The federal budget will be presented to parliament by Treasurer Wayne Swan on May 12. While Swan has been officially tight-lipped about its contents, he has already released significant details about the cuts to programs and
government jobs the budget will hand down.
The government has also used the recession to lower expectations of pensioners, single parents and the unemployed of receiving any substantial relief.
"When you face the type of deficit that the global recession has given us, our only option is to make room for jobs and investment by shaving back other areas and we make no apology for taking the tough choices where necessary", Swan bleated in his May 3 "Economic Note" on the treasury website.
"Nobody likes having to make difficult decisions, but we are fully prepared to do what's necessary to promote and protect the economic interests of Australians."
On May 5, Swan predicted that government revenues would be cut by $200 billion over the next four years as a result of the recession.
He conceded the government will need to maintain a budget deficit, probably until 2015/16. Yet he committed the government to paying back the debt, mainly by capping real (above inflation) growth in government spending at 2% per year.
Winners and losers
While the final details of the budget will not be released until May 12, it's already possible to identify winners and losers.
The biggest winners out of this budget are likely to be builders and developers. In its $42 billion stimulus package announced in February, the government set aside $14.7 billion for new buildings for public and private schools.
Designed to be spent over the next two years, a big portion of this money will be poured into the coffers of major
builders. The government claims this will "support" 90,000 jobs.
A section of builders will lose, at least in the short term, however, with the likely decision not to extend the hyper-inflated first home buyers grant past June 30. The grant gives $21,000 to first home buyers who buy brand new homes.
The beefed-up grant has encouraged thousands to enter the housing market, taking advantage of relatively low interest rates.
The effect of the grant, however, has largely been to inflate the price of new houses. Those who bought homes in the six-month life of the grant are likely to see their over-inflated home values fall when the grant is removed.
This will further add to the downward trend of house prices in Australia, which fell by 6.7% to the year ending in March, according to the Australian Bureau of Statistics (ABS).
Rapidly falling house prices increase the risk of home buyers falling into negative equity, where the amount of the mortgage is greater than the value of the home.
The government has indicated that it will continue its (short-term) stimulus spending in the budget.
While it has not released plans, it is likely the next round of stimulus funding will be spent on infrastructure.
The spending is unlikely, however, to be directed towards
socially necessary infrastructure such as public transport or the transition away from coal-fired power stations and towards renewable energy.
The wealthy will also be winners in the budget. Those earning $100,000 or more will receive a tax cut of at least $31.73 a week. This is almost three times as much as those struggling on $30,000 a year will get ($11.54).
The military brass will get a funding increase of 3% in
the budget. The government's May 2 white paper on "defence"
argues for the need to spend $60 billion over the next 10 years on new military hardware.
In the last budget the government committed $22 billion on war, the largest single expenditure item.
It's rumoured the government will wind back some access to welfare entitlements for those on very high incomes. This may include cutting the 30% private health rebate for those families earning $150,000 a year or more.
However, Labor has refused to dump this gift to private health funds entirely, which would free an extra $3.5 billion a year to spend on improving public health.
Labor is also expected to make further attacks on "middle-class welfare" in the budget. Among the most significant cuts likely to be made is to the Medicare safety net. The safety net pays 80% of out-of-pocket medical expenses beyond a threshold of $1160.60 paid in any calendar year.
The threshold is likely to be lifted. At the same time, the rebate paid for certain health services will be increased. One result will be many women will pay more for child-birth services.
Dr Andrew Pesce, president of the National Association of Specialist Obstetricians and Gynaecologists told ABC radio's AM on May 7 "of women who see specialist obstetricians — about 80% will be worse off".
Losers
There will be many more losers than winners from the government's budget. First will be federal public servants, many of who may lose their jobs as the government struggles to make "efficiencies".
Seven hundred jobs are likely to go in the federal immigration department, the Sydney Morning Herald reported on May 1.
More cuts have been threatened in the Australian Bureau of Statistics and other agencies to meet the government's 3.25% "efficiency dividend", which forces departments to cut costs each year.
"It is well documented that many agencies, particularly smaller ones, ran out of 'efficiencies' long ago", Stephen Jones, Community and Public Sector Union national secretary said on May 4. "The application of the efficiency dividend has simply meant agencies have had to cut programs and/or staff."
The other big loser will be those who rely on welfare payments.
PM Kevin Rudd admitted to the media in September that the rate of the single pension is too low to live. The Harmer review into pensions called for an increase of $35 a week for single pensioners in February. Despite this, the government is likely to limit any increase to $20 a week, according to the April 26 Sun Herald.
Single parents are likely to miss out on the increase entirely. The money saved may be used to make a (small) increase to the Newstart allowance for unemployed people.
Those receiving a part-pension may lose out even more in the budget. As part of its attack on "middle-class welfare" the government may increase the rate that pensions are reduced as a result of extra income, from 40 cents for every extra dollar to 50 cents. Thousands would lose their pensions entirely.
People aged 18-25 will receive special harassment in the budget. The government will introduce an "earn or learn" scheme, which will compel people under 21 to enrol in education or training to qualify for Youth Allowance.
Some of this "training" may be in the form of "boot camps"
run by the military, the May 3 Sunday Telegraph reported.
Those aged 21-25 will be "guaranteed" a training place. There is no guarantee of a job once the training is over, however.
Working parents will also lose from the budget. The May 4 Australian suggested that the 18-week paid parental leave scheme proposed by the Productivity Commission will be delayed, and then "phased in".
The scheme — which will replace the $7000 "baby bonus" for working women — promises payment only at the minimum wage.
Priorities
There are many urgent social priorities the government could address in the budget, if it had the political will.
As well as the need for urgent action to halt climate change, higher education is in desperate need of extra funds.
Federal funding for public schools lags $1.6 billion behind 1996/97 levels, according to the Australian Education Union. Public health and dental services are also hugely under-funded.
While he claimed he was willing to make "difficult decisions", it's certain Swan won't go far in fixing these pressing problems in the budget.
Regardless of the final details of the budget, however, it is also certain that in the long term that all working people will lose.
Whatever extra spending the government makes in the short term to "stimulate" the economy, it has promised to pay it all back. That can only mean more cuts. Workers, welfare recipients and parents will be ones to pay.