A Budget to enshrine inequality


Joe Hockey shuffling papers

Governments have always included in their budgets a 'we're serious' clause. It doesn't address the real problems of the economy, saves relatively little money, but it is a symbol of the government's fierce determination to fix the economy.

It has normally been directed at the vices of the underclass. Once it took the form of increasing the tax on booze and cigarettes, the working man's weaknesses. Nowadays governments slash spending on the disadvantaged.

And so it is in the latest Budget. This change from demonising things to demonising people deserves reflection.

The decision to make an example of welfare recipients in the Budget was clearly taken before the appointment of the Audit Commission. The enquiry into welfare had been announced as a way of reducing unsustainable expenditure. Yet the growth in expenditure on welfare has in fact been relatively modest compared with other areas of government. The decision had to do with politics and ideology, not with economic need.

The impact on disadvantaged young people will be particularly harsh, particularly on those who have no safe home. Their income support will be unreliable, their access to appropriate education more difficult, and health care more costly. The cuts to education and health will also affect the services provided by the states 

The practice of further disadvantaging the already disadvantaged reflects growing inequality between the more affluent and the disadvantaged members of society. Although a common response to discussions of inequality is to decry the 'politics of envy', the effects of growing inequality are real and corrosive in society.

Government ministers and the heads of the public service are relatively affluent. They mix with and consult others who are notably affluent. Neither affluence nor consorting, of course, is a moral fault. But the style in which we live and the people with whom we live and speak shape our imagination, the way we instinctively see the world. And what matters to those with whom we mix and what they take for granted will also matter more to us. We come to share their view of the world.

In an unequal society in which politicians and senior bureaucrats are relatively affluent they are likely to share with their conversation partners a working vision whose effect will be to entrench and deepen privilege. They will accept the gods of economic growth, competition and the market as inescapable, if not totally benign, and define the public good in terms of economic growth without asking whom it benefits.

They will also instinctively accept the division of society into winners and losers, and so believe that losers are responsible for their own weakness, and are morally at fault. This makes it natural to dismiss financial support for the disadvantaged as part of a decent society, and so to redefine it as a reward for jumping through a number of humiliating hoops. It also makes it harder to see that disadvantage often means you can't jump. Shared affluence leads to a failure of the imagination.

Inequality also makes it more likely that disadvantaged people will be used for target practice. When economic liberalism rules it is easy to make those who cannot compete scapegoats to deflect public anger from the deficiencies of the government. Shared affluence means that this can be done with an untroubled conscience. So if the government becomes unpopular we may expect attacks on asylum seekers, the unemployed, youth with disabilities Indigenous Australians and all the usual suspects. 

Inequality of wealth and power tend to perpetuate themselves and to become more deeply routed in society. The narrowing of the political imagination is reinforced by practices like cash for access, in which the economically powerful and the politically powerful are brought together to further their individual interests. The voice of the poor or of the common good will not be heard in that land.

So inequality makes it easy for governments to identify the common good with the interests of the affluent and so to serve their interests. In the Budget the financial restrictions placed on regulatory agencies and the abolition of many statutory bodies will certainly make it easier for wealthy developers to circumvent regulations and to enrich themselves without respect for the environment or social needs of the nation.

Australia will survive this Budget. But it will survive as a more divided nation with less sense of mutual responsibility. And the enshrinement of inequality will further exacerbate the disillusion with democracy characteristic of so many Western nations. Democracy rests on the acknowledgment of the unique and equal value of each citizen. The culture of inequality corrodes that belief. 

Andrew HamiltonAndrew Hamilton is consulting editor of Eureka Street.

Topic tags: Andrew Hamilton, Budget, welfare, Joe Hockey, Tony Abbott, inequality



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Existing comments

I am 85. I don't want my grandchildren to grow up encumbered by a national debt incurred by "populist" spending to many welfare agencies. One of the most affluent sectors of our society is the Catholic Church, who pay no taxes, take up a weekly "plate", encourage giving to the disadvantaged. do not open up the presbyteries to the homeless, who build bigger and bigger buildings rather than selling and giving to the poor. Surely, surely, the Church is in no position to take up a stance of wealth versus poverty, or the strong against the weak - aren't we still going thrugh the dradful revelations of priests molestation of the young. Somtimes, Andrew, it could be an idea to give some hope to people through good governance and support to a government trying to get our country out of debt. Isn't that the reason for the Budget. Isn't it true that Labor left an enormous debt? Do you agree to spending above your means?

shirley McHugh | 14 May 2014  

A stunningly good analysis, Andrew, Thank you so much. I particularly liked the way you showed the way in which the elites re-enforce each other's prejudices and I loved your sentence 'Shared affluence leads to a failure of the imagination.' Spot on!

