Budget 2017-18 brings welfare crackdown and increased defence and security funding: experts respond

The Australian Federal Police will receive $321.4 million over four years for a range of measures. AAP/Lukas Coch

The government hopes to save A$632 million over five years from 2016-17 by strengthening penalties for non-compliance in Work for the Dole programs. Failure to meet requirements will result in suspended payments, and then escalating penalties.

Defence spending will rise to 2% of GDP by 2020-21 as the government increases spending by $50 billion over the forward estimates. The Australian Federal Police will receive $321.4 million over four years to support counter-terrorism, and operations against organised drug imports, violent criminal gangs, cybercrime and serious financial crimes.

Foreign aid has risen with inflation to $3.9 billion in the budget, and will rise again to $4.01 billion in 2018-19. However, it will remain at that level for the following two years.

The current broadcaster licence fees will be replaced with new ones, costing the government $414.5 million over the forward estimates.

The Conversation’s experts respond to these and other aspects of the budget below.


A populist attack on welfare recipients

Ben Spies-Butcher, Senior Lecturer in Economy and Society, Department of Sociology, Macquarie University

For a budget that has shifted considerable ground in areas like education and health – and, to a lesser extent, housing – it strongly plays to existing Coalition themes on welfare. These reinforce punitive welfare measures and the divide between the “deserving” and the “undeserving” poor.

There are some mildly positive reforms for older Australians – enabling access to state concessions – and some additional funds to assist single parents return to work. However, it is strongly punitive towards many of the most vulnerable.

The budget seeks to save $4 billion in new “integrity” and “mutual obligation” reforms. There is no funding to increase what is now a tragically low unemployment benefit (Newstart). Instead, there are new enforcement measures. These are largely constructed around drug and alcohol use. They include measures to force more recipients to access their money through a “cashless welfare card” that directs how people spend their money.

More surprisingly, there are harsh measures that include trials of drug tests, harsher breaching rules (that often leave recipients with no income), and even restrictions on accessing support for disabilities related to substance use.

That reflects a very strong populist attack on some of the most vulnerable. It also reaffirms an important political dynamic in Australia: when we frame action for everyone (as we do with health, education and housing), it is much easier to achieve equitable action. And when action is focused on the very poor, the political instinct is to attack.


Aid gets another cut, but not the unkindest

Robin Davies, Associate Director, Development Policy Centre, Crawford School of Public Policy, Australian National University

The Coalition once again cut overseas aid, as it has done now for several years running. However, the cuts in this budget will not be felt for another two years and are smaller in annual terms than those inflicted in the previous two years.

Aid spending will, as promised last year by Foreign Minister Julie Bishop, increase in line with CPI in 2017-18, rising from $3.8 billion to $3.9 billion, and also in 2018-19, when it will reach $4 billion.

For the following two years, though, the indexation of aid to CPI will be suspended and the resulting savings, $303 million, redirected to “other policy priorities” of the government. CPI indexation, according to the government, will resume thereafter.

Since coming to power in late 2013, the Coalition has fashioned five aid budgets, starting with its revision of Labor’s 2013-14 aid budget. In addition, it has now set notional bottom lines for the next three, out to 2020-21.

Over these aid budgets, aid has been or will be cut in real terms six times. The biggest cuts were in the last two budgets, 2015-16 and 2016-17, where aid was cut by 20.2% and 7.4% respectively.

After the reprieve in 2017-18 and 2018-19, when there will no real growth in aid, the cuts resume in 2019-20 and 2020-21 at the modest rate of 2.4% per year. The cumulative cut in aid from 2013-14 to 2020-21 will be 32.8%: basically one-third.

Australia’s aid as a proportion of its gross national income will stagnate at the historically low level of 0.22% for several years, and could fall to 0.2% by 2020-21. Australia’s aid generosity is now very far below the OECD average of 0.32%. We rank 17th among our peer countries on this measure.

It appears that The Australian was taking some dramatic licence when it reported, just before the budget, that:

The Turnbull government will divert foreign aid funds to boost Australia’s intelligence agencies as part of its escalation of the war on terror.

However, it had the basic story about right.

The Coalition pledged in late 2013 to increase aid in line with inflation. Last year, implying that it had finished cutting aid, it revived that pledge.

However, the Coalition has only maintained aid in real terms in two of eight years. While it cannot be claimed that aid is funding domestic policing or foreign intelligence, these are prominent among the “other policy priorities” the government is able to pursue by cutting aid.


No news is good news for defence

Andrew Carr, Senior Lecturer in Strategic and Defence Studies, Australian National University

Defence wasn’t expecting anything in tonight’s budget, and didn’t get it. The 2016 Defence White Paper and the 2016-17 budget both proposed minimal changes for defence in 2017-18. This was not because of a lack of support, but because the ten-year funding plan to raise the defence budget to match 2% of GDP by 2020-21 is largely backloaded, and because the Department of Defence is struggling to spend the funds it already has.

