Why the federal budget should get a fail from the #G20 #auspol #budget2014 The federal budget recently presented by the Australian government is worrisome. Using a NON-EXISTENT DEBT PROBLEM as a justification, the government has introduced several HARSH MEASURES THAT HIT hard those WHO ARE IN GREATER NEED OF PROTECTION: aged and disability pensioners, the sick poor, young people under 30, single-income families with children, and the Indigenous population. In addition, the budget envisages CUTS TO FOREIGN AID of A$7.5 billion. While it’s commonly accepted that development cannot just be financed through official aid, reducing aid is a blatant MORAL FAILURE for the country chairing the G20. And while this budget COMPLETELY FAILS TO DELIVER INCLUSIVENESS (and fairness, and equality, and solidarity), it also FAILS TO PROMOTE GORWTH (inclusive or not). Australia’s macroeconomic OUTLOOK IS FRAGILE: output is still growing below its potential and unemployment is rising. A tight budget is likely to slow down the pace of economic activity even further. As a consequence, THE ECONOMIC DOWNTURN THAT AUSTRALIA AVOIDED (thanks to good economic management by the Australian Labor Party) during the global financial crisis MIGHT NOW HAPPEN. There is simply NO CLEAR EVIDENCE that in an advanced economy like Australia, infrastructure is a driver OF LONG-TERM GROWTH. What this budget ultimately does is to set the stage for the advent of a patrimonial society dominated by the top 1 per cent of the population. The hope is that the OTHER G20 countries will DO THE OPPOSITE OF of what the AUSTRALIAN GOVERNEMNT is doing. To get a sense of why inequality is so important for development, it is useful to look at the Human Development Index (HDI) of the United Nations Development Project. The HDI summarises a country’s development along dimensions like education, health, and wealth. Statistically, it is a number between 0 and 1. The highest level of HDI is currently observed in Norway (0.955), followed by Australia (0.938). Niger and Democratic Republic of Congo have the lowest HDI (0.304). The average HDI for all countries in the world is 0.694. However, when “adjusted” to account for inequality, world HDI decreases to 0.532. Fighting inequality is central to fostering global development, especially now that inequality appears to be on the rise. In their quest for growth, G20 countries must not lose sight of inclusiveness. To this effect, growth should hinge on free access to goods and services like education and health. The public supply of these goods and services should be financed from strictly progressive forms of taxation. On top of that, the policies for inclusive growth ought to include strong welfare programs to provide the bottom segments of the population with a buffer against economic shocks. In fact, it was the tax-benefit system, together with fiscal stimulus packages, that absorbed a significant part of the inequality effect of the crisis until 2010. For the G20 to play any role in development, countries should go to the Summit being hosted in Brisbane in November with a comprehensive growth plan that includes the abovementioned principles and policies for inclusiveness. businessspectator.au/article/2014/5/20/federal-budget/why-federal-budget-should-get-fail-g20
Posted on: Tue, 20 May 2014 09:24:58 +0000
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