrelink and its handling of ‘overpayments’ and personal information.
AAP/Dave Hunt

Bruce Baer Arnold, University of Canberra

Recent controversy over the government’s use of information provided to Human Services and Veterans’ Affairs demonstrates there are major holes in Australia’s privacy regime that we need to fix. The Conversation

Australians are accustomed to providing personal information to federal and state governments. We do it repeatedly throughout our lives. We do so to claim entitlements. We also do so as the basis of public administration – the contemporary “information state”.

In making that state possible we trust we will not be treated as a file number or an incident. We will not be doxed.

A key aspect of that trust, consistent with international rights law since the 1940s, is that our privacy will be protected. We assume officials – and private sector entities they use as their agents – will not be negligent in safeguarding personal information.

We also assume they will not share personal information with other agencies unless there is a substantive need for that sharing – for example, for national security or to prevent harm to an individual. And we expect they will not disclose personal information to the media or directly to the community at large as a way of silencing criticism or resolving disputes.

Australia has a sophisticated body of administrative law and ombudsmen. So, there is no need for public shaming of people who disagree with ministers, officials or databases.

The complicated and inconsistent body of privacy law highlighted by law reform commissions over the past two decades attempts to provide legal protection for personal information. It is overseen by under-resourced watchdogs that – amid threats of termination – are inclined to lick the ministerial hand that feeds them.

That law has major weaknesses, illustrated by the Centrelink controversy and the furore over the Veterans’ Affairs Legislation Amendment (Digital Readiness and Other Measures) Bill. The Commonwealth is able to ignore ostensible protections under the Privacy Act and other statutes. That is quite lawful. It has been so for many years, evident in the watchdog’s finding in L v Commonwealth Agency.

The watchdog’s guidelines state that where someone:

… makes adverse comments in the media about the way [a body] has treated them … it may be reasonable to expect that the entity may respond publicly to these comments in a way that reveals personal information specifically relevant to the issues that the individual has raised.

Put simply, if you complain publicly about a Commonwealth agency that holds personal information relating to you, that agency can lawfully give the information to the media or publish it directly. It can do so to correct what the minister deems to be “misinformation”.

There is no requirement that your complaint be malicious, fraudulent, vexatious or otherwise wrong. Disclosure is at the minister’s discretion, not subject to independent review. You have no legal remedies unless it could be proved that the official was malicious or corrupt.

We have seen such a disclosure. The Department of Human Services gave personal information to a journalist for publication about a person who disagreed with action by Centrelink to recover an alleged overpayment of an entitlement.

There has been much discussion in the media and the national parliament about the vigour with which the government is seeking to recover overpayments. Worryingly, it remains uncertain whether many of the alleged overpayments actually exist.

Ongoing changes to entitlements policy, the hollowing out of key agencies by the annual “efficiency dividend” (that is, ongoing cuts to budgets) and problematical design and management of very large information technology projects mean overpayments might not have occurred.

Public disclosure of someone’s personal information thus looks very much like bullying, if not a deliberate effort to chill legitimate criticism and discussion of publicly funded programs.

The veterans’ affairs minister and the shadow minister have apparently not done their homework. The new Digital Readiness Bill – passed in the House of Representatives but not in the Senate – allows the minister to publicly disclose medical and other personal information about veterans. The rationale for that disclosure is to correct misinformation.

Understandably, veterans are unhappy. Legal practitioners and academics wonder about the scope for public shaming through release of department information that might not be correct.

The national Privacy Commissioner has been complacent. Labor’s veterans’ affairs spokeswoman, Amanda Rishworth, has belatedly expressed concern. The minister has simply referred to the establishment of an independent review by the Australian Government Solicitor and his department. It is difficult to understand why privacy wasn’t properly considered before the bill went into parliament.

There are too many loopholes in Australia’s privacy regime. Government agencies also need to toughen up in the face of criticism – legitimate or otherwise – and not respond by bullying people through publication of personal information.

Bruce Baer Arnold, Assistant Professor, School of Law, University of Canberra

This article was originally published on The Conversation. Read the original article.

Tony Abbott says government’s challenge is ‘to be worth voting for’


Michelle Grattan, University of Canberra

Tony Abbott has laid out his policy alternatives to make the next election “winnable” for the Coalition, in a provocative speech that again highlights his differences with Malcolm Turnbull. The Conversation

The former prime minister said the government should say to the people of Australia that it would cut the renewable energy target, reduce immigration, scrap the Human Rights Commission, stop all new spending, and reform the Senate via a referendum held with the next election.

Launching Making Australia Right, a book of essays by conservatives edited by James Allan, Abbott brought together several proposals he has previously argued for.

He took aim at the government’s current signals about the future direction of its energy policy, and attacked its preservation of the 23% Renewable Energy Target (RET), which was negotiated in his time as prime minister.

“The government is now talking about using the Clean Energy Finance Corporation to subsidise a new coal-fired power station – creating, if you like, a base-load target to supplement the renewable target,” he said.

“We subsidise wind to make coal uneconomic so now we are proposing to subsidise coal to keep the lights on. Go figure.”

“Wouldn’t it be better to abolish subsidies for new renewable generation and let ordinary market forces do the rest?”

“Of course that would trigger the mother of all brawls in the Senate, but what better way to let voters know that the Coalition wants your power bill down, while Labor wants it up?”

Abbott said the government’s challenge was “to be worth voting for” and to “win back the people who are giving up on us”.

“In or out of government, political parties need a purpose. Our politics can’t be just a contest of toxic egos or someone’s vanity project.”

The next election was “winnable”, he said, outlining the pitches he saw as needed to secure that win.

“If we stop pandering to climate change theology and freeze the RET, we can take the pressure off power prices.”

