15 May 2003

ALIA Federal Budget Analysis

Each year senior staff of ALIA national office produce a Federal Budget report. These reports analyse the budget and in particular the parts which have an impact on the library and information industry.

Mid-term Budgets are often the least interesting - especially when Government's are well-established. A treasurer's standard approach to the electoral cycle is: do the hard stuff in the first Budget; don't scare the horses in the second; offer a lump of sugar in the third so that they rush to vote for you in the election which follows.

That's the theory. In practice, the unexpected sometimes turns up. When the smokey is a mid-term tax cut, it usually means one of three things: the Government is in trouble; the Government feels an early election coming on; or by spending its money now, the Government wants to prevent its Opposition spending it later. Whichever, surprise is of the essence. And it helps to have a distraction.

So this year Peter Costello must have been overjoyed to find that his Labor opposition have created the smokescreen for him. Who can recall a year when - even before its delivery - the Budget was already dwarfed politically by the Opposition Leader's response to it? Once Kim Beazley announced that Simon Crean's speech in reply would determine his fate, Crean in the Colosseum became the main political game for what Joh Bjelke Petersen used to call 'the chooks' of the media. The Governor-General's travails reduced the focus on this year's Budget still further. And then the Indonesian government kindly began the Bali bomber trial this very week. Not since Elvis died on Budget Eve in 1977 has Budget anticipation been so overshadowed by other events.

Mr Costello won't be complaining. While attention has been directed elsewhere, he has been able to get on quietly with the task of presenting a clever but cynical Budget. He has handed back only a tiny portion of his bracket-creep windfall. But in doing so, the treasurer has neatly positioned the Government for a tax-cut-centred poll later this year - when Crean, Beazley and the ALP could be drowning in blood and gore. And if his prime minister decides to go full term, the Opposition is nicely hedged in by his spending much of the surplus this year. In trying to develop an attractive program, Labor will inevitably face the old cry of 'Where's the money coming from?'

The Budget spends heavily on defence and security which will be electorally-popular too. The costs of war in Iraq are met with additional spending of more than $2 billion over five years. Total defence spending rises to more than $15 billion.

Yet for all its superficial political attractions, there are potential vulnerabilities. The Budget's controversial changes to Australia's health system were made public well ahead of Mr Costello's speech. They are certain to increase costs for average families and to date seem unpopular. Now they are joined by radical plans for overhaul of higher education which threaten many students with sharply-higher fees. Both offer an electoral lifeline to the Opposition if it can move beyond internal brawling; both face difficulties in the Senate, which might add fuel to any early election fire. And there are disappointments. There are no measures to assist Australians balance work and family responsibilities, despite recent Government pronouncements on the subject's importance. There is silence on maternity leave.

Overall, Mr Costello will be pleased with himself. Thanks to huge increases in taxation revenues, he has been able to meet many competing demands and still claim a $2.2 billion surplus - quite a platform from which to boast of further sound economic management. A solid surplus AND tax cuts is something few of his international counterparts can even dream of. And this has been achieved despite the high-profile challenges of war, drought and fire.

To read the full-text of the ALIA National Office budget analysis see http://alia.org.au/publishing/budget.analysis/