Or, I’m not an economist, but… part 2

The government’s explanations of its savage cuts to welfare along with increases to charges/levies/taxes, whatever you want to call them, are bordering on the embarrassing. First, Joe Hockey called an end to an age that never existed. This was followed by straw-man inferences that unemployment and disability benefits are public subsidies for sitting at home watching television. Then the treasurer went on to express surprise at the “screaming” about the Medicare (ahem) “co-payment” of $7, saying that it was only the equivalent of a couple of beers or a third of a packet of cigarettes.
Really, Joe? Cigarettes? Are we still living in the 70s?

Mr Hockey can parse the value of $7 any way he likes, whether it’s beer, cigarettes, coffees, hamburgers, magazines, these are all things that people living at or below the poverty line can’t afford. He would perhaps be better off describing $7 in how many loaves of bread or cans of baked beans people might have to sacrifice in order to visit their GP.

Leaving aside the fact that poor aren’t actually blowing all their money on booze and smokes for a moment, Mr Hockey’s trivialisation of the new charge suggests that he hasn’t thought through the knock-on effects of people giving up certain discretionary spending in order to afford a visit to the doctor.

I don’t mean to shock anyone, but welfare recipients spend money too, and to use an American parlance, their money is just as green as the next person’s. So even if people take Mr Hockey’s advice and forego the two middies that he blithely assumed they’re spending their money on, that’s two middies the publican hasn’t sold and $7 he doesn’t make.

The publican (or café owner, or whatever) doesn’t care if that $7 is coming from a pensioner, a CEO on seven figures or a “woman of calibre” who has been deemed worthy of a $50,000 government subsidy with no mutual obligation. All the business operator knows is that’s $7 they’re not making thanks to Joe’s doctor tax. Multiply that across the few million people who will be affected and you’ve got a serious kick in the economy.

Now let’s broaden the scope a bit to look at the cuts to benefits. Moving people from disability to Newstart and putting six month delays on Newstart for under 30s will undoubtedly increase poverty. The only way anyone could think otherwise would be to assume that the only thing stopping people getting off their bums and finding work is the hitherto extreme generosity of the unemployment benefit. I think even A Current Affair would find that notion hard to swallow.

This is that part where I have to say “I’m not an economist” but I think it’s generally accepted that they key to a vibrant economy is spending power. This budget is an attack on the spending power of those who are already among the most disadvantaged. Whether they spend their meagre resources at the kind of pubs Joe Hockey frequents or, more likely, the local supermarket and rent payments, this decision is likely to have ripple effects throughout the economy, lowering demand, hurting businesses and possibly resulting in higher unemployment, continuing the cycle.

When the Rudd government announced an economic stimulus package in 2009 with grants of $900, one of the Coalition’s criticisms of the policy was that people would either save it or use it to pay off household debt rather than putting it back into the economy by spending it. So the Coalition does understand that spending leads to a stronger economy. Or at least it did. That was under the less ideological leadership of Malcolm Turnbull.

Joe Hockey was at pains to say in his budget speech that this is not an austerity budget but the austerity he has chosen to inflict on thousands is obvious. If he can’t see that, and the economic damage it could do, then he really is as out of touch as an unfortunate photograph of him puffing a huge cigar suggests he is.

There was an article posted yesterday by Kaye Stirland detailing what $7 can really mean to someone living close to the poverty line and it illustrates why the lack of women in cabinet is a serious problem.

When Tony Abbott found that he had bitten off more than he could chew by offering to answer questions from a high school group, and was asked why he, as a man, was representing the interests of women, he responded that you don’t have to be a woman to represent women. He sort of has a point. If our representatives do their jobs properly, they will consult with all those who would be affected by their decisions and adjust those decisions accordingly. The problem with the makeup of Cabinet at the moment is not just that it’s dominated by middle-aged Anglo-Saxon men, but the lack of breadth of life experience.

Of the senior Cabinet, at least half went to private secondary schools, the majority are married, over three quarters have been in parliament for over ten years and more than half of them have practised law. As Bill Shorten said in his impressive budget reply speech, they have never had to live hand-to-mouth. Curiously, Tony Abbott shook his head at this statement. I’d be interested to know when Tony Abbott thinks he lived hand-to-mouth. Perhaps in the seminary, but there he would have been provided for according to his needs. Hmmm…

So is it any wonder they find themselves clutching at straws when it comes to the budget? This is possibly the only tough budgeting they’ve had to do, at least since their early 20s, notwithstanding Tony Abbott mortgaging his home after the 2007 election. And if he has to refinance again, then I’ll believe he’s sharing in the sacrifice.

If there really is a budget crisis and we need to make tough decisions without losing our basic humanity, get a few single mums on the job. They’ll soon have it sorted, and far more equitably.