Paul Collins | 14 May 2014  

In the US a politician who disobeys the orders of bishops can be refused communion. Will our RC politicians, who refuse to heed the words of Pope Francis and of our bishops calling for a policy of social inclusions, be denied communion? Or are the words of popes and bishops only serious if they are about abortion and birth control?

Janet | 14 May 2014  

Thank you Andy for this thoughtful analysis. I am utterly anguished over the plight of homeless young people.

Libby Rogerson | 14 May 2014  

A prophetic summation; the 'usual suspects' must be highly troubled at the prospect of further vicissitudes. Thank you for eloquently and accurately contributing what I hope will be one of many voices in the social policy wilderness.

Barry G | 14 May 2014  

We open the morning papers after Budget night to expert opinion (economists are apparently the experts on how people live) that divides our society into winners and losers. We study closely to see if we are winners or losers. If we are winners we live under the deep illusion that the government is good and looking after us. This treatment of sections of our society (students, unemployed single parents, the aged) as losers establishes attitudes toward all of these people that are negative and destructive. We are quietly being drawn into an us-and-them way of thinking in which basic respect is being thrown aside and personal identity is treated as immaterial to well-being. The lack of any care from this government, and the deliberate flouting of that attitude of non-care towards others, makes a mockery of the ideal of a Commonwealth of Australia, let alone the moral understanding about treatment of others taught by the majority religion of this country.

CLOSE READING | 14 May 2014  

Thank you Andrew. Why can't Joe Hockey and his party see the neglect of the most vulnerable and especially the young is bad for the economy. Welfare needs to be central to a healthy society. Welfare is not waste, but if structured and protected as simply basic human rights,includes education, housing, health and a chance to be active in society, contribute positively and gain dignity, advancement and independence. Welfare is a safeguard against overcrowded and extremely costly incarceration, crime, health problems and debt.Australia's wealth relies on stable economics, and welfare is the reason the rich enjoy their assets in a relatively safe society. The Liberals pride themselves on a past surplus but this was only possible by ignoring the value of investment in health and education.

Catherine | 14 May 2014  

Well spoken Andrew. The blind spot of this budget is adherence to ideology over economic research and data. The authors, more tellingly appear oblivious of their own bias.

Matt Casey | 14 May 2014  

I couldn't agree more with Andrew's assessment. My heart is breaking for all those who will be so much worse off under this 'budget of the rich'

Bonita | 14 May 2014  

The budget has been sold badly. Instead of explaining to the people that a Government cannot keep on borrowing money without creating too much demand for funds. If the demand for funds increases, competition from the private sector will eventually increase interest rates. High interest during a previous Labor Government rule creates enormous hardship. I can remember that we had to pay 17.5% interest for our home loan. High interest rates do far more damage to low and middle income people than paying a moderate fee towards medical research. I think people should thing and imagine how much worse off they would in a high interest rate economy! It is so easy for non tax paying institutions such as churches go on the high horse and preach for more funding from the Government for numerous worthy schemes. In the end it is the working tax payer who is paying for Government stupidity. Australia is lucky as the Government had many Billions accumulated during the Howard years. It took Bob Brown and Kevin Rudd just about 6 years to waste the lot and then go deeply into debts. They are now living on a massive pension and can laugh their heads off.

Beat Odermatt | 14 May 2014  

Thank you for this brilliant piece of writing. I wish the Opposition had spokespeople who would speak with this kind of depth and understanding. Our country is in deep trouble.

Vineta | 14 May 2014  

A budget should show the values and priorities a country holds. It should be balanced and fair. This budget so unfair. The levy on the rich will bring in about $3 billion and the poor; i.e. families, youth and pension cuts will bring in about $12 billion by Dr. Hewson's analysis. So unfair. Slowly dismantling Medicare and leaving youth high and dry.

