Budget spending locked in for a decade

The Gillard government is planning to lock-in spending on education and disability insurance for ten years in an attempt to protect these reforms from future economic pressures.

Almost $100 billion is expected to be spent across the National Disability Insurance Scheme (NDIS), now known as DisabilityCare, and the Gonski education reforms over this ten year period. This unprecedented move is designed to guarantee the survival of these reforms and to force the hand of Opposition Leader Tony Abbott.

Over time money is often taken from reforms such as these and diverted when governments feel they need the money elsewhere. ‘Locking in’ this funding will help to ease doubt over the long-term success of both DisabilityCare and the education reforms.

Treasurer Wayne Swan explained that this ten-year plan was a test for Mr Abbott. “If he supports DisabilityCare, then he needs to support the responsible saves we’re making to fund it over 10 years – or tell us where he’ll cut.”

Mr Swan will be announcing the Federal Budget this evening, although much has already been leaked to the public. After the Labor Government had to abandon its pledge of a budget surplus just before Christmas last year, it is expected that Mr Swan will be trying to win over those who no longer feel secure about the Labor Government’s economic promises.

The pre-budget budget

Planned spending:

  • $68 billion over 10 years on DisabilityCare
  • $26 billion over 10 years on education reforms (assuming all states and territories sign up)
  • $300 million per year due to changes to Newstart Allowance recipient rules.

 

Planned saving

  • $1.8 billion over three years saved by scrapping a boost to Family Tax Benefit A
  • $3.3 billion per year by boosting the Medicare levy from start of financial year 2014
  • $1.4 billion per year by deferring tax cuts for carbon price compensation until 2015

 

Surplus promise: The budget should be back in surplus by 2016–17

You can read more about the 10-year-plan at the Sydney Morning Herald website. 

Visit the ABC website for a comprehensive list of what we already know about the Federal Budget

 

The bright future of Aussie politics

One of my biggest criticisms of Australia’s political system is the three-year term for federal governments. It means that governments are forever working in three-year blocks, never looking past the next election. It makes for some very short-sighted planning and I think that this does Australia more harm than good when it comes to becoming a world-leader in innovative thought.

I (and many others I imagine) was unaware that it was possible for a government to ‘lock-in’ funding over a period in which they may not be in office. For Treasurer Wayne Swan to attempt to guarantee funding for projects over a ten-year period is a gutsy move; one which I support wholeheartedly.

To set a precedent in which Australia can look forward and say ‘this is where we want to be’ in 10, 20 or even 50 years, and then to ensure that the project continues to have life for more than three years, is a going to leave us is a much better position, both economically and politically.

My bank once gave me a brochure about saving money. It explained that if I started to save a small amount of money at a young age, I would be financially a lot better off than if I saved larger amounts later on, both because of compound interest and because you never know what will happen in the future.

By starting early and running projects over a longer period of time Australian governments can better plan how they will run. It will also make it possible for future governments to plan around and build from reforms which are already in place, rather than thinking they can start with a clean slate every three years.

What do you think? Is it dangerous tie up Australia’s money by locking in funding for reforms which may be faulty, or is this the bright future of Australian politics?

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