On the eve of a Federal Budget expected to be tight and anything but generous, particularly to those being bundled from welfare and back into the worforce, some Australian economists are examining just how the Howard Government has been spending the extraordinary windfall of 'fresh' taxes collected thanks to the explosion of growth and profits within the resources industries.
ANZ chief economist Saul Eslake is quoted in the Sydney Morning Herald as saying that through the past four years, the Howard Government has hauled in some $97.5 billion in boom-time taxes, but has managed to spend more than $98.8 billion in the same period.
"The resources boom has dropped $100 billion into the Government's lap that they hadn't expected in 2002 and they've spent all of it and a bit more....I honestly and genuinely struggle to find anything that has been done with it bar win elections."Prime Minister John Howard went on a frenzied spending spree in the lead up to the 2004 elections, and many economists were wondering where the money would come from to pay for all the billion dollar splurges. Most of that wildly committed money came in the form of these tax windfalls, but it seems as fast as the billions came in, they went back out again.
We are left with no major improvements to national infrastructure, sections of the national highway that remain blood-soaked death traps, a massive plunge in the number of skilled workers, a mental health system that has left hundreds of thousands of youth caring acting as full-time carers and tagged us with one of the highest suicide rates in the world, few new training programs to up the vital national stock of technically-trained employees and no nationwide rollout of an all-fibre broadband internet access system.
While the 600 million other internet users of the world are rushing into fast-service internet futures, Australia will lag behind countries like South Korea, for years to come.
The $100 billion windfall is well and truly gone. But now interest rates are going up, food prices are soaring, petrol is bubbling to record highs and the housing boom appears to be well and truly over (with the exception of WA).
Are the good times over already? And if so, where did all the money go? There's a bundle of questions well worth asking, and the Federal Budget is not expected to provide a lot of answers, though it will supply numerous clues.
From the Herald : (Eslake) says he wouldn't have minded if the Government had saved up to a half of this windfall, or had spent some of the money boosting the capacity of the economy so it could continue to grow after the period of strong commodity prices was over.
Mr Eslake says they could have improved Australia's long-term growth profile by boosting infrastructure....Other areas include providing some money for the looming problem of an ageing population and funding fundamental reform that was particularly difficult to do, such as tax reform.
"I've got nothing against the Government as such but the resource boom has handed them a great opportunity on a plate. They've spent the money and as far as I can see they've not created anything of lasting value."
Good thing the stock market is in such great shape, and not over-valued by, say, 10% to 30%, as some experts estimate the US and UK markets are.That would really hurt, in the immediate future.
It'll be interesting to see how long Howard sticks around if the economy starts to go sour.
UPDATE : The Federal Budget is expected to allocate some $2 billion to improve the condition of some of the most deadly sections of the National Highway, as discussed in the above story.
There will also be one-off "bonuses" for the young carers described above, but such "bonuses" will amount to no more than $18 extra a week for most of the hundreds of thousands of carers struggling to cope. It's not necessarily cash they're all short of, it's help, it's time off, it's down time. Cash bonuses make no real difference to these very real problems, but they do allow the government to crow about how they've given the carers more money.
Find a big problem, throw some money at it, hope it goes away, or goes quiet for a while....
Women going back into the workforce will be targetted with bonus payments as well, and a concerted effort by the Treasurer will be unveiled to encourage families to have more children, though if the new payments are a bribe, it's a pretty weak one.
Most families already struggling will laugh at the measly $10 a week being offered to help families grow.
It's a very strange thing, although it has been going on in Australia for a few years now, for the Federal Government to offer cash incentives, bribes in short, for young women, and young families to have more children.
It just seems...not right, somehow, and the renewed call from the Treasurer for women to have babies in a volume of "one for the husband, one for the wife and one for the country" is something straight out of a bad science fiction novels from the age of eugenics and muted mass population control programs.
Like I said, it's a very strange thing to hear discussed in our day and age, even stranger when it comes with a cash "incentive".