Kate | 14 May 2014  

You have surprised me today, Fr Andrew. I was half expecting that somewhere the Jesuit community would have expressed some pride in one of their alumni who last night, in stark contrast to his predecessor, began the task of finding the money to help the poor and disadvantaged in our society and at the same time eliminating the army of abusers of the public purse. Does "social justice" excuse responsibility with other people's money? Democracy has its problems but it sure as hell beats the daylights out of communism which so much of the current "preferential option for the poor" mentality espouses. Nowhere in this budget has the government penalised the genuinely disadvantaged. Rather its measures seem to be designed to encourage those who can help themselves to get on with it and do it, something in line with the widely espoused Jesuit philosophy.

john frawley | 14 May 2014  

The style in which we live and the people with whom we live and speak shape our imagination." Well said Andrew. Yesterday I spoke to a single mother with a disability whose house had just been damaged by a fire, a 46 year old man whose marriage had broken down and who was at rock bottom,a teenage boy who had been bullied at school and was receiving support from a counsellor, an old age pensioner who was valiantly trying to care for his wife in the first stage of dementia and a country mother whose son at uni was doing it hard in the city trying to study and hold down a part time job. I walked in the city and was asked for money by homeless people with a disability. My imagination is stimulated , challenged daily and my life is based on the words of Jesus. How can certain politicians "go to"church" on the day the budget comes down and put their signature to a document that discriminates against the impoverished in our country? Open your eyes and look around . The poor are truly with us right here in "river city".

Name | 14 May 2014  

They profess to know God, but they deny Him by their works.

Annoying Orange | 14 May 2014  

I think right from the beginning of his campaign Tony Abbott has been about a class war. To see the outcome of this approach to government one has only to look eyes wide open at the American experiment with its i% super wealthy who make the rules in their favour versus the 99% who are not so comfortably endowed yet expected to fuel the crass life style of the wealthy. Of course gross capitalism has no room for compassion it's everyone for oneself. Perhaps TA's favourite bible story is that of the Pharisee who gives thanks that he's not like other men?

Name | 14 May 2014  

Tony Abbott and Joe Hockey are both Jesuit educated Catholics. How could they have come up with a budget that is so lacking in compassion and gospel values, let alone church teachings on social justice and care for the poor.

Sue | 14 May 2014  

Good to find a Christian voice which appears to respect the Gospel. The Federal Government front bench, stacked with Catholics and with a plethora of Jesuit educated amongst them, has deeply discredited the name of "Christian".

Bilal Cleland | 14 May 2014  

Perhaps if 85-year-old Shirley is concerned about her grandchildren growing up encumbered by debt, she should look at the debt that will now be shouldered by those wanting to do university courses. If those like her were serious in their desire, perhaps they might ask the government to explore alternative ways of raising revenue such as re-instating inheritance taxes, rather than targeting disadvantaged young people under 30 and ensuring poverty becomes more entrenched from generation to generation.

Joseph Vine | 14 May 2014  

The problem with belonging to an elite is the danger that one feels entitled to demonise the poor. And the problem with demonising is not only the damage to the target, but that it ALSO DAMAGES oneself, in that the very act of demonising makes it is easier to demonise more. "He must be bad because I was nasty to him, and it was OK; so I can be nastier!"

Peter Horan | 14 May 2014  

this article is strong on rhetoric but light on facts - please study the facts and provide evidence for your assertions

frank hetherton | 14 May 2014  

Thank you Andrew for your analysis. It is difficult for me to understand how the Prime Minister and the Treasurer seemed to have abandoned their Jesuit training for the religion of the free market. In the words of a former pope, (I think it was John Paul 11) " Every man is our brother. he must be treated as a brother. That means he must be loved. The littler, the poorer, the more suffering, the more defenceless, ever the lower man has fallen, the more he deserves to be assisted, raised up , cared for, honoured." It must be so sad for the Jesuits that these two men are former students of their schools.

