ANU experts respond: 2015 federal budget

13 May 2015

The budget is very political, reflecting more an 'economic/political emergency', than a 'budget emergency'. It is designed to provide a short-term boost to the economy, and happy to delay the real challenge of dealing with an underlying structure.

Treasurer Joe Hockey handed down the second Abbott Government budget on Tuesday 12 May.

Experts from The ANU have responded to the budget announcement discussing the key issues and the implications for Australia.

POLITICS

Professor John Hewson AM, Tax and Transfer Policy Institute, Crawford School of Public Policy

"The budget is very political, reflecting more an 'economic/political emergency', than a 'budget emergency'. It is designed to provide a significant short-term boost to the economy, and happy to delay the real challenge of dealing with an underlying structural deficit. The proposed surplus by the end of the decade is more the result of ambitious growth assumptions, and hanging on to 'bracket creep', rather than structural adjustment."

ECONOMICS AND TAX

Dr Andrew Hughes, Research School of Management, College of Business & Economics

"This budget is definitely one from the UK Conservative Party 2015 election playbook - sound like Labor, enact Labor policies in the middle to reduce dissonance, but reward the base."

"Labor's negative campaigning against this budget says one thing - this budget took them by surprise. Now that it is out of the way, they'd better start talking positive or else that election winning gap is going to disappear.

"Abbott can be pleased with this budget. He looks safe for now, Turnbull will lose momentum, and he might finally be onto a winner with the child care policy that is all about reconnecting and re-engaging with the marginals. Over to you, Bill Shorten."

Dr Paul Burke, Arndt-Corden Department of Economics, Crawford School of Public Policy

Small-business tax cut:

"A lower tax rate for small business will create a threshold effect and is not economically efficient. Firms will have an incentive to remain below the cut-off (annual turnover of less than $2 million). The change delivers a more complicated and distorting tax system."

Emissions policy:

"At a time of fiscal challenges, it is unfortunate that Australia's emissions policy now involves paying subsidies for emissions reductions. Australia's prior policy of pricing carbon made more fiscal sense.

CLIMATE CHANGE

Associate Professor Frank Jotzo, Director, Centre for Climate Economics & Policy

"The government is planning to spend around 400 million dollars per year paying some businesses for projects that are presumed to reduce emissions. If we had emissions trading, it would bring money into the budget, in the order of $2 billion per year. That is twice the most recent aid cut. And it would provide an economy-wide incentive to cut emissions, not piecemeal subsidies."

HEALTH AND MEDICINE

Professor Archie Clements, Research School of Population Health

"Great to see the Medical Research Future Fund in the budget and no longer tied to a GP co-payment. But the devil will be in the detail, how will the fund be administered? Critically, public health and health services research needs to be central to the MRFF agenda if Australians are to benefit directly from our investment in research."

Dr Liz Hanna, National Centre for Epidemiology and Population Health

"Health organisations delivering vital services to the Australian community are facing funding cuts of essential programs worth $1.7 billion across funded programs over the next 4 years."

"The Australian public will not forgive the attack on health in this latest mean budget.  Expenditure on public health is an investment, indeed a human right. It is not a luxury to be tinkered with. Dollars spent today save between $3 and $30 later in avoided health costs alone. Penny pinching in this way condemns people to the social scrap heap, whereas, if offered support during their time of need, they could serve productive lives.

"The budget continues to pretend the greatest health threat facing humanity is a puff of smoke that will simply blow away. It won't. Ignoring the health effects of climate change, of extreme heat events, of deepening and more frequent droughts ravaging communities, destruction of our productive agricultural land, precious water resources, fisheries, as well as tourist industries will be seen for what it is, a selfish theft of Australia's future. Blow by budget blow this government is weakening our resilience to the challenges ahead."

Professor Hal Kendig, Centre for Research on Ageing, Health & Wellbeing, ANU College of Medicine, Biology & Environment

"It would be nice to think that this marks a turning point for a government in electoral trouble, one that is now charting a path for towards a more mainstream response to population ageing."

"But while these proposed changes have been welcomed by interest groups, they represent a missed opportunity to craft a coherent approach to retirement incomes policy.

"What appears on first blush to be a better policy than the one proposed in last year's budget is, in fact, part of a piecemeal approach that risks taking Australia backwards."

DEFENCE, FOREIGN POLICY

Dr John Blaxland, Coral Bell School of Asia Pacific Affairs, ANU College of Asia & the Pacific

"It's great to see funding set aside for official histories of Australia's involvement in the military conflicts in Iraq and Afghanistan as well as the unprecedented international intervention in East Timor in 1999."

"All of Australia's involvement in armed conflicts since federation have been written about by experienced authors and historians with unfettered access to the official records and most were commissioned at the time or shortly after the conflict concerned. 

"The funding set aside for this project makes amends for the oversight. Nearly sixteen years since the intervention in East Timor and over fourteen years since we first sent combat forces to Afghanistan, a comprehensive explanation of Australia's involvement is overdue. Explaining what happened there, how it happened and why it happened is vitally important for us as a nation. Reflecting on how and why these events came to pass is important not only for the sake of the veterans, their family and friends who live with the legacy, but also for policy makers who grapple with such choices today and tomorrow.

"Australians deserve to be told this important story and with this funding commitment that can happen now."