The 2017-18 budget papers’ main change was an efficiency reclaim of $304.1 million over the next four years, aimed at:

… reductions in the numbers of consultants and contractors used in Defence, as well as limiting the costs of non-operational overseas and business travel.

There is also $350 million in support for Veterans Health – an important and popular measure that was announced two days ago.

Freed of the need to devote new significant resources, the treasurer’s speech confidently reiterated the government’s commitment to the 2% target. While there are underlying issues with the notion of tying defence spending with the health of your economy — namely the worse the global situation, the easier the 2% target becomes – this stability itself is welcome.

Over the last decade, defence has seen significant promises of spending and some harsh cuts on budget night. So no news is good news.

Many will also be pleased to see the return to surplus remains a priority. While not a defence measure, this provides additional flexibility and resilience, which could be important for Australia’s security in the unpredictable Trump era.


Government levels the playing field for traditional media

Andrew Dodd, Program Director – Journalism, Swinburne University of Technology

There are no big shocks for the ABC in this budget, as the national broadcaster is only one year into its current round of triennial funding. SBS has won a cash injection to make up for lost advertising revenue, and broadcasters in general have won a reprieve from licence fees.

However, it’s women’s sport on pay TV that seems to have done best of all out of the 2017 budget.

The government has levelled the playing field for media companies that are struggling to compete against internet-based media by abolishing licence fees for broadcasters and datacasters that use broadcast spectrum. However, it is also broadening the revenue base through a new regime of apparatus licence fees for broadcasting spectrum. The change is estimated to cost $414.5 million over the forward estimates period.

The budget provides a “transitional support package” for those licensees who will be left worse off. The Treasury estimates state this:

… support package is estimated to have a cost of $24.8 million over the forward estimates period.

And the Australian Communications and Media Authority will receive a small cash injection to make the transitional support package work.

The budget is also providing $30 million over four years to support:

… underrepresented sports on subscription television, including women’s sports, niche sports, and sports with a high level of community involvement and participation.

In addition, $6 million will be spent over two years to support the development of Australian film and television content.

SBS will get $8.8 million in 2017-18 to:

… restore revenue that could not be raised due to the delayed passage of legislation, which would allow SBS further flexibility in the way it advertises.


Science flies under the radar

Les Field, Secretary for Science Policy, Australian Academy of Science, and Senior Deputy Vice-Chancellor, UNSW

Science has largely flown under the radar in a restrained budget, with no big spending measures and no major cuts apart from the university funding changes announced last week.

It is pleasing to see an astronomy partnership with the European Southern Observatory that will ensure Australia’s access to world-leading optical astronomy facilities, as well as new funding and administrative improvements in health and medical research, including the first investments from the Medical Research Future Fund.

It is also positive that the tried-and-tested CRC program will benefit from the government’s advanced manufacturing industry focus. But it was disappointing that the budget didn’t include any of the recommendations of the review of the R&D tax incentives.

There are small decreases in indexation of funding across the forward estimates equating to savings of several million dollars per year in agencies such as ANSTO and CSIRO, and funding programs such as the ARC and NHMRC. These will certainly be absorbed, but will add to the challenge of doing important science and innovation in areas of critical national importance.

The science sector will now look ahead to the 2030 Strategy for Science and Innovation, to be finalised by the end of the year, and the government’s response to the Research Infrastructure Roadmap – which will determine priorities for new capital investment.

John Rice, Adjunct Professor, University of Adelaide

As far as science is concerned the 2017 budget could be described as 2014 budget-lite. There is no vision for the role of science and technology in Australia’s future. Instead what stands out are the cuts to universities and to the CSIRO.

The National Innovation and Science Agenda (NISA) made the 2016 budget very exciting, even if a little disconcerting. There wasn’t much new money behind it and what there was largely reversed the disasters of 2014 and 2015.

But NISA was the kind of vision that we ought to expect from a budget, a vision for the economic direction of the country, one that can guide its productive capacity, meet current challenges and show the way to continuing prosperity.

Where did that vision go? There is none of it in the 2017 budget.

A less-than-enthusiastic electorate reminded politicians there needs to be more to an innovation-driven economy than everyone developing an app. Clearly the average citizen needed to understand where innovation-driven automation and other labour productivity improvements leave them in relation to earning a living.

If the 2017 budget does nothing else it confirms that the government has not risen to these challenges, and has lost its faith. In the face of the electoral blowtorch it has simply melted away.

There are a few modest and sensible initiatives that are a legacy of the 2016 rush of blood. Their gestation has been so long, like the activation of the Medical Research Futures Fund, that you would have expected an elephant rather than a mouse, but they are positive moves nonetheless.

What is seriously disappointing is the cutting of funding to the universities and to the CSIRO. Universities contribute probably more than three-quarters of Australia’s basic research. University research is seriously underfunded, and the underfunding is made up via transfers from other areas, particularly teaching. The cuts will make this worse, which leaves no room, let alone incentive, to engage university research and teaching more with industry.

What this budget represents for science is a retreat from any serious vision for an innovation-based economy, and a return to the unthinking cost-cutting of the 2014 and 2015 budgets.

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