Brian Coates | 14 May 2014  

There is no directive from the Gospel or Catholic Social Teaching to esteem economic equality. Further, there is abundant evidence that pursuing economic equality as a priority of policy can have disastrous outcomes for all, especially the poor, of which there will be an increasing number. I refer to the experiments of the 20th century known as communism and socialism. On the other hand, countries which prioritize economic freedom tend to deliver better results for the poor. The freer economies are richer and growing faster. True, their distribution of wealth is the same across society as the least free economies (eg the poorest 10% receive 2.6% of the income in both situations), but in the poorest decile of an unfree economy this translates to an average income of $US932 compared to a freer economy where the income of the same decile is $US10,566 (2011 numbers) ... a detail I’m sure the poor would be interested to know about. Moreover, if one really insists on equality, the freest 25 economies have a lower Gini coefficient than the least free 25. And within free economies, the lower quintiles are increasing their income at a greater rate than the higher quintiles (ie the rich are increasing their wealth at a slower rate than the poor are) and poverty is disappearing faster in these economies. There are many other benefits, including lower rates of child labour, less pollution and less deforestation. As a Catholic concerned for the poor, I definitely recommend economic freedom over economic equality as a policy option. I see the Coalition as paying lip service to the same idea, but, sadly for the poor, not much more than that.

HH | 14 May 2014  

The Budget to me seems like something drawn up at the Mad Hatter's Tea Party. Those who drew it up and most ardently support it are living in Wonderland. They urgently need to return to the normal world. Some of the wisest comments on the current economic situation of this country I have heard were made by Satyajit Das on last Monday's Q & A. One of the key points Das made was that we focus narrowly on the economy rather than society. I think he is right. A society where the draft plan for the future is drawn up by politicians and advisers on $800, 000. 00 per annum is not going to favour those who earn less than $20,000.00 on some sort of benefit. Sadly, I fear the Opposition are not of the necessary calibre to take the fight where it should be taken in parliament. They have their own skeletons which are being revealed. The real long term problem for participative democracy in this country is we do not seem to have politicians of the calibre of Menzies or Keating to address the problem. The whole current crop need urgent replacement. Then we can actually start.

Edward Fido | 14 May 2014  

Those wanting some evidence to back up this article should have a look at this TED talk from Richard Wilkinson (http://blog.ted.com/2011/10/24/how-economic-inequality-harms-societies-richard-wilkinson-on-ted-com/). It outlines how greater inequality in a society correlates directly with falls in health, life expectancy, imprisonment rates, mortality and even things like 'basic human trust'. The amazing part is that even the richer are healthier and live longer in more equal societies. You can create a more equal society by have an elite that voluntarily accepts less in earnings (as in Japan), or is taxed more highly (as in parts of Europe). I suspect neither would be palatable to our own elite.

Michael McVeigh | 14 May 2014  

Andrew do you appreciate that Aussies generally are heading towards an extremely challenging economic future, situated in the midst of a region of approx. 400 million +where people dont receive any social securityl benefits.Surely you recognise that the day of reckoning is upon us. Certainly challenge the strategy but recognise that courage is needed to face up to what is ahead of us

Brian | 14 May 2014  

"countries which prioritize economic freedom tend to deliver better results for the poor". This is wrong. The best results for the poor have been obtained in those northern European countries who designed their economies to meet their social objectives. Those countries, that have, for example, free universities.

Russell | 14 May 2014  

To HH. On the other hand, countries which prioritize economic freedom tend to deliver better results for the poor? http://www.youtube.com/watch?v=JTj9AcwkaKM

Annoying Orange | 14 May 2014  

Contributors who are critical of Tony Abbott for trying to save Australia from 6 years of Labor/Greens coalition's economic disaster, should reconsider that even though, Tony Abbott knew that he would lose some support over the budget, he still put Australia first. We are fortunate to have a Prime Minister that has the courage to do the right thing, put Australia first. People who do not approve of Tony Abbott, can vote for Bill Shorten at the next election.

Ron Cini | 14 May 2014  

AO, thanks, but the dramatic youtube link you supply is irrelevant. Demonstrating that most Americans imagine and desire wealth distribution curves which are at variance to the reality doesn't in any way disprove my point that in reality countries which prioritize economic freedom tend to deliver better results for the poor.

