• Rikki Lambert

Farmers, sport, recreation and culture the biggest losers in big-spending federal budget


Tuesday night's record-breaking Federal Budget aims to reduce unemployment to levels not seen since the mining boom or 1970s, but fails to invest heavily in farming, regions, local community sport and recreation initiatives. Universities also suffer as the government pivots instead towards trades, skills and apprenticeship training.


This budget drops spending levels by 42 per cent in real terms over four years into the sports sector, rural assistance falls 39 per cent and recreation and culture sector drops 19 per cent. In some consolation, the government will provide $223 million in support for the arts sector to recover from COVID-19 - including $20 million over 2 years to revive independent cinemas - while Netball South Australia will receive $6 million to upgrade its main stadium in Adelaide, supporting the $12 million put forward by the SA government last November. (Curiously, the state government is also campaigning at the state election to spend $700 million building a new city stadium to host, among other things, elite netball matches). While the nationwide grassroots Sporting Schools program gains $41 million over two years to encourage more physical activity, the Matildas and national youth football teams get $12 million to help them get better hitouts before their 2023 international tournaments and Basketball Australia receives $5 million to host the FIBA Women's Basketball 2022 World Cup. Paralympics Australia receives $3.5 million in 2021/22 to cope with the additional cost of getting athletes to the Tokyo Paralympics.


Farmers rocked by Chinese tariffs imposed on wine and barley will have to rely on a modest $72.7 million fund over three years from 2020/21 to help them strengthen or find new export markets - and other short-term state government schemes to help them find new markets. The federal government declined to invest heavily in assisting farmers to establish or grow new markets, even though Australian foreign policy has played a significant role in Chinese trade disputes. Farmers will have to wait for benefits to materialise on offsetting tariff reductions into jurisdictions such as the United Kingdom, with a new trade deal with post-Brexit Britain imminent. The government has also declined to make significant commitments in this budget to alleviate current freight delays through road or rail improvements from paddock to plate, although the NSW Farmers were grateful for local spending on the Great Western Highway (more on that later), and on instant asset write-offs, saying early on Wednesday:

“We applaud the Australian Government on continuing the instant asset write-off to June 2023, especially after years of setbacks including drought, bushfires, COVID-19 and flooding.”

The federal budget also fails to assist farms or irrigation districts in the Flow family area with new water infrastructure projects other than redirected pre-existing funding from on-farm water efficiency to off-farm projects in the Murray-Darling Basin. Farmers do, however, gain the $370 million biosecurity measures announced pre-budget and $212 million over four years from 2020/21 to provide more support for farmers and communities to manage drought. The mining sector and communities dependent upon it receives no significant funding support in this budget, other than an additional $38 million from July 2023 to assist junior mineral explorers.


Aside from the pre-budget announced sixth round of the Building Better Regions fund at $250 million, there were no significant additional funding initiatives for regional Australians, aside from $275.9 million next financial year in Disaster Recovery Funding Arrangements that will assist regional NSW recovering from the early 2021 floods and 2019-20 bushfires. Despite a profound regional housing shortage, no specific measures were announced to increase the availability of low-income or social housing in regional Australia. The government has instead opted to stimulate first home ownership with a $782 million package over four years. The government will also serve as guarantor for single parents to be able to get their first home or re-enter the housing market with a deposit as little as 2 per cent of the total purchase price. Those measures will, theoretically in turn, free up older housing for rent and emergency housing - though the Coalition government would also expect states to take the primary initiative in social housing support.


Aged Care


Whilst women were touted as the big winners in the lead-up to the budget, aged care took centre stage after a rumoured $10 billion spend on aged care was in fact over $17 billion as the government seeks to prevent the crises that unfolded during the Aged Care Royal Commission. The spending package will focus on the key areas of home care, services and sustainability, quality and safety, workforce as well as governance. For instance, the government will pay a $10 daily funding supplement to aged care providers so long as they provide annual reports on the adequacy of daily living services they provide, including good, nutrition and cleaning. To resolve the waiting list for places, the government will fund 40,000 more home care packages this year and a further 40,000 in 2022.


NDIS


The government will also invest an eye-watering further $13.2 billion into the National Disability Insurance Scheme over the next four years, as it rapidly moves towards becoming more costly than Medicare. For that reason the government is applying more stringent criteria, such as independent assessments, to ensure those most needy and eligible are receiving NDIS funding.


Health


An additional $1.5 billion will go to telehealth services and COVID-19 testing as well as outbreak prevention in remote communities. The Budget also allocates an additional $1.9 billion to the vaccine rollout. The government has committed to purchasing additional vaccine doses, expanding the total to 170 million doses. Mental health will be given a $2.3 billion boost to expand prevention and treatment services.


Education


The largest movements in this budget are at the pre-school level with $1.6 billion committed over four years to establish a new funding agreement towards universal access to early childhood education, supporting at least 15 hours or preschool a week for children before they start school. Higher education, by contrast, had its calls for support fall on deaf ears, losing more funding despite already being decimated by the loss of international students during the pandemic.


