Federal budget 2012: expert reaction

9 May 2012

Three University of Sydney experts give their views on the 2012 Federal Budget.

Michael Rafferty, Senior Research Analyst, Workplace Research Centre

What you've got with this budget is an attempt to address some long-term issues with massive redistribution away from working Australia to the rich. And this budget is rather a token gesture towards dealing with that. The continuing theme of the budgets of the past 15 years has been tweaking distributional issues between high-income working people and low-income working people, but actually doing nothing about redistribution between the owners of capital and the people that work for capital.

This budget is about some slight income redistribution. That income redistribution is not even going to touch the Clive Palmers and Gina Rineharts. Without getting too ridiculous, it's sort of like Putin-light. I do believe that if you look at Russia, you actually see oligarchs in the raw, in Australia we have rentiers in the raw, or slightly raw — people who have a lot of money. And despite what Wayne Swan has said in the past, he's actually done nothing to change Clive Palmer's revenue streams or Gina Rinehart's revenue streams. Their incomes or their net wealth can grow by a billion dollars a year, and nothing happens to their tax treatment.

What's being missed in the political debate is that even a budget like this, which is supposed to be a battlers' budget — really that's just a rhetorical flourish which covers up for the massive redistribution from working Australians to the owners that's occurred over the past decade or so.

Graham White, Senior Lecturer, School of Economics

On economic grounds, and on equity grounds, there's been a lot of talk among media commentators that this is a more traditional Labor budget. If there's going to be pain from the surplus, there's been an attempt to ensure that most of the lower-income groups are quarantined from that, to an extent.

So, there's an equity aspect to that, and economically - although I don't agree that they needed to go into surplus - I imagine things could have been a bit worse than they were. It seems to me, on balance, that it's probably as good as you can expect from a government that's painted itself into a corner politically and has been forced to go for surplus.

Deferring foreign aid and the defence cuts are the big-ticket items. Chris Richardson from Deloitte Access has said that they've basically got their savings from the corporate sector and high-income earners - but that's not quite accurate.

There's also spending there, so it remains to be seen whether there's any serious constraint on spending that might add to the softening economy. And, if it does, if it is balanced out by the initiatives they've taken in terms of benefits for low-income earners. Had the government gone for the tax cuts and crunched down on the expenditure more, it would be a very different scenario.

Hal Kendig, Professor of Ageing and Health and Director of the Ageing, Work and Health Research Unit

The 2012-13 Budget provides a modest but important beginning to the Government's $3.7 billion commitment over the next five years to the valuable Living Longer. Living Better Aged Care Reform package announced in April.

Headline items for "strengthening the aged care system" include $955 million for the new integrated Home Support Program, $670 million for residential care, $268 million for people with dementia, $192 million to support diverse groups, and $256 million to build a new aged care system including the Aged Care Financing Authority and a new Gateway to improve access to services.

A closer look at the figures reveals that genuinely new funding is delayed and largely provided through redirecting existing funding. Growth in services will depend significantly on increased user charges albeit with careful means testing and caps on user costs. Means testing is expected to save $183 million in home care and $378 million in residential care.

An extraordinary $1.6 billion of savings to be achieved from "refining" the Aged Care Funding instrument for residential care will largely fund the $1.2 billion to be directed through the Workforce Compact to improve pay and conditions for aged care workers.

Overall, the Government has moved towards a fairer and more sustainable aged care system directed more to the overwhelming priority of older people for more care at home. There are major "buts" and questions ahead, including the capacity of a minority government to pass the enabling legislation. In the end a budget is a plan rather than an achievement but this one has substantial value for care of older people and it deserves bipartisan support.

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Media enquiries: A media advisory of University of Sydney experts available to speak on the 2012 Federal Budget can be obtained from

Katie Szittner, 02 9351 2261, 0478 316 809,

Sarah Stock, 02 9114 0748, 0419 278 715,