HH | 15 May 2014  

Deficit and Debt are NOT the same thing. A Deficit occurs when Government Expenditure exceeds Government Revenue. A sovereign country can always meet expenditure, if necessary, by printing money, which is also known euphemistically as quantitative easing. However, printing money can lead to rising prices, and it is sometimes important to withdraw the money from circulation when the time arises by running a surplus, just as it is sometimes important to support the economy by running a deficit when the economy lacks liquidity, as it was after the global financial crisis. Debt is different. Debt occurs as a result of borrowing incurring interest costs, incidently adding to expenditure. Australia's debt is low.

Peter Horan | 15 May 2014  

Thank you Russell. I was about to say the same thing. Coming from a Northern European background I simply cannot understand why Australia continually follows a country such as the US as a model, when the truly successful holistic societal models can be found in Northern Europe. Perhaps these privileged Catholic men have a big daddy complex and want to emulate the USA by making us a mini-USA; you know, the United States of Australia. WHY? WHY? WHY? No, this is a purely ideological budget, one seeking to change the once egalitarian loving Australia into a Spencerian Social Darwinist elitist run, completely anti-Australian future. Be prepared people for a lot more crime. But what do we do? Protest. Occupy. Flex our own fought for and worked for democratic muscle. These over-grown elite and male hegemonic school boys have got to be demoted from their prefecture. (Written in sorrow and fear for all those who will be affected, many of my loved ones and my own family. Enough is enough).

Agnes Day | 15 May 2014  

I agree with the sentiment of this article. In my opinion the philosophy of this budget is a reflection of contemporary Australian society which has very little sympathy with egalitarianism and social justice. Most Australian people prefer policies of low taxation and minimal spending on the provision of government services for education, health and welfare for disadvantaged people. Australian people prefer individual autonomy concerning spending of their income rather than the government. Most Australians also prefer a capitalist society like America where disadvantaged people are dependent on the generosity of good Samaritan type people.

Mark Doyle | 15 May 2014  

This exactly the budget Labor would have to do if elected. The choice is simple, keep on getting deeper and deeper into debt in the hope that our children and grandchildren can pay for our wasteful spending or apply common sense and start to live within our means. I think it is criminal to accumulate a massive debt and let our working children pay for it. Yes, I agree with an inheritance tax. If we look at the latest news about Packer etc., an inheritance tax would be a good service to all!

Beat Odermatt | 15 May 2014  

A summarising image I have of this excellent article is a bloated dollar note attacking a poor and marginal person. And that seems to be the nub of it. We are losing a sense of what it means to be human and how to relate with others who are not dollar bills or even coins but human. The pressing question I have is that if we can't sustain the value of the human individual, how we can maintain democracy? And what hell might replace that system of governance?

Jane Anderson | 15 May 2014  

The talk recommended by MM is a précis of the Richard Wilkinson/ Kate Pickett book "The Spirit Level". Those interested in the topic should give it a fair reading as it is a work which has had a considerable influence on both sides of politics and is a bible for the left. But in the true spirit of equality, they should also read with attention Christopher Snowdon's searing critique : "The Spirit Level Delusion", or visit his website: http://spiritleveldelusion.blogspot.com.au/ and make up their own minds as to where the truth lies.

HH | 15 May 2014  

Russell, are you thinking of Sweden? A Scandinavian economist once said to Milton Friedman: “In Scandinavia, we have no poverty.” Milton Friedman replied: “That’s interesting, because in America, among Scandinavians, we have no poverty, either.” He was substantially correct. Eg. The poverty rate for Americans with Swedish ancestry is only 6.7 percent, half the U.S. average (in 2011). Economists Notten and Neubourg calculated the poverty rate in Sweden using the American poverty threshold, finding it to be an identical 6.7 percent. Moreover the Swedes flourishing in America are 53 percent more wealthy than those in Sweden (excluding immigrants). As for equality, Sweden was very free market from the late 19th c to 1950. Yet by 1920, 30 years before the onset of a welfare state, it had already one of the highest levels of income equality of developed western economies. By 1950 Sweden was one of the most prosperous (per capita) and free economies in the world. Unfortunately, over the next 40 years, it did to its economy what Rudd and Gillard did to Australia's in 6, and faced enormous economic hardship as a consequence. Since then it has made significant free market reforms, and thus recovered somewhat. Unfortunately, areas like health care remain almost completely socialized and the dire results are well documented.

