At around the 15 minute mark of Hockey’s budget night speech, I’d had enough. It wasn’t the fake economic emergency, the fiddled forecasts or the alleged debt burden, claimed in the name of fixing the budget for future generations. No, it was their undeclared class and generational war, so central to both the budget and the Commission of Audit’s report.
As well as being a savage budget for older people and for low income Australians, it was also brutal to our young people, Generation X first, then Y and then Z. Warren Buffett said recently words to the effect that there was a class war in America and his class – the rich – were winning. In Australia, low and middle income earners have done well, compared to many other developed economies. Now there is an increasing concentration of wealth at the top.
Lurking in the darkness on the conservative side of politics is the Tea Party–inspired policy pursuit of shrinking the state, to shred a so called “age of entitlement”. Budget night shone a beaming light into the darker corners of the conservative agenda. I had heard enough.
The heavy artillery had been devised by a prime minister, a treasurer, the head of the Business Advisory Council, Maurice Newman, and the head of the Commission of Audit, Tony Shepherd, who neither mixed nor empathised with low income earners. All four were older, wealthy and cloistered, and hailed from Sydney’s wealthiest suburbs.
It’s not often you have a prime minister and a treasurer with neighbouring electorates. It’s unusual that it has happened twice since 2007. First when I was treasurer in the Rudd government, and now with Joe Hockey as Tony Abbott’s treasurer.
Who cares, you might ask? Some may know I have more than a passing interest in postcodes. The thesis of my book Postcodes: The Splintering of a Nation, which I wrote nearly 10 years ago, was about the corrosive effect of growing inequality on our country, and the grouping of Australians into enclaves of growing prosperity and growing disadvantage.
Learned books by Joseph Stiglitz and Thomas Piketty examine this growing disparity in developed countries. Another book, Unequal Democracy, by American political scientist Larry Bartels, goes a step further and shows how policy choices are shaped when the system is dominated by the partisan ideology of the wealthiest. He shows how US politicians respond to the needs of affluent constituents but ignore those of poor people.
What has this got to do with treasurers and prime ministers in adjoining electorates? Well, everything.
The 2011 census produced an interesting table, ranking federal electorates by median household income. When Rudd was prime minister and I was treasurer, our electorates ranked 22nd and 46th out of 150 respectively.
If you look at Abbott’s electorate, it is the third richest in the country, with a median weekly household income of $2,100 a week or just over $100,000 a year. That’s the median; the average would be much higher.
The treasurer beats the prime minister, with the second richest electorate in the country. The richest electorate is Bradfield, only recently held by former opposition leader Brendan Nelson, where the median household income is $2,200 a week. Malcolm Turnbull, the opposition leader who preceded Abbott, lives in the fifth richest in the country: Wentworth.
I have nothing against the hard working people of these electorates. I know plenty of them and they are some of the finest contributors to our society and our economy. My point is rather one of diversity. The median household income in Australia is around $1,300 a week. In my electorate it’s a bit above that at just under $1,400, and in Rudd’s former electorate it was closer to $1,600 a week.
All the Liberal party’s recent leaders have come from four of the five wealthiest electorates in the country. When your idea of representational diversity is to allow just one of your last four party leaders to come from outside Sydney’s north shore – and that guy comes from the eastern suburbs – you have a serious problem.
The world in which they live inevitably moulds their world view. We could easily call the current mob running our country “The Military Road Mafia”, in honour of the people that traverse that road daily: not just Abbott and Hockey, but the main players in the conservative elites. This is where the real power now lies in society.
This concentration of wealth goes a long way to explaining the debacle of the first Abbott-Hockey budget. Put simply, this budget translates their world view into deeds. Their world is one where people go to the doctor too often because it’s free. Where workers’ wages are too high, regulation on business is out of control, climate change a conspiracy and Julia Gillard still has questions to answer about the AWU.
They are Abbott’s cabinet, his staff and his numerous outsider supporters, including many in the media. Surprise surprise, they are also the principal beneficiaries of his budget.
The change to Newstart, in particular, is the most vicious, unjustified and utterly policy-idiotic measure I have ever seen a government take anywhere, anytime in my public policy career. It denies support upfront to the most vulnerable labour market group at the very time they need it.
It’s policy loved by the angry older conservative brigade; tough love from the “you kids get off my lawn” crowd. But just cutting benefits for younger Australians would be a little obvious. The generational engineering goes deeper, with the pension age being raised to 70 and the real cuts to indexation – and that’s not to mention the impact of the changes to Medicare and the long term impact of the cuts to education.
On the other hand, the most obscene piece of generational warfare goes untouched: the top end tax concessions for superannuation. Labor’s measures in our last budget to claw these back over time were abolished.
Hockey carried on in his budget speech about the age pension becoming unaffordable, but within three years this top-end superannuation concession will cost more than the age pension.
Little wonder Australians reject this budget for what it is: an assault on social justice in the short and long term. Abbott and Hockey need to remember one thing: the generations now being victimised are considerably larger in electoral terms than the generations doing the victimising. In a compulsory voting system this cannot stand. Stay tuned for their assault on the Electoral Act. It’s straight out of the Tea Party playbook.