Budget 2015: If the policy stinks, just change the narrative

Facing the prospect of political annihilation after last year’s Federal Budget, the Coalition has firmly pushed the political reset button. Having launched a battery of policy missiles targeting multiple constituencies, the Prime Minister and his team were on a fast track to political oblivion. Having almost reached the point of no return, the search is on for political resurrection – a way out of the self-imposed political wilderness that is far right Australian politics. The political reset they have chosen cleverly targets a large and popular constituency: those hundreds of thousands of small business owners in Australia, all of which stand to benefit from the tax changes introduced in the Budget. The tax changes are a welcome, though modest windfall, for most South Australian small businesses. Wholesalers and retailers are cheering the bump in demand. While the new tax arrangements represent a stimulus measure of sorts, they are pragmatic rather than transformative policy. They won’t build more resilient and competitive companies in the same way that a sophisticated and well-funded small business innovation program might – something sorely lacking in our national policy landscape. A startling change in the political narrative has taken place in just 12 months. Borrow and buy for the nation implores the Treasurer. As he rallies the nation’s small businesses to “have a go”, you might ask are we heading for an early election? That is a real possibility if the small business tax measures give the Prime Minister the bounce in the polls he and the Coalition are hoping for – just enough of a bounce to make them competitive and avoid the ugly spectre of leadership speculation. While this year’s Budget reset has delivered some improvement in the Coalition’s political standing, the acrid stench generated by last year’s Budget remains. In particular, the reductions in planned health and education expenditure over the next few years will bite hard, undermining the ability to deliver long hoped improvements in education and health outcomes for South Australia. Cuts to university funding are undermining research and education at a time when our universities need to be better resourced to help drive the growth of the industries of the future. Meanwhile, students continue to face the threat of course fee deregulation driving up the cost of degrees. People who are unemployed continue to face unreasonable waiting times for benefits and are subjected to poor quality labour market programs like the Work for the Dole program. While South Australian small businesses are major beneficiaries of the Federal Budget and the purchases of equipment they make beneficial for the state, the tax breaks provided to them are poor substitute for a comprehensive SME growth and innovation plan. Infrastructure loomed large in the Budget but not to South Australia’s advantage. Much was made by the Coalition in the Budget about better equipping Australia’s northern regions with the infrastructure it needs to take advantage of the Asia-Pacific century. This gesture to nation building served to highlight the fact that no new major South Australian infrastructure projects were funded in the Budget. The bigger problem for South Australia is that the Federal Government has tied infrastructure funding to their asset recycling policy – the idea that you have to sell an asset in order to be eligible for funding to build a new one. South Australia urgently needs a major injection of Federal funding to bring forward new infrastructure projects as existing job-rich ones, such as the new Royal Adelaide Hospital, which is near completion. Many have been calling on the Federal Government to make the remaining funds in its Automotive Transformation Scheme available to component supplies and other companies impacted by the automotive closure. This would greatly advance industrial diversification efforts and help to support a vast network of companies facing exceptional circumstances. There was no joy in the Budget in this respect. More broadly, the Coalition continues to underestimate the impact of the closure on South Australia, failing to provide a package of assistance that matches the size of the problem. While the reset button was given a big push by the Coalition in the Federal Budget, the policy fundamentals remain much the same despite the changing narrative. So long as austerity policies prevail, growth prospects will be stifled. No amount of small business tax cuts will unleash a new age of innovation and prosperity – a reality that both sides of politics should be honest with us about. It is possible that this might be the last Budget of the Abbott Government. If it is, then the demise of it in just one term might be shot home to right wing adventurism bolstered by narrow corporate self-interest. A desperate rescue mission is underway by the Coalition to find some safe political ground. Will it try to win hearts and minds or buy votes? This year’s budget suggests the latter. Associate Professor John Spoehr ­is the Executive Director of the Australian Workplace Innovation and Social Research Centre at the University of Adelaide @johnspoehr