Budget 09: Where’s my share?

Generation Y cop a pretty bad reputation as being completely self absorbed and without any understanding of self sacrifice, prepare to see this stereotype thrown out the window for the next 72 hours as the 2009 federal budget launches the biggest wave of bitching, moaning and baseless self pity seen since the Collingwood cheer squad were interviewed for the Footy Record.

This year’s budget is going to be disappointing for lots of Australians who have spent the past few years being conditioned to think that the federal budget is all about what new handout they will be receiving. During the mining boom, Peter Costello as Treasurer was lucky enough to receive enormous revenue from corporate taxation, which he then used as an electoral tool to bribe voters with handouts and tax cuts. The result of this as that our tax mix is heavily reliant on corporate tax receipts, which is fine during a booming global economy, but suicidal in the long term as the economic cycle inevitably turns, leaving a huge revenue shortfall.

The deficit budget that will be handed down tonight is due to the revenue shortfall caused by an over reliance on corporate taxation. We are all about to have to take our medicine for the unsustainable tax cuts that Howard and Costello used to win voters’ favour since the turn of the century. Naturally, the opposition will attempt to lay this disaster at the feet of the Government, and a lot of people will fall for it.

There have already been plenty of hints as to how this budget will play out, but the coverage of the it will inevitably focus heavily on people who regard themselves as being hard done by. Here is my list of predictions of people who will squeal the loudest about the budget, and why they should shut their whinging pie holes.

Self funded retirees. This is such a stupid and inaccurate phrase, the Howard government bent over backwards to keep the grey vote locked in and in doing so pretty much extended every benefit designed to keep pensioners out of poverty, like health care cards and other services, to people who were ineligible for the pension, but were over retirement age. In addition to this, these people were gifted enormous amounts of money through foolishly generous superannuation policies and by the debasement of the capital gains tax system.

As the baby boomers race towards retirement this mess needs to be unwound, it is unaffordable and unsustainable. Expect to hear this group claim that unless they are heavily subsidised by the government they will spend every cent they have and live off the pension, thereby forcing the rest of us to pick up the tab. So much for being self-funded. The reality is that most of these people would sell their own children rather than live on the aged pension and will simply whittle away their kids inheritance to support their lifestyles. Boom times for reverse mortgage providers.

High income earners. Another group who were trained to suckle at the government teat during the Howard years. One of Howard’s most socially regressive feats was instilling in people a sense of downward envy, demonising welfare recipients as being unworthy of government assistance, and then quelling the disharmony he’d created by handing out cash to people who didn’t need it. Policies like the Baby Bonus and the Private Health Insurance Rebate scheme should have been means tested from day one, because one of the basic tenets of the welfare system is that you only provide assistance to people actually need it.

High income earners, like talk-back radio hosts, op-ed writers for our major newspapers, and their friends, will be especially critical of any means testing, claiming that it is ‘unfair’. The reality is that everyone loves getting something for nothing, and free money is the pinnacle of that principle. Expect to hear this group claim that the changes are a disincentive to hard work and that their tax contributions entitle them to some government largesse, while their accountants desperately search for new ways to reduce their tax liability.

Businesses whose business model is leeching off taxpayers. The private health insurance industry is the first that springs to mind, but there will no doubt be plenty of other businesses whose profits are largely derived from providing services to the government who will foreshadow thousands of job losses, should their place at the trough be threatened. The reality is that if there is a genuine market for their products, then they will survive. Government interference distorts the market and usually ends up with all sorts of perverse unintended consequences, reducing these effects is a good thing.

People without children. Apparently people without children do not use any government services at all and are subsidising us breeders. Fuck off. Sleep in on a Sunday, go to a movie with your partner after dinner and hope like hell that the rest of us pop out enough kids to pay for your health care bills when you get old.

There will no doubt be others crying out this year, and the opposition will be full of sympathy for them as this will be their first real chance at drumming up some resentment towards the government. But the reality is that the massive budgets we came to expect for the last decade were underpinned by the same assumptions that have bought the commercial world to its knees in the past year, the boom could not go on forever, we could not keep deferring the cost of government spending and it is now time to face the consequences of our reckless actions during the good times.

18 thoughts on “Budget 09: Where’s my share?

  1. Good one, Dave.

    One little correction, if I may. I know several childless couples whose broken hearts break mine at times.

    But then again, there are also those who could not stand any kids interfering with their need for greed.

    Youse breeders are the ones though. Why don’t we celebrate and establish an annual breeders day. Model it on “Paws in the Park”. Woof!

  2. Being a “non breeder” by choice I’m still trying to figure out how to respond to this….

  3. Matt, my contempt is reserved purely for those people who complain at budget or election time that there are no bribes carefully targeted payments for them. The line of argument tends to be “I pay tax, but I don’t have kids, so I’m subsidising schools and not getting family tax benefits, that’s not fair”. That type of reductionist thinking reeks of self interest to me and it pisses me off.

