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Mr Costello's precariously balanced Budget: a mix of heroic assumptions and asset sales.

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Senator Meg Lees Parliamentary Leader and Senator for South Australia Australian Democrats spokesperson for Treasury

Press Release Dated: 9 May 2000 Press Release Number: 00/248 Portfolio: Treasury 

Mr Costello’s precariously balanced Budget: - a mix of heroic assumptions and asset sales. “The Budget 2000 is precariously balanced at best. It’s based on rather heroic assumptions that, if realised, would be great for Australia. But these assumptions run a real risk of not being realised given the economic uncertainty of the year ahead,” Senator Lees said.

“Without the phoney accounting device of including the spectrum asset sale in the revenue figures, this Budget would be in deficit” she said. “The Democrats do not accept the selling of assets to fund general expenditure.”

“I would welcome the achievement of Peter Costello’s forecast for unemployment falling to 6.25 per cent by next June. But, along with most credible economic analysts, at this stage I have grave doubts that we can get there.”

“Unless key forecasts like the unemployment, economic growth, business investment and household consumption figures are achieved, this Budget will deliver a significant deficit with serious ramifications for inflation and interest rates.

“There are, however, some very positive things in this Budget. Indeed, this Budget delivers on many key policies that the Democrats have lobbied this Government long and hard to deliver. These include:

· $560 million for rural health and getting health professionals into rural centers;

· $132 million to ease the assets test on Youth Allowance for rural families;

· $240 million compensation for hospitals for new salary packaging arrangements;

· $400 million for greenhouse gas abatement programs;

· $45 million additional funding for cash-strapped legal aid commissions;

· $100 million of development aid to East Timor;

· $13 million for a childhood nutrition program;

· $16 million minimal increase in higher education R&D infrastructure support.

“The Government has also picked up on elements of two of our proposals for reducing the beer excise impost from July 1. We will need to examine the revised beer excise proposal very closely to ensure that the Government’s pre-election commitments are met. At first blush, the proposal looks like it still falls short, but we will take time to assess that.

“Given the tightness of the Budget, the Democrats are very concerned that the Government has decided not to proceed with the East Timor levy.

“The notion of Australians on higher incomes making a small contribution towards our costs in East Timor was one that enjoyed widespread public support. This Budget shows that the revenue base is inadequate to fund the running costs of Government and the costs of East Timor without dipping into the one-off proceeds of the spectrum asset sale.

“This is far from sound economics,” Senator Lees said.

“The proceeds of the spectrum sale could have - indeed should have - been ploughed back into our national infrastructure.

“The real disappointment of this Budget is the failure to address the need to raise public investment in infrastructure, particularly regional infrastructure, education and R&D.

“With unemployment rates in regional areas much higher than the big cities and with the jobs of the future certain to come from high-skilled industries, this Government’s running down of education and R&D spending over the last four years is tantamount to squandering our future.

“The spectrum asset sale proceeds provided us with a real opportunity to increase investment in the jobs of the future. But, that opportunity has been lost in the creative accounting upon which this Budget is based,” Senator Lees said.

Comment on specific areas:

Health: “I am very pleased to see the Government adopting many of the Democrats’ recommendations for increased rural health spending and, in particular, funding for allied health services, such as physiotherapy, in rural areas. However, I am disappointed that the Government has not provided any funding for public dental services. In some areas people are waiting up

to 5 years for basic dental treatment. The Government MUST address this if it is serious about improving health services for disadvantaged people.

Environment: “Apart from the Measures for a Better Environment won by the Democrats during the tax negotiations last year, environment spending has fallen in real terms. Apart from this very disappointing result, I am even more concerned that we are starting to see falls in spending on the Murray Darling Programs with no indication how funding for the Natural Heritage Trust will be reinstated when it runs out next year.”

Communications: “The Government attack on the ABC and SBS continues. As we expected both of our important national broadcasters are being severely underfunded when it comes to converting to digital television.”

“We are disappointed that the Budget contains absolutely nothing for upgrading communications infrastructure in regional and rural Australia. There is $2.8 billion in this budget from the sale of spectrum - not even one dollar of that is set aside for upgrading communications infrastructure. This is more than disappointing - it’s very disturbing.”

Social Security: “I am very concerned about placing increased burdens on unemployed people in an uncertain employment climate. I welcome increased spending on community-based initiatives to assist families and the inclusion of family trusts and private companies in the means test for income support.”

Education: “This Budget does nothing to reverse the decline in public spending on schools and universities. The Democrats consider this to be very shortsighted.”

Defence: “We can see no justification for the $200 million increase in defence spending ahead of the Defence White Paper. Defence, presently, has the capacity to meet its needs by savings within its current allocation.”


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