Tough and unfair: Business as usual
This Australian budget isn't as bad as Labor will claim and the Liberal heartland will privately think. It's undoubtedly the toughest budget since John Howard's post-election budget in 1996, but it's hardly austerity economics.
I give Joe Hockey's first budgetary exam a distinction on management of the macro economy, a credit on micro-economic reform and a fail on fairness.
Although Hockey has laboured hard to ensure few sections of the community escape unscathed, the truth is most of us have been let off lightly.
Only those people right at the bottom of the ladder have been hit hard - unemployed young people, the sick poor and, eventually, aged and disabled pensioners - but who cares about them? We've been trained to worry only about ourselves, and to shout and scream over the slightest scratch.
Someone in the top 4 per cent of taxpayers on A$200,000 ($217,000) a year will be wailing over the extra A$7.70 a week they'll be paying in tax. A single-income couple with kids will be losing a lot more than that, while someone under 30 denied the dole for the first six months will lose A$255 a week.
And everyone will be angry about the resumption of the indexation of fuel excise, so worked up they forget it will raise the price of a litre of petrol by about one cent a year.
Anyone surprised and shocked by the budget can be excused only if last year's election was their first. Any experienced voter who allowed themselves to be persuaded that "Ju-liar" Gillard was the first and last prime minister ever to break an election promise should pay their A$7 and ask a GP to check for amnesia.
If you thought a man who could promise "no surprises, no excuses" was a man who could be trusted to keep his word, more fool you.
Any experienced voter who didn't foresee that changing the government would mean this year's budget was a stinker, isn't paying enough attention.
Labor supporters want to believe that because Hockey and Tony Abbott are exaggerating about a "budget emergency" and "tsunami of government spending", we don't really have a problem. They are refusing to face reality.
After running budget deficits for six years in a row, we faced the prospect of at least another decade of deficits unless Hockey took steps to bring government spending and revenue back together. Failure to make tough decisions wouldn't have turned us into Greece, but since when was that the most we aspired to?
This budget is Abbott's admission that his claim to be able to balance the budget without increasing taxes was no more than wishful thinking. The Liberal heartland, however, schooled for years to give its selfishness free rein, is having trouble facing this reality.
Hockey's problem was that, with the economy weak and with big declines in spending on mining construction still to come, sharp cuts in government spending or big rises in taxes could have slowed the economy to a crawl.
This is why some of the biggest savings he announced - particularly on the age pension - have been timed not to take effect until 2017. It's also why he put so much emphasis on increasing spending on infrastructure, particularly by the states.
The economy is expected to be a lot stronger by the time Tuesday's measures take full effect. This carefully measured approach is what wins Hockey high marks for macro-economic management.
He claims his reforms will improve the economy's performance. His best measures along those lines are the increased competition between universities, the concessional loans to TAFE students, the grants to encourage youngsters to complete their apprenticeships and the grants to encourage employment of people over 50.
But some measures are likely to make things worse rather than better. The A$7 patient co-payment for GP visits and tests is certainly likely to discourage visits - more by the poor than the rest of us - but if it dissuades people from seeking help until their medical problems are acute it may end up costing the taxpayer more than it saves.
The planned tighter means-testing and much less generous indexation of pensions will be defensible only if the planned review of the tax system leads to big reductions in the superannuation tax concessions going to retirees far too well off to get the pension.
Sydney Morning Herald