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One more promise to break

29 Feb 2012

As Labor attempts to re-unite after its very public family spat there is one more piece of dirty linen that needs to be aired – the self-imposed strait-jacket that is the government’s pledge to bring the budget into surplus by 2012.

Listening to both the victor and the vanquished shift the focus to, ermm, moving forward after yesterday’s spill, there was a list of good works that the government insisted it will pursue with renewed vigour: at the top of the list disability reform, education funding, health reform.

Labor does have a strong set of progressive policy positions ready to roll – the Productivity Commission report into a National Disability Insurance Scheme will revolutionise the delivery of services to society’s most vulnerable; the Gonski review sets out a radical reshaping of schools funding that will shift resources to the public system, the Productivity Commission has also produced a major report into improving services of aging Australians.

All of these are potentially great Labor reforms that speak to Labor values; they will all set up key sectors for the decades to come and they will all benefit big slices of the electorate.

But they also come with significant price tags – NDIS $6 billion per year; Gonski $5 billion, with $%1.5 billion from he feds) and the less-known Aged Care reforms a further $6 billion.

With Labor tied to a 2010 election promise, reinforced last year, to bring the Budget back to surplus – regardless of external economic conditions – by 2012-13, all these initiatives are likely to be left in the starting blocks. Worthy reports gathering dust.

Walking away from the surplus would clearly be a big call for the Government – it would play out in the tabloids as another lie; and as the PM has learnt to her chagrin despite their low level of trust in politicians, the punters will pounce on a lie.

But in insisting it will deliver a budget surplus, no matter how wafer-thin, the Gillard Government is sucking up to the wrong crowd.

Give voters a choice between concrete improvements in key policy issues and delivering a surplus to the books and you get a very clear answer, as this week’s Essential Report shows.

Q. The Gonski report recommends a $5 billion increase in education funding with $1.5 billion of this additional funding coming from the Federal Government and the rest from the State Governments. If the Federal Government provides this additional funding it may mean they will not be able to return the budget to surplus next year.

Do you think it is more important to provide this additional funding for schools or more important to return a budget surplus?




Vote Labor

Vote Lib/Nat

Vote Greens

More important to provide additional funding to schools





More important to return a budget surplus





Don’t know





This is not just a matter of flaky lefties walking away from self-imposed fiscal confines; indeed Coalition voters are nearly as keen as Labor voters for funds to be released to institute the Gonski reforms.

These findings back more general questions on the budget deficit we asked last November where 69 per cent of respondents favoured delaying a return to surplus if it meant cutting services or raising taxes.

‘Returning the Budget to Surplus’ has become one of those bumper sticker policies that hamstring governments. Like ‘Turning Back the Boats’ it is not only impossible to deliver, it creates a series of knock-on effects that compound the problem.

Worse for Labor, it keeps the economic debate in the abstract frame, the natural territory for conservative governments, rather than placing the economy in its proper context – the forum for improving the lives of ordinary people.

Could they win the argument? Australia’s current debt to GDP ratio is under 10 per cent – many developed OECD nations have levels ten times that rate;  so actually explaining why Australia has set itself this target at a time of falling revenues could shift the conversation.

Indeed, not even Tony Abbott is tying himself to a 2012-13 surplus, so while he would cry ‘liar, liar’ he would not do so from a position of fiscal purity.

Of course, walking away from the surplus guarantee would inflict more pain on a government whose leader already suffers credibility deficit issues. But it might just be that delivering the goods on reform in education, disability and aged care is a better way to establish credibility with the electorate than delivering a wafer-thin surplus as a sop to the business pundits and tabloid press.

After all the hurt and tears for leadership status quo, surely a shift that opened the way for the next wave of social reforms for the young, the aged and the disabled would be a porky worth wearing.