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Off the Bench: Cutting through the budgetary bulldust


In our opinion series Off the Bench, two of South Australia’s brightest backbench MPs – one Labor, one Liberal – trade arguments on key issues. Today, Labor MP Chris Picton responds to Liberal MP Stephan Knoll’s argument that the state doesn’t need more tax income.

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SA business tax has been cut and responsible savings are being made in the budget. But cutting much further would only help the rich at the expense of services for everyday people.

Stephan’s argument yesterday is that the main difference between Labor and Liberal is all about tax. He says Labor we want lots of it and the Liberals want little. That sort of logic might play well with the Burnside Liberals over tea and scones, but it is far from the truth.

Vastly more important than caring about taxes, we in Labor focus on caring about people and our community. The Liberals might define themselves as ‘letting people keep their money’ – but we define ourselves as making sure every kid gets a good education, that every senior can get an operation and that people can get a job with fair pay and conditions.

When it comes to tax – the major taxation issue Australia’s faced over the past 50 years has not been Labor versus Liberal –it has been state versus federal. That’s why you’ve seen the most popular Liberal in the country, NSW Premier Mike Baird, fighting side by side with our Labor Premier Jay Weatherill for a better share.

We all remember that old Paul Keating quip: “Never get between a Premier and a bucket of money”. But the big issue behind the joke is that Canberra collects almost all the taxes – and the states pay for most of the services. The economics-jargon term is called ‘vertical fiscal imbalance’ – and most serious economists agree it is an important issue.

The Gillard Government health reforms addressed that – by saying that all new hospital expenditure should be a 50/50 share between the states and Commonwealth. Since that deal was scrapped it is projected that Canberra’s share will drop to just 25 per cent over coming years. That’s a huge problem for keeping our hospitals open.

In Stephan’s article he quotes a figure of $4 billion of unplanned expenditure. I’m willing to bet that is almost entirely made up of increased demand in the health system – more people walking into emergency departments than expected over the past decade. Unless you start turning people away – there’s not much you can do about that.

Labor and Liberal Premiers all agree there needs to be a better deal from Canberra to fund hospitals into the future. Weatherill and Baird took political courage to open dialogue on options to fix this – however unfortunately our Prime Minister has squibbed and apparently only minor reform is on the way.

It would be great if instead of just SA and NSW banding together to fight for a better deal, we actually had SA Labor and Liberals working together to fight for our state.

As a state – we’ve been hard at work getting our own local tax system in order. This Labor Government has been busily cutting inefficient taxes.

You can’t have it every-which-way. You can’t oppose budget savings while advocating for lower tax revenue and bigger budget surpluses.

Last year this Government has introduced the largest business tax cut in our history: $2.5 billion over a decade cut. We didn’t pluck random taxes to cut – we did the hard work to identify which were the most inefficient taxes that held back growth. We cut the taxes that did the most damage to the economy.

Comparatively the Liberals would have us cut taxes on land tax that would have largely helped rich people who own many residential properties. They would cut a tax that is ranked by economists as one of the most efficient and sensible taxes we have.

And the only way you could go further on tax cuts – would be massive cuts to services.

That would be so easy if there really were buildings full of bureaucratic fat cats, having long lunches, dribbling their caviar all over their shirts, shuffling paper between each other.

But the truth is the vast majority of our public servants are front line workers. Doctors, nurses, teachers, paramedics, police officers – and the list goes on. It is harder and harder to make cuts to the state budget without impacting on real services helping real South Australians.

One way we are trying to make things more efficient without impacting service provision is the ‘Transforming Health’ reforms. It should logically follow that the Liberal Party would support that new efficiency. However, the Liberals are against any budget savings in the health system.

I heard a Serial podcast recently where an expert said that one of the mistakes of US troops in Afghanistan was delivering over-the-top messages of goodwill to local villagers. Those messages not only seemed insincere, but came across as total lies. By the Americans saying “We’re here to make your life better. We want to build some roads… we just want to improve your life…” – the logical reaction of the average Afghan was “this dude’s lying through his teeth”.

In a completely different context, I’d argue the same effect applies to when a politician tells the public: we want huge cuts to taxes, big budget surplus and no cuts to services. It doesn’t add up – so there’s clearly another agenda at play.

A quick Google search for “cuts” on the SA Liberal website delivers more than 500 media releases. The Opposition have argued against savings in every area of government under the sun – from hospitals to schools, TAFE, sport, environment, regions and prisons.

You can’t have it every-which-way. You can’t oppose budget savings while advocating for lower tax revenue and bigger budget surpluses.

South Australians have a very good way of seeing through such bulldust. If the Liberals say there should be massive cuts to taxes, they should admit that means massive cuts to services.

Chris Picton is the Member for Kaurna and Assistant Minister to the Treasurer.

For more of out “Off the Bench” debates, go here.

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