    Every modern democracy in the world has a progressive taxation system, designed to tax people at a level that they can afford and provide services and support to those who need it. Considering the fact that our entire economic system is built on the need for growth and expansion, it becomes very important to provide the next generation of workers to eventually support the current one, that’s why governments have provided family support in one form or another for a long time now.

  4. Perhaps some of those “childless couples” that you seem to despise so much are only “childless” because their kids are now grown up and were raised without a lot of assistance from the Government. Is it any wonder they might feel a tad resentful of things like baby bonuses, massive first home buyer grants & other benefits lavished on young families today?

  5. My wife and I fall into the category you describe, Ray, but I don’t begrudge the first home buyer’s grant and baby bonuses and other benefits.

    Our youngest has in fact just benefitted from a first home buyer’s grant fort her modest (by current standards) new home under construction at this time.

    The thing that pisses me off is the lack of fairly structured means testing.

  6. It’s funny Ray, I rarely hear people saying that any of those programs should be stopped, which I think could be a valid argument, but I often hear “why don’t I get a handout”.

    Perhaps I should have been more specific, it’s not people without children per se who I’m critical of, it’s those with an enormous entitlement mentality who think that government spending should be some kind of mini lotto win once a year.

    There was no first home buyers’ grant when Mrsdave and I bought our first home and no baby bonus when Buster Boy was born, these things did not drive our decision making so there’s no point sulking about missing out on something that I never expected.

    Additionally, younger people didn’t have the benefit of a free higher education, or many of the other social policies which benefited Baby Boomers and the Greatest Generation, because they were all abandoned for being too costly to maintain.

  7. I think the worst thing you can do here, Dave, is to divide the debate along generational lines. It’s a complete misnomer to say babyboomers had “free higher education” because the fact is it just wasn’t available to the great majority and there were far less tertiary institutions around. Only the top 5 – 10% were encouraged to go on and most people didn’t even complete high school.

    I don’t begrudge my daughter her 1st home buyer grant either and I’m not “sulking” or complaining about anything. I understand the point of the stimulus.

    But I think you’re being rather dismissive of baby boomers and to suggest we’re all selfish is ridiculous and very narrow. I’m not aware of anyone I know in my age bracket (50s) that is planning to live off a a fckn pension. On the contrary we’re all trying to ensure we’re not a burden on the next gen and at the same time we’re still supporting our adult kids in one form or another.

  8. Actually Ray, I’m dismissive of people who feel an entitlement to welfare despite not needing it, regardless of their age. That was the core premise of my post, although having written it at 4am I may have not been as clear on that as I could have been.

    The only mention of Baby Boomers in the post is mentioning that the present superannuation rules, which allow people of retirement age some ridiculously generous financial gains, need to be fixed before the boomers are eligible for them.

  9. The generous superannuation terms are necessary to force everyone to save. If they didn’t, then there is no way the government could afford to provide for the basic needs of healthcare. The alternative is to raise the minimum 9% contribution. Keating tried this but was mocked. If you are not going to make it mandatory then you have to make it tempting enough for people to save using their own discretion.

    The system fails when people take the view that ‘I worked my whole life to save enough to give my kids a good inheritance – I don’t want to have to blow it on my own cost of living’.

    Having known Dave for years, I can vouch that the first paragraph of his 11.03 comment would be what he intended – and I couldn’t agree more. My family paid its fair share of federal tax last year and probably a dozen other people’s as well (we also received $10,000 last September in the baby bonus, but that’s another issue), but that is fine if I know that I live in a country that tries to give everyone a decent education and relatively good health care. I don’t want to be the richest guy in a third world country.

    People should see handouts as a debt – I received this so now I owe my community to pay it back, whether in cash or in kind.

    What I do resent is when people accept a hand out but don’t take the opportunity to contribute back. If you are on the dole and there is an opportunity to work or study and you don’t, well then you lose my sympathy for breaching a social contract.

    Part of this is the governments fault. Handouts should be better directed. An un-means tested handout is just daft. Ultimately people should be encouraged to pay their own way and only receive help when necessary to maintain a community’s standard.
    The flip side to this is that a person should be rewarded for being diligent and responsible. It’s like having the foresight to maintain insurance against hail damage. Of course, the reward should not be that another person has to suffer, such as in the recent bushfires -whom can justify the argument that the government should not rebuild my neighbours house because he didn’t have insurance whilst I paid the premiums and now get nothing?

    What I do disagree with (although this could be an interpretation issue) is the comments regarding business. The government should play a role in any industry whose services are required by the public due to legislation. If the government creates the demand, then they should ensure responsible supply.

  10. One problem I see with super at the moment Lee, is the scenario where some people can salary sacrifice their entire wage into a super fund, thereby avoiding income tax, and at the same time take exactly the same amount out of their super fund to live on, without penalty. These people aren’t saving for their future, they’re simply dodging their tax obligations. Although this arrangement was designed so that people could work after their nominal retirement without punitive taxation it is being exploited and should be shut down.

    Regarding governments hand in the market, the government should not be deciding what services my family needs and then punishing me if I disagree, while at the same time funnelling money to private enterprises. The way that the private health insurance rebate works does exactly this. It doesn’t directly affect me, but that doesn’t stop it being bad policy.

