MYEFO’s promising balance sheet due to the cuts made to welfare and universities
The Lib/Nats Coalition government’s mid-year budget update announced last week in its MYEFO (the amusing but confusing acronym for the Mid-Year Economic and Fiscal Outlook) loudly trumpeted a larger surplus of $10.2bn in 2020-21, revised up from $7.4bn, but the small print made it clear that this was due to new cuts to higher education and family payments.
The Turnbull government did its best to demonstrate that the larger than expected surplus was due to an improved economy, but the reality is very different.
For example, historically-weak wages growth is weighing on the budget, with wages in both the public and private sectors being more subdued than expected six months ago, with one consequence being that nominal GDP growth has been revised down to just 3.5% in 2017-18, from 4% in May.
More worryingly the government has used the end of year Treasury update to unveil cuts to welfare, family payments and new cuts to the university sector worth $2.1bn.
Indeed, the government has abandoned a higher education package outlined at the May budget and replaced it with cuts worth $2.1bn. The revised package will see students having to repay debts once their income reaches $45,000.
Thankfully many community sectors have not taken these cuts, which were sneaked through in the glow of its Bennelong by election (quasi) success, lying down
The Universities Australia chairwoman, Margaret Gardner, said the freeze amounted to a “real cut” in funding – due to inflation – even if universities simply maintain current student numbers.
“And for universities that are still growing their student numbers to meet the needs in their local communities and regional economies, this will be an even deeper cut,” she said.
We in the Riverina need to note that Australians who live in regional areas are only half as likely to have a degree as city dwellers and would therefore be most likely to miss out.
The Group of Eight universities chair, Peter Høj, said the government was treating the sector like a “cash cow to be milked for budget cuts” rather than a means to improve the career opportunities of young people.
The shadow treasurer, Chris Bowen, accused the government of “mortgaging the future and attacking one of the sources of Australia’s long-term economic prosperity, our higher education sector”.
Australian Greens federal party room leader Richard Di Natali wasn’t afraid to call a spade a spade when he said that “The Turnbull Government has got just that little bit meaner with today’s budget, which unfairly targets young people, struggling families and newly arrived migrants with $6 billion in cuts.”
Truth is the Government would like us all to believe that everything is rosy, but here’s what they’re not telling you: wages remain stagnant, there’s a household debt-bomb ticking away, and inequality is growing because of the Coalition’s blind faith in trickle-down economics.
As Di Natali said, “The government has a choice: boost wages for people or give tax cuts to the few and hope for the best.”
Most of today’s politicians enjoyed a free university education, affordable housing and secure jobs with steady wage growth waiting for them when they graduated. None of this will be available to the current generation of young Australians unless we dramatically change course.