Labor shares the budget illusions

As predicted in this column on budget eve, the 2017 budget, like its predecessors, projects a return to surplus in the final year of the forward estimates. As we travel towards this shimmering mirage on the horizon, it slips away, as elusive as ever. All the while, the present generation accumulates debt to be repaid by the young and the unborn.  The surplus by illusion is facilitated by the acquiescence of the federal Labor opposition. Neither party wants to tell the truth, for it would then be obliged to say how it would fix the problem of stealing from future generations to fund the lavish lifestyles of the Baby Boomers.

Yet in bringing down this year’s budget, the Coalition grudgingly accepted some realities. Having insisted since 2010 that the budget didn’t have a spending problem, only a revenue problem, the Coalition introduced several substantial revenue measures, including an increase in the Medicare levy and a new bank levy.

These should have been welcomed. Yet the major banks, resolutely insisting on budget repair, squealed that they should be spared from contributing to the task, pointing out that – as if alone – they already pay tax. They are effectively insured against failure by the taxpayers of Australia but are outraged about paying an insurance premium. Everyday Australians pay for house and car insurance without expecting others to bear the cost.

Labor should support the full Medicare levy rise. In doing so, it would lock in the National Disability Insurance Scheme, a signature Labor reform for which Bill Shorten can take much credit from his time as the Rudd government’s parliamentary secretary for disabilities and children’s services.

History shows Labor introduced most of the post-war reforms that have shaped our nation – Medicare, access to universities for young people from less-privileged families, superannuation for working people, an assets test on pensions, tax reform entailing a fringe benefits tax and capital gains tax – only for the Coalition to oppose and seek to reverse them. Eventually, though, the Coalition has conceded defeat and the reforms have been locked into place.

So it is with needs-based school funding. The Abbott government did everything in its power to kill this vital social and economic reform. Perversely, now that the Turnbull government has embraced the needs-based philosophy and promised to take some of the funding increases from the wealthiest private schools, Labor is trying to block it.

While the Turnbull government’s needs-based funding allocation is manifestly inadequate, Labor has a wonderful opportunity to lock the formula into place and promise to increase the funding if elected to government. What’s the point of Labor supporting a Senate inquiry that could help evaluate the grievances of the Catholic school system when it has already announced that it will block any Coalition legislation enshrining the needs-based system?

The Gillard legislation wasn’t perfect. Nor was Whitlam’s Medibank or fee-free university, or Keating’s initial 3 per cent superannuation guarantee. But they laid the foundations of enduring social advances, a source of great pride for every member of the Labor Party and for all Australians who believe in egalitarianism. Now, here is a once-in-a-generation opportunity to lock in a school-funding system that can give every disadvantaged child a chance of a good education, and Labor has pledged to block it.

It’s heartbreaking.

Labor can again demonstrate its credentials as a party of social reform and economic credibility. It should support the full increase in the Medicare levy, unconditionally back the bank levy and pass the school-funding legislation while promising to enhance it in government. By combining these with its other announced savings and revenue policies, Labor would be in a position to return the budget to surplus much more quickly than the Coalition as well as being able to increase the rate of the job-search allowance – Newstart – which everyone outside the Coalition agrees is manifestly inadequate at its current level.

The Australian people – fed up with short-term populism – are desperately seeking a party of vision, compassion and economic responsibility. They back needs-based school funding, are willing to pay a higher Medicare levy to support their fellow Australians with disabilities and are conscious of the need to return the budget to surplus. It’s not too late for Labor to reconsider its position on each of these issues and, in doing so, reaffirm itself as the party that shapes our nation for the better.