  11. Super was designed for people to retire at the usual retirement age. If memory serves me correctly, there was a time when retirement was compulsory. However, with the larger number of retirement aged people, it was better for society to see them continue working. What you describe is a loop hole that should be shut down but it still stands that people should be encouraged to work for longer.

    As for the government’s hand in the market – I don’t have a problem with forcing people who can pay for something to pay for it. If they didn’t, then it is another form of a hand out. In a perfect world the government would provide first rate universal coverage for health care. They can’t. Therefore, if you can afford health care you should pay for it. The problem is that people who should be able to afford it don’t save for these eventualities. People in their 30’s don’t say ‘I’m going to need $40,000 for my heart by-pass when I’m 60’ and as such, the government must make them save, either through higher taxes or compulsory insurance. This is what is in place.

    The government isn’t punishing you, they just don’t trust you to get it right.

    Ultimately we elect a government to collect the resources of the country, some of which I create and others are dug from the ground, and redistribute them in such a way that best serves the very large majority without seeing anyone left behind. Obviously it is not possible to allow those who want to live outside the system do so, because in the end, we can’t leave them behind just because they were unfortunate or dumb. The government is whom our system has nominated to do the best to get this right, and if it means that someday you will have to have health insurance, then so be it.

  12. As the baby boomers race towards retirement this mess needs to be unwound, it is unaffordable and unsustainable. Expect to hear this group claim that unless they are heavily subsidised by the government they will spend every cent they have and live off the pension, thereby forcing the rest of us to pick up the tab. So much for being self-funded. The reality is that most of these people would sell their own children rather than live on the aged pension and will simply whittle away their kids inheritance to support their lifestyles. Boom times for reverse mortgage providers.

    I think you’re showing a lot of bias in that statement, Dave. A bias based perhaps on your own interests and misguided perception that babyboomers ‘had it all’. Believe me, we do not expect (or want) a pension. We have learnt that our kids (and their kids) are certainly not going to look after us. How? Because we taught them that they were more important than us.

    Also, self-funded retirees and pensioners (my parents generation) are doing it hard (very hard) and should be looked after better. They’re the last generation brought up to believe you work in one place for 50 years, bring up your kids, don’t ask for much for yourself but then live out your older years on a half-reasonable pension or on your fixed interest investments, if you’re so lucky. It’s not their fault that the dream evapourated and we have an obligation to them as much as we do to the youngest generation. Unless, of course, you think they should eat bread, water and the occassional tin of baked beans for the rest of their days. Don’t worry though, they won’t complain – that’s how they were brought up.

  13. I think that my poor punctuation at 4am might be to blame for how you are reading that statement Ray. Try it this way.

    In addition to this, these people were gifted enormous amounts of money through foolishly generous superannuation policies and by the debasement of the capital gains tax system. As the baby boomers race towards retirement this mess needs to be unwound, it is unaffordable and unsustainable.

    Expect to hear this group (ie Self funded retirees, not Baby Boomers) claim that unless they are heavily subsidised by the government they will spend every cent they have and live off the pension, thereby forcing the rest of us to pick up the tab

    Compulsory super only came into existence in 1992, that being the case I don’t expect that many people who entered the workforce much before then will have sufficient savings to live off it (government employees aside). However, the Howard government policies which tried to ramp up the process of making people self reliant were a farce, people whose only major asset was their home and 16 years worth of compulsory super have never been in a position to take advantage of the big tax avoidance measures, and the people who were in a position to do so didn’t need the big tax break anyway.

    I agree that we need to take better care of aged pensioners, I fully support the mooted increase in the pension, but I’d also like to see that applied to the single parent’s allowance, newstart and disability allowances too. My point is that a large number of superannuation policies are really only useful to people who are not genuinely in need, and they are the same people who have lobby groups to argue their case. That’s not right and it doesn’t help people who are truly in need of support.

  14. Punctuation AND paragraphing. Hmm, more proof that the 4 am sleep-deprived post is best ‘saved’ and reviewed and seriously edited later – when you’re more with it – before publication.

    Anyway, superannuation is a mess and a farce, always has been. I don’t believe in it myself and I think you should invest and manage your own money, not leave it in the hands of some dodgy super manager. Those with money in compulsory super funds should just regard anything they get as a bonus.

  15. I don’t think the budget & huge deficit is “a consequence of our reckless actions during the good times,” Dave. I think it’s good management and just a response to changing world conditions over which we had no control. The GFC was not our fault.

    In fact I think Australia has been very well managed economically since Bob Hawke & Paul Keating came to power back in 83. Prior to that we were too fiscaly conservative and hamstrung by our unwillingness to join the real world of de-regulation.

    As much as it pains me to say so, even Howard & Costello managed the economy very well, although they had the benefit of the boom created by Paul Keating and even an orangutan from the Adelaide Zoo could have run the country during that period.

    The only howling we’re likely to see is from the Opposition benches but they are almost irrelevant.

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