Out with Middle Class Welfare, In with Affordable Housing


Expect surprises in the first Rudd Labor Government budget, which Federal Treasurer Wayne Swan will bring to Parliament next week.

Its broad aims have already been set in stone. As Swan himself has said: "This [budget]has, at its core, the task of fighting inflation, putting in place a strong surplus so we can [reduce]inflation in the community, which is pushing up interest rates."

Consistently, though, it has been the Prime Minister who has revealed more of what Australians can expect in this budget than his still nervous Treasurer.

Speeches Rudd has given over the past few days have been full of Budget hints.

Rudd told NSW State Labor delegates in Sydney last weekend, for example, that many of the spending cuts in next week’s budget would be unpopular. "But our responsibility is to get the priorities right for the long term, and we intend to do that," he said.

Rudd revealed even more in a speech he gave a few days earlier to the Housing Industry Association.

He said then that his Government would be "reprioritising" Federal spending in this year’s budget. He signalled, too, that its approach would go far beyond the delivery of the first tranche of Labor’s promised tax cuts, which will eventually be worth some $31 billion. And he declared that a drive to make housing affordable again in Australia is central to Labor’s ambitions.

"A place to call home is fundamental to Australian values," Rudd said. "The 2008 budget will include a significant package to tackle the housing crisis."

"While we are, of course, taking a very disciplined approach to public spending, we are introducing more new housing policies than any budget in living memory," Rudd boasted.

This will include measures to help renters, first home buyers and other Australians who are struggling to keep a roof over their heads.

These remarks have received relatively little attention. Look for the details when Swan brings his budget into Parliament on Tuesday next week.

Swan is making no secret of the fact that drawing up the budget this year has been particularly difficult.

On one front, at least, he has been incredibly lucky. The planned tax cuts will stuff an extra $10 billion or so into Australian pockets and purses, over the next 12 months. Think what that might have done to inflation if Australians had kept spending the way they were late last year.

Fortunately, the credit crunch stopped that, hitting both consumer and business confidence quite hard over recent months. Even so, retail sales in the March quarter were still higher than analysts had expected.

All the same, the credit crunch is making Australians think twice before they pull out their credit cards in the nation’s stores.

It has, in fact, brought so much economic shock and awe that the Shadow Treasurer, Malcolm Turnbull, an economic conservative, has been warning the Government not to cut Federal spending too sharply.

Turnbull said, quite bluntly, that Swan should not impose "extra hardship" on Australian families by cutting government spending too deeply, warning that Australians are already suffering as a result of higher interest rates. "There’s a lot of grief coming from overseas," Turnbull said.

Swan countered by alleging that the Howard government had indulged in reckless spending in its final years. "So we will restrain government spending to make room for our commitments to the Australian people," he said.

So what cuts will be made in next week’s budget?

A means test on the $3000 baby bonus is a fair bet. The savings the Government would make by doing so would not be great, but as it stands the bonus is a rolled-gold example of wasteful middle class welfare.

Both Rudd and Swan have said many times that their emphasis in this year’s budget will be on helping working class families, whose need for assistance is greatest.

Rudd also reminded delegates to Labor’s NSW State conference at the weekend that his victory in last November’s Federal election was narrower than many people think. Labor could all too easily lose the next Federal election, due in 2010, he said.

The delegates’ decision to split the State Labor Party over power privatisation in NSW will add to that risk.

Rudd is riding a wave of popularity at present. But he, more than any other Federal politician, knows these waves can recede.

Labor has already made major changes, setting a timetable for the withdrawal of Australian troops from Iraq, apologising for the injustices suffered by Australia’s Aboriginal people and signing the Kyoto Protocol. But Rudd is acutely aware that Australians are impatient for much needed changes in domestic areas, such as Labor’s promised education revolution.

Governments that have promised to make sweeping changes on big ticket items like housing and education have no time to waste, especially when they have only three-year terms. Rudd knows that his programs have "now or never" written over them in red ink.

So this will not be an empty budget, which just moves blocks of figures around. It will make way for real changes.

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