I enjoyed watching last night’s Budget, delivered by Treasurer Scott Morrison.
There were some positive and welcome initiatives, as well as areas that we could do much more on. It may seem like a small thing, but one of the hopeful and inspiring aspects was that all present in the House listened genuinely and respectfully to the Treasurer. In this age of increasingly combative and polarising politics and media coverage, it was warming and affirming to see a dignified humility and calmness in the way the Treasurer delivered his speech and the way it was heard.
Framing this as the beginning of a 10 year economic and social plan is also very welcome. With an election in 59 days, it would have been tempting to fully position this Budget as a short term fix to win an election. Overall, I think it was well positioned, responsible and starting to move our conversations and thoughts in the right direction.
Five first thoughts on the Budget
1. ‘Jobs and growth’ – is that the right end?
Most people would agree that jobs and growth are important in enabling us to live full lives. However, we all need to connect to a compelling national narrative about how we relate with and care for each other, and what our aspirations are. We all want to feel hope, inclusion, opportunity, respect, to love and be loved and to experience life fully, as well as to be able to bounce back and be supported from shocks. Economic resilience, through jobs and growth, is a means to the fullness of life and governments and other actors, including ourselves, play a key role in realising that. Milestones and indicators on our collective progress towards fullness of life, as people might define it themselves, would provide a clear and relatable frame for how budgets, jobs and growth might assist that.
2. Socially progressive initiatives
Reminding ourselves that superannuation is there to enable adequate retirement income, rather than accelerate excessive wealth creation, has led to positive increased revenue in this Budget from those with very large superannuation balances and contributions. This, combined with changes to boost the superannuation of women, especially those on low incomes through extending the current spouse offset and enabling catch up contributions, after time out of the workforce, is most welcome. This will partly reduce gendered economic inequality and positively shift economic power within relationships and families.
Much more is to be done to enable economic power equality and reduce physical, psychological and economic violence against women, including supporting women on low incomes, health and broader recognition of economic participation and contribution of women.
Initiatives to reduce tax for small businesses is also welcome, as we know that after tax earnings of small businesses is more likely to be invested in family and closer-proximity community wellbeing and resilience. This is compared with dividends of large multinational companies, that are more likely to be reinvested away from the original activity deriving the value or not reinvested at all.
3. A good start to economic mobility – Youth Jobs PaTH
This ambitious and innovative new initiative seems well conceived. Supporting young people to gain confidence in entering the workforce, as well as real experience through skill building and seeing how workplaces operate, with clear mutual expectations of employer and employee, is positive. The phase two intention to make 120,000 internship placements for young people will be successful if executed well and if the employees are genuinely valued, welcomed and equally able to shape the culture of the organisation they work with.
4. Movement to more responsible corporate citizenship – Multinationals ‘Google tax’
The linking of locally generated revenue with locally paid tax, in its simplistic sense, is what all tax systems should be able to do. Sham internal cross border loans, without commercial reasoning, and other mechanisms to reduce taxable income in higher taxed locations and increase income in low or no tax locations is completely unethical.
The new ‘diverted profits tax’ initiative provides increased fairness and transparency of multinational corporate behaviour, raising and retaining important revenue for important services. We need to see increased transparency also in the area of corporate shareholdings to understand who the actual ‘human’ beneficial owners of investments are. The short-termism driving corporate tax avoidance is aided and enabled by a regime that allows privacy and anonymity of hidden people that combine powers to put very short term pressure on Boards and CEOs to harvest short term high returns, at the expense of customers, staff, and retail shareholders with longer term interests. Directly and transparently associating those hidden people with the behaviour of the companies in whose interest they act will be in everyone’s long term interest.
5. Income support and foreign aid needs to lift
Newstart and other income support measures need to better reflect the actual basic cost of living, to reduce demands on crisis oriented social services that directly result from income inadequacy.
In addition, lifting our foreign aid to at least 0.7 per cent of GDP by a specified date, as committed by the Howard Government, needs to happen now. Post-GFC reductions in foreign aid around the world has directly led to reduced certainty and coordination of international economic and social development in so-called ‘developing countries’. This destabilising impact has been observed through social dislocation and reduce hope, as well as internal crisis, conflict and civil wars, significantly lifting refugee numbers. Supporting the needs of these people fleeing conflict and persecution is increasingly challenging from a humanitarian, economic and political perspective. We need to go back to the source – fullness of life in all communities is in everyone’s interest.
More can be done
One might ask, what has all this got to do with financial inclusion and microfinance? The answer is everything.
After consulting with our microfinance network, we will soon be releasing an election manifesto, calling for actions to realise the fullness of life, through economic wellbeing of people on low incomes, especially women and girls. That will be the subject of a future blog and influencing efforts that we will share with all parties in the federal election.
In the last few months Good Shepherd Microfinance has met several times with ministers and shadow ministers of social services, employment, women, treasurer, assistant treasurer and climate change, seeking considerably increased investment in microfinance – NILS and StepUP especially. The response has been very encouraging and supportive as the economic case is clearly understood and compelling, but in this Budget, the Government decided not to commit to increase to our $33.3m from 2015-2020. We know this is constraining the fullness of life for millions, as well as economic growth, as the time horizon for the economic and social return – economic mobility and inclusion of large numbers of people – doesn’t directly match an electoral cycle of three years.
We will continue to find new creative ways, and continue to work with all stakeholders, including governments, to reach many more people on low incomes, especially women and girls, to realise economic wellbeing and the fullness of life, which is in all of our interests.
CEO, Good Shepherd Microfinance