HH | 15 May 2014  

To HH. There is no directive from the Gospel or Catholic Social Teaching to esteem economic equality? All through the Gospel Jesus denounces the abuse of worldly power, which inevitably leads to the oppression of the poor: And there came a certain poor widow, and she threw in two mites, which make a farthing. And he called unto him his disciples, and saith unto them, Verily I say unto you, That this poor widow hath cast more in, than all they which have cast into the treasury: For all they did cast in of their abundance; but she of her want did cast in all that she had, even all her living [ this passage is not only about the widow’s trust in God and holy providence ] ... How is it you don't understand that I was not talking to you about bread? But be on your guard against the yeast of the Pharisees and Sadducees [ this passage is not only about broken promises, lies and hypocrisy ]. Glance is the enemy of vision. - Ezra Pound

Annoying Orange | 15 May 2014  

I believe the Coalition believes in its own small government theory. In practice, however, it will indeed be divisive, promoting a culture of inequality. This doesn't necessarily mean economic inequality - it will be a huge and dangerous inequality of power. Just to start with, how easy will it be for employers to employ someone from the long-term unemployed list, then make sure they throw it in once the government subsidy runs out - and employ another unfortunate. It's not good to have a large number of people desperate for a job to the extent that their employers have really unreasonable power over them. Good for employers, perhaps, for the employees - not so much. Interesting to notice, too, how the government has forgotten all that old research about the long term economic and social benefits of children having a parent at home with them during their early years.

Joan Seymour | 15 May 2014  

AO, Catholic social teaching doesn't state that if everyone had equal wealth/income that would be somehow a better situation than if they didn't. Your gospel references don't contradict my point.

HH | 15 May 2014  

I personally benefit from this Budget because I live off interest and pay no taxes thanks to salary sacrifice into superannuation and negative gearing and franking credits via a margin loan. But as a Christian I am obligated to protect the poor and vulnerable. This Budget is horrendous in that it cuts spending on the poor, pensioners, motorists, families, disabled, and vulnerable members of society while sparing the rich.

keith | 15 May 2014  

To H.H. Pride is concerned with who is right. Justness is concerned with what is right.

Annoying Orange | 16 May 2014  

John Frawley you're kidding right? "Nowhere in this budget has the government penalised the genuinely disadvantaged." If you believe this, you have no clue. This budget will destroy hardworking disadvantaged families like mine. We live in Canberra so our mortgage for a two bedroom place takes up half my husband's income. I have multiple serious health problems and have just lost my job after asking for extended sick leave. Both my daughters and my husband have their own health problems. We could only just make ends meet with me working, and I was working against medical advice because we couldn't afford to eat otherwise. I'm already going without medications and treatments I need as my husband earns just a few dollars too much for a concession card. We are already paying over $10K a year in medical costs. When this budget comes in, the cost of medical care for us will increase by at least $1000, plus the loss of family tax benefit which is over $4000, and that is just the start. We are already seriously disadvantaged, this budget penalises us extremely. If you think it doesn't penalise the disadvantaged, you need to get out in the real world.

Jay | 16 May 2014  

...a detail I’m sure the poor would be interested to know about? Don't you mean, HH, a pleasant illusion is better than a harsh reality? http://www.youtube.com/watch?v=HmlX3fLQrEc

Plato | 18 May 2014  

Simultaneously depressed and inspired. I think the word is 'hopeful'. Thanks Andy, as usual, your reflection has given me hope.

Edwina | 18 May 2014  

Thanks Plato, for that entertaining and at times perceptive critique. However, exposes of taxpayers funding sugar millionaires and governments bulldozing housing lots are not critiques of the free market. It's against crony capitalism/socialism and corrupt officials that this movie lands its punches (and rightly so).

HH | 19 May 2014  

The sooner we throw these fake Catholics out of office, the better. Abbott, Hockey and pyne are sadly out of touch. let Hockey smoke his celebratory cigars elsewhere. Let Pyne be the host of 500 dollars per person away from elected office. is Abbott capable of smiling ? Is Abbott going to stop spreading fear ? these elected twerps are highly dysfunctional politicians. They are an embarrassment to Australia and to good Catholics. This is not the Australia I have ever known. Throw them out.

Robert Drummond | 23 May 2014  

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