The Prime Minister is right: there is a moral aspect to economics, just not in the way he thinks

Published: 19/09/2016
Category: Analysis
Published: 19/09/2016
Category: Analysis

By Ged Kearney, ACTU President

Malcolm Turnbull’s recent description of budget management as a ‘moral challenge’ suggests that he is aware of the complex, real world stakes at play. But when you look at the solutions he’s proposed, such as the Budget Savings Omnibus Bill, it appears the Prime Minister believes it’s the act of creating savings that is itself moral, rather than the effect that the savings are bound to have.

Expenditure cuts are only one of the range of economic management tools available to government, but like any tool, there are many ways they can be used.

Just as a knife can be wielded by a surgeon to save your life or a mugger to obtain your wallet, it’s the context of savings that provides the morality. They should be a means to an end, not the end themselves.

The omnibus bill is a seemingly random assortment of cuts leftover from previous budgets and un-passed legislation. Despite its benign name, it contains a range of substantive measures that are going to be felt by Australians.

It was headlined by a $1.29 billion cut to Newstart, Disability Support Pension and the Aged Pension recipients. A proposal – which was taken off the table thanks to an eleventh hour deal with the opposition – that would have taken $5 a week from the lowest income recipients in Australia.

If we’re going to start judging the morality of budget decisions, then intentionally lowering the income of the poorest Australians should surely be considered wrong.

But even without this particular cut, the bill still contains a number of measures that still have a moral question mark.

What about $52.5 million from the health budget that means many children will not be able to see a dentist? Or $108.6 million from the Department of Human Services budget that is achieved by limiting the income for carers who are looking after sick or elderly loved ones?

Economic decisions don’t happen in a vacuum, they occur within an ideological framework that reveals a lot about the values of the people making those decisions.

By approaching the moral challenge of budget repair with only cuts, and choosing to first target  expenditure that helps pensioners, children or carers, Malcolm Turnbull is saying he doesn’t value them as much as he values the opportunity to achieve an arbitrary economic outcome like decreasing the budget deficit.

This is the crux of the problem with the current way we debate economic policy in this country.

We’ve talked ourselves into a cul-de-sac where we argue back and forward about where to make cuts to try and ‘live within our means’, as if a balanced budget is the only worthy economic outcome our politicians should aspire to.

This is not the approach Australian Unions believe the government should be taking. Our submission to the Senate enquiry on the bill outlined and alternate, moral approach to budget management.

Rather than one-off, short term savings which will deliver little permanent structural impact to the budget bottom line, unions want to see a comprehensive, long-term plan to invest strategically in high quality health, education, skills and training, research and innovation, and clean technology infrastructure to sustain our strong economy and society into the future.

To do this, the government must have the political – and moral – courage to address corporate tax avoidance, close tax loopholes and reform high income concessions in areas like negative gearing, capital gains and superannuation.

Our revenue base remains less than optimal because we have allowed multinational companies and the very wealthy far too many opportunities to evade and avoid contributing their fair share to the public good.

This where the government focus should be – not on short term cuts which undermine the future prosperity of our economy and our society.

Instead, we bend our health, education and social support systems to fit within a preconceived economic ideal, making cuts without ever stopping to realise we are moulding ourselves to serve an economic system that really should adapt to suit our needs.

All this does is entrench disadvantage – the gap between the wealthy and the struggling which economic organisations such as the World Bank, IMF and OECD have warned has a negative effect on growth and prosperity for all of us.

Clearly the federal budget is no magic pudding and the challenge of economic management is indeed a serious one, but if we’re going to ascribe moral values to certain economic decisions, we first need to have conversation about what we value.

Do we place a higher moral value on ensuring multi-nationals pay their tax, or taking $5 a week from the lowest paid members of society?

Once we answer the fundamental questions of where our values lie, the task of budget repair will be an easier one for the Government – and one more likely to be supported by the Australian people.  

The Prime Minister is right: there is a moral aspect to economics, just not in the way he thinks

The Prime Minister is right: there is a moral aspect to economics, just not in the way he thinks