Defence and veterans


The budget contained no new surprises in Defence, with money already announced to improve Northern Territory defence facilities after recent tensions with China. After big-ticket spends in recent budgets such as the future frigate and future submarines projects and attendant cost blowouts and controversies, the government has shied away from any major new defence projects or investment, which will dampen manufacturing and materials demand.


An additional $1 billion will be invested in ASIO intelligence functions, while the budget also revealed a $174 million price tag over two years for the Royal Commission into Veteran Suicides. The Government also committed a further $302 million to improve the Department of Veterans' Affairs processing of claims.


Low-and-middle income earners also gain short-term relief with the second extension of a concession worth thousands of dollars to people earning under $90,000 per annum.


Roads


After receiving $1.2 billion in infrastructure funding this budget, Queensland was cranky at the $3.2 billion now confirmed for South Australia, which the Queensland treasurer Cameron Dick lumped with Victoria as both being 'city states' in pre-budget commentary. SA receives a further $2.6 billion for the North-South Corridor of South Road from Darlington to Anzac Highway, and the other big-ticket items announced pre-budget in the form of a $160m Truro Bypass for the Sturt Highway and $140m in further duplication of the Augusta Highway. $64 million will be spent on further sealing the Strzelecki track in the state's north, while $40 million will go to councils over two years for local road funding.


Victoria receives $3 billion, mostly focused on metropolitan Melbourne, although $15 million goes to future priority works on the route from Mildura to Melbourne, $17.5 million in Dairy Supply Chain Road Upgrades. $20.7 million has been allocated to improve the Princes Highway West between Colac and the South Australian border.


New South Wales receives $3.3 billion largely for regional works, $2 billion of which goes to upgrading the Great Western Highway between Katoomba and Lithgow.


Debt, jobs and budget repair


Budget repair has also been put on the backburner due to the pandemic recovery, with the Treasurer Josh Frydenberg saying unemployment needs to fall below 5 per cent - unseen since the mining boom - before the government is willing to begin returning the budget to surplus. The Treasurer told Parliament on Tuesday night:

"Australia has seen employment go above its pre-pandemic levels.
"At 5.6 per cent, unemployment today is lower than when we came to government.
"This is remarkable.
"Employment is at a record high, with 75,000 more Australians in jobs than before the pandemic.
"And this budget will help to create more than 250,000 more jobs by the end of 2022-23.
"Jobs are coming back. The economy is coming back. Australia is coming back."

The budget projects the sub-5-per-cent lofty unemployment goal to occur in 2022/23 - however much of it is predicated on existing pandemic levels remaining the same, or better, including a mass vaccination program available to all Australians who want it by the end of 2021.


One contributor to the employment picture is the absence of international migration. When the international borders reopen more broadly some time during 2021/22, the government will have to carefully consider skilled migration balanced against its training efforts in this budget - including $2.7 billion to expand the Boosting Apprenticeship Commencements program and $506 million to expand JobTrainer - to give Australians the skills to meet skills shortages.


The budget estimates that it could now be the early 2030s before a federal budget returns to surplus - words one would have thought unthinkable to be uttered by a Liberal treasurer in the era of Prime Ministers Abbott or Howard. Commonwealth net debt will rocket from $617 billion in 2021/22 to $980 billion by 2024/25.


The Treasurer indicated Australia's retention of the cherished triple-A credit rating from the major ratings agencies gave the government reassurance that its borrowings were manageable due to disciplined fiscal management before the pandemic hit, and low borrowing costs with central banks slashing interest rates to historic lows.


The shadow treasurer will deliver a reply speech on Thursday, with Labor's $15 billion National Reconstruction Fund initiative bound to be a centrepiece. The Coalition's budget did not include a competing policy to stimulate Australian manufacturing, investing only $1.5 billion by comparison in a modern manufacturing strategy.


The Coalition also failed to counter Labor's response to the delayed October 2020 budget of a $20 billion Rewiring the Nation energy infrastructure fund to modernise Australia's electricity generation and transmission grid.


The Coalition has instead elected to focus on its company tax cuts agenda, letting the economy pick its own winners rather than government. Businesses will be able to avail themselves of a further $20.7 billion in tax relief over the next four years, on top of $16 billion in tax cuts and other spending incentives for small to medium-sized businesses and tradies by 2023/24.


Treasury projects that Australia's gross domestic product - a rough measure of the size and strength of the economy - to continue roaring back into shape, with the 0.75 per cent growth in 2020/21 now estimated to be 1.25 per cent - helped in no small part by China's insatiable demand for iron ore, and hence record high prices and resultant royalty revenue for government at rates unseen even during the mining boom. To be safe, Treasury has maintained a conservative estimated future price for iron ore, meaning the budget will recover more quickly if prices continue to surge. Treasury also estimates this financial year's GDP slump will be countered by an estimated whopping 4.25 per cent in 2021/22 (previous forecasts were 3.5 per cent), settling back down in the more historical trend 2.25-2.5 per cent range in the forward estimates years.


-- with AAP