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#BREAKING Abbott Government looks to populist playbook, also increases military spending in the Middle East, cracks down on things – as debt questions loom.

Tuesday, 12 May, 2015

In higher education and youth affairs, Government also to give higher education funding to private providers, force people living overseas to repay HELP and HECS, introduce work experience scheme – deregulation and cuts not off the agenda.

 

Longtime Farrago political analyst and current co-editor Martin Ditmann on the 2015 budget.

 

The Abbott Government has changed its approach with the 2015 budget – but some items are likely to still prove controversial.

 

The big announcements all seem straight out of the modern American populist playbook – “cracking down” on tax issues and overseas corporations, universalising childcare and tax cuts to small businesses.

 

But notably, debt issues and the government’s military plans seem destined to cause deep division between the left and right of Australian politics.

 

In the area of higher ed, there are two big changes. The first is the government continuing its attempts to give student funding to private providers – an issue likely to cause deep division among the right and left. The second is the government forcing people to repay their HELP debt (including their HECS debt) even when they live overseas.
Fee deregulation and cuts to per-student university funding are still on the Government’s agenda, but barely receive a mention in the government’s budget or publications.

 

The budget marks a noticeable shift in rhetoric from the government – and a shift away from focussing on pursuing big payment changes like fee deregulation and the GP co-payment. The government appears determined to get itself out of the serious popularity issues it has found itself in. Whether this budget will have that result remains to be known.

 

So, what’s happening in the Federal Budget?

 

Policy: Higher education and youth affairs

The overall education agenda

First of all, fee deregulation and cuts to per-student university funding are still on the agenda. Treasurer Joe Hockey says the government remains “absolutely committed” to them. However, the crossbench has repeatedly rebuffed them as a concept and it remains unclear whether the government has a new strategy to get them passed.

 

Instead, other things have taken front and centre in the government’s agenda.

 

Student funding to private providers

The government is continuing with its attempts to extend student funding to private providers. These providers, such as private colleges and TAFEs, would be eligible for the same Commonwealth Grant Scheme (CGS) funding that currently pays 60% of a students’ costs at a university. This would put students at Billy Blue Design College in the same situation as Melbourne Uni students.

 

Proponents of this idea argue that it helps put students on a level playing field and increases flexibility. Opponents argue that it means increasing negative privatisation of education and more money going to less accountable and standard-backed providers.

People living overseas repaying HELP debts

Currently, people living overseas don’t have to repay their HELP debt (including HECS debts) until they return to Australia. That’s set to change. The government says it’s “fairer” and will recover $26 million over four years. “There is no good reason why Australians living overseas earning high incomes cannot pay back what they owe to Australia,” says the Budget’s Fairness in Tax Benefits document. It remains to be seen whether others will agree.
Also: Abolition of funding for the OLT and The Conversation

In addition to these two big measures, two other things may be of interest to students. The government is set to replace the central Office for Learning and Teaching pedagogy advisor with a university-based system. The National Union of Students has already criticised the move in a rapid press release this morning, but it’s unclear whether the move will receive wider backlash.

 

Also gone is funding for The Conversation, the online explainer-based site run by academics.

 

Youth employment payments and welfare

The government will attempt to reduce youth unemployment through a new “jobactive” employment services scheme, which it says includes “a balance of obligations, incentives and assistance”. It also includes a new scheme where youth try a business through work experience there for up to four weeks, while receiving income support.

 

Policy: Taxation, welfare and development

Tax “crackdown”

The government’s “Fairness in Taxes and Benefits” proposals include a wide swathe of “crackdowns” on tax. It promises fighting “tax avoidance by multinationals” (specifically looking at around 30 companies), applying GST on digital goods and services and a new serious Financial Crime Taskforce. It also promises to reduce Fringe Benefit Tax rebates for charities and non-for-profits. The government will also increase some foreign investment regulation, particularly around land, further increasing penalties on some breaches.

 

Small business tax cuts and deduction increases

The government has announced large changes to small business taxation, cutting small companies’ tax rates by 1.5 per cent and introducing deduction changes. Small businesses will now get an immediate tax deduction for assets they buy costing less than $20,000 – with the arrangement continuing until the end of 2017. Questions are already being raised over the potential cost to the government in terms of revenue.

 

Development and infrastructure

The government is funding a swathe of broad spending around development and infrastructure, from roads spending to improving digital records. Perhaps its biggest proposal is its Northern Australia changes – including a $5 billion Northern Australian Infrastructure Facility. The government is promising a “White Paper on Northern Australia”.

 

Its budget documents also say it “remains committed” to the East West Link, despite it being recently scrapped by the Victorian government.

 

Childcare

Universalising childcare is another priority for many governments around the world, emerging as a top issue in the United States, particularly among Democrats. The government is replacing several childcare payments with a single means-tested and capped Child Care Subsidy. It will also spend directly on preschool programmes as part of a “Universal access to preschool” goal and fund a trial of a new nannies scheme.

 

Aged care and pension changes

The government will make adjustments to the age pension – decreasing pensions for higher-asset pensioners and increasing pensions for lower-asset pensioners. It will also continue with attempts that having spanned several governments to reform aged care. The government will increase self-directed care in a voucher scheme, attaching care funding to the person being cared for, not the provider.

 

Policy: Military

One of the government’s biggest announcements in this year’s budget is its “Protecting Australia” agenda. It touts “$1.2 billion in new funding for national security” and cites an increased National Terrorism Public Alert level. Perhaps most notably, the government will spend $750 million on expanding Australian military operations in the Middle East, including $382 million on fighting Daesh (also known as ISIS or ISIL) in Iraq.

Policy: Debt

Ultimately, the government is set to receive hard questions on its management of debt and deficit issues – as well as spending and taxation balances. Moves such as the government’s tax breaks to small business and questions over crucial iron ore prices are set to amplify these questions.

 

Joe Hockey’s 4:30pm press conference saw him defiantly knock back suggestions of the government’s projections around getting back to surplus being too optimistic. Hockey, along with Finance Minister Mathias Cormann, argued that the Australian economy was on its way up, along with the possibility of going into surplus – while repeatedly attacking the economic and financial record of the previous Labor government.