“If we end the ‘big is best’ thinking of the federal Treasury, and scaled
back immigration – at least until housing starts and infrastructure have caught up – we can take the pressure off home prices.”

“If we can take our own rhetoric about budget repair seriously and avoid all new spending and cut out all frivolous spending, we will start to get the deficit down.”

“If we refuse to be the ATM for the states, there might finally be some microeconomic reform of our public education and public health systems.”

“If we stopped funding the Human Rights Commission and leave protecting our liberties to the parliament, the courts and a free press where they belong, we might start to look like the defenders of western civilisation that we aspire to be.”

Speaking on Sky, Abbott said that “plainly there are lots of people concerned about our direction” and warned “the risk is we will drift to defeat if we don’t lift our game”.

He also criticised Turnbull’s decision to stay in his own home in Sydney.

“I think it would be a better look if the prime minister did live in Kirribilli House,” he said. He understood Turnbull not wanting to be a burden on the taxpayer but “by trying to avoid being a burden to the taxpayer, in the end, you end up costing the taxpayer more”.

When he was prime minister Abbott was reluctant to move from his own home to Kirribilli but was persuaded to do so.

https://www.podbean.com/media/player/j795u-67fef0?from=yiiadmin

Michelle Grattan, Professorial Fellow, University of Canberra

This article was originally published on The Conversation. Read the original article.

After all the talk, what is the Turnbull government actually doing for small business?


Martie-Louise Verreynne, The University of Queensland and Thea Voogt, The University of Queensland

Treasurer Scott Morrison continues to warn about the decline of Australia’s global competitiveness if the centrepiece of the 2016–17 federal budget – a company tax rate cut – is not passed.

However, such tax cuts are not necessarily the best approach for the government to support small business. They need other – more immediate – forms of support, our research shows.

What’s being proposed?

The 2016-17 budget reflected the Turnbull government’s catchphrase of “jobs and growth”. From a small-business perspective, the budget wanted to:

… boost new investment, create and support jobs and increase real wages, starting with tax cuts for small and medium-sized enterprises, that will permanently increase the size of the economy by just over 1% in the long term.

In 2014, Australia had the fifth-highest company tax rate among OECD countries, albeit average in the Asia-Pacific region. Local investors benefit from lower taxes on dividends through Australia’s dividend imputation system, which passes credits onto them for corporate taxes already paid.

The Abbott government later succeeded in lowering the tax rate for small businesses with a turnover of less than A$2 million from 30% to 28.5%. The Turnbull government’s plan would eventually reduce the rate for all companies to 25% by 2026-27. It’s a phased implementation over the next ten years, starting with an immediate cut for small companies to 27.5%.

However, 70% of small businesses are unincorporated. This means their owners add profits to their personal income for tax purposes. While the government has promised an increase in their tax offset percentage, it plans to retain the cap of A$1,000.

All small businesses will benefit from the simplification of tax rules for stock, GST and depreciation. But the government’s plan introduces three levels of concessions for small businesses. This complicates the definition of what these small businesses are.

Definition disputes

Defining small business goes beyond an academic debate.

With little consensus on typical turnover numbers – these range from A$2 million to A$25 million – a better indicator could be the Australian Bureau of Statistics definition of small businesses as those with fewer than 20 employees. And 97% of the 2.1 million businesses trading in Australia fit this definition.

It is risky, though, to simplify the definition into one blunt instrument that ignores differences in industry, life cycle and high-volume versus high-worth sales. A more nuanced approach is needed to ensure relief for the businesses that need it most.

However, the major political parties seemingly remain focused on turnover as a measure of what is and isn’t a small business. The government’s plan extends the upper limit for the turnover of small businesses to A$10 million by 2016–17, which covers some of the 3% of Australia’s non-small businesses.

Meanwhile, Labor has argued for immediate support for tax cuts to small businesses with a turnover of less than A$2 million.

Lifting the turnover threshold for all small businesses from A$2 million to A$10 million in the short term will increase the number of businesses that can access some tax concessions by 90,000. And it may improve economic growth as larger firms receive some relief.

What small businesses actually need

Small businesses need immediate and certain tax relief in the short term. They struggle with an uncertain business environment.

But, in the longer term, our research shows increased competition, a lack of market demand and red tape are but a few of the issues small businesses deal with. They highlighted statutory and regulatory compliance, as well as tax planning and compliance, as major issues for them.

More than tax rates, complex tax requirements and regulations are issues causing small businesses substantial distress. The Australian Tax Office’s research supports this: more than 70% of surveyed clients viewed their tax affairs as complex. And the World Bank’s ease of doing business index ranks Australia 25th in terms of ease of paying taxes.

The immediate tax relief for small businesses is tied up in proposed legislation surrounding the government’s ten-year tax plan, which is unlikely to find enough support to pass the parliament in its current form. The uncertainty and complexity that have ensued from the political conflict over tax have negative effects on the small business landscape.

Innovation is likely to suffer under such uncertain conditions. The government’s plan recognises that:

Small businesses are the home of Australian enterprise and opportunity and they are where many big ideas begin.

In addition to ideas and passion, small businesses need resource availability, appropriate capabilities and market access to innovate. The plan proposes measures that satisfy some of these criteria, but more focus on finding ways to minimise bureaucracy to provide time to focus on innovation is needed.

The role of government is undeniable in such initiatives. Even if one argues that tax relief is a temporary reprieve, this cash injection can jump-start small business innovation and growth.

Should the two major parties fail to find common ground on the government’s company tax cut, the stalemate will continue – and leave small businesses in the lurch.

The Conversation

Martie-Louise Verreynne, Associate Professor in Innovation, The University of Queensland and Thea Voogt, Lecturer in Tax Law, The University of Queensland

This article was originally published on The Conversation. Read the original article.