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May 3, 2013

Abbott helps Gillard poison his chalice

Cartoon: By Bill Leak 
In supporting a ‘modest’ 33% increase in the Medicare Levy, Tony Abbott has either forgotten the sage words of former Treasurer Peter Costello, or didn’t listen:
"The easiest spending cut you'll ever make is the new spending you don't go into because you're not taking anything away from anybody.”
With the budget in a perpetual black hole scenario ever since Labor took power, and a national debt predicted to be in the order of $300 billion by the time Labor is voted out in September, Gillard has proposed two more big spending initiatives to suck more sustenance out of the economy.  The first is the Gonski Education overhaul or spendathon, and the second is the National Disability Insurance scheme.
Both involve the expenditure of tens of billions of dollars recurrently into the future, and both require substantial funding from the states as well when most are struggling to pare down the debts left after years of Labor state governments.
Some of the left leaning commentators are hyping them in terms of being Gillard’s effort to leave some sort of legacy for the future.  The reality is more likely to be an effort to buy votes in a desperate last gasp, and to saddle the opposition with huge unaffordable commitments when it comes to power after the election.
Even without these schemes, Abbott is going to need to make some really tough decisions if his government is going to achieve a balanced budget in anything like the near future.  While he will have the sort of majority he needs to make such decisions, he will be saddled with the same problem as Queensland Premier Campbell Newman has.
A fair proportion of his majority will be members who only win their seats because of a massive ground swell of anti Labor sentiment.  These will be people who know deep down that they are one term members but hope to swim against the tide of inevitability by trying to avoid being part of tough decisions.
The Liberal Party should not be backing more spending at any time, let alone spending that they will have to pick up the tab for in just over four months.  The first priority of an Abbott government will have to be pulling the economy out of its downward spiral by chopping the current unsustainable spending. 
If the budget can be brought into surplus, there may be room to assist the disadvantaged short of a Rolls Royce scheme.  Education can probably be addressed with an overhaul of the way in which current funding is spent.  There has been substantial increases in the education budget over recent years to no avail, so it seems clear that additional spending is not the answer. 

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