Tuesday, 30 April 2013

We are two weeks out from

Budget Day so I thought I would offer some unwanted advice to the government as they do the preparations.
You have been spending more than you earn? Yes, all governments do this from time to time. That is not a concern in itself as long as the money has not been wasted and has been spent with an eye on future income sources.
There could be a problem there. Pink batts insulation scheme? That has not generated any future income has it? Those school halls? No future income generated there either. The new, too big, too powerful Holden? No future income there either. The NBN? Well you say it will generate income but the take up rate is so low and the cost so high that it is looking unlikely.
Right, the Baby Bonus and paid parental leave - paternity as well as maternity leave. Yes, the argument has been that we should all pay for this because children are our future but the economics of this need to be looked at carefully. It may not be the wise use of money it appears to be.
Ah, you have been subsidising child care costs so people can go back to work? Yes, the argument is that we should all pay for this too, again because children are our future. But does that really target the right people? There are suggestions that this might not be the case. The actual economics of this need to be more closely examined as well. 
Then there is the "Schoolkids' Bonus". Wouldn't that money be better spent in other ways that would actually benefit all children?
Oh, I forgot. There is the "First Home Owners' Scheme" - a nice little hand out. Of course the argument is that it helps people buy a new home and provides the building industry with work - but it also means that expectations are high, perhaps too high. People want nothing less than a four bedroom house on a quarter acre block with a rumpus room, family room, patio, swimming pool, low maintenance garden and the sort of white-goods that make it easy to take something from the freezer and zap it in the micro-wave after picking the kids up from day care and after-school care. Well, I exaggerate slightly but I think you understand what I mean. 
I think we need to look at the economics of these schemes and many other schemes. We also need to look at the actual social impact of these schemes. Is the cost low enough and the benefit to the future of our society high enough to justify the expenditure? 
Does the right to go to work also include the right to expect assistance from other taxpayers to pay for the house of your choice,  assistance to pay others for the care of your children?
Finance Minister Penny Wong is now saying that there might be a need to increase the Medicare levy to pay for the National Disability Insurance Scheme. It would, I suspect, raise taxes by a minimum of $6 a week. That will, in turn, bring about a demand for higher wages.  Whether the extra money raised would actually go into the NDIS, get wasted in administration or keeping the noisiest advocates quiet is something else. So far there has been too little detail about how the NDIS might work or what it might cost. It is a political battle ground of "anything you can do I can do better" rather than a carefully thought out scheme for the long term. It will not be the panacea for all disability funding ills that many people seem to  believe. 
And paying for the "Gonski reforms" by taking money from under-funded universities is not the way to go either. We need better teacher training not more money just flung at schools. We do not need smaller classes but better classes in which more is expected and more is done.
For the record, I do think there are ways in which governments should support families with children - but you can have too much of a good thing. We can't afford all of it. We are living beyond our means. 


Anonymous said...

Way beyond our means, and in a speech yesterday the PM said that when your income didn't quite live up to expectations you could max out the credit cards rather than cut your spending. More debt coming?

Anonymous said...

Which just goes to show how well our PM understands economics - not. Chris.