Newman's state, Abbott's nation.

THE HON DR CRAIG EMERSON MP

MINISTER FOR TERTIARY EDUCATION, SKILLS, SCIENCE AND RESEARCH

MINISTER FOR TRADE

AND COMPETITIVENESS

MINISTER ASSISTING THE PRIME MINISTER ON ASIAN

CENTURY POLICY

OPINION PIECE

THE AUSTRALIAN

8 JUNE, 2013

These birds of a feather share the same economic philosophy.

AFTER a ferocious period of job cutting and service withdrawal, the Queensland

LNP government has conceded it will break its promise to return the state budget to surplus in 2014-15. Sound familiar?

Yes, it's true: the Gillard government was unable to keep its commitment to return the federal budget to surplus in 2012-13. To do so in the face of falling commodity prices and a high exchange rate would have flattened the national economy, needlessly putting Australians out of work and small businesses into receivership. Yet that is the policy prescription of the Tony Abbott - led Coalition. When Wayne Swan explained that a combination of falling commodity prices and a high Australian dollar was squeezing company profits and forcing a downward revision of revenue estimates, Abbott claimed in his budget reply that there was no revenue problem, only a spending problem.

Abbott was strangely silent when Queensland Treasurer Tim Nicholls announced the state budget was being hit by revenue write-downs. What happened to his argument that revenue was doing just fine?

Far more important than the political posturing about the budgetary impact of

downwards revenue revisions by Treasury officials whether state or federal is the appropriate policy response. Here's where it really gets scary. The federal Coalition argues that for every $100 million of downward revision to revenue, spending should be cut by $100m so as to achieve a surplus. Abbott's right-hand man, Christopher Pyne, has declared that during the global financial crisis a Coalition government would never have gone into deficit.

Federal government revenue write-downs of $170 billion brought on by the GFC would have been matched by spending cuts of $170bn-delivering not a budget surplus but a deep, prolonged recession. During the parliamentary sitting week following the budget, the Coalition lauded the New Zealand policy response as the path Australia should have trodden to a recession lasting more than a year. The truth is that by cutting too hard, too fast, the Newman government has not only engineered an economic downturn in Queensland, it has also delayed the timing of the state budget returning to surplus. Such are the consequences of ideologically driven Tea Party economic policy. Instead of matching each dollar of revenue write-downs with a dollar of spending cuts, governments should concentrate on achieving long-term savings through expenditure restraint. That's what the federal Labor government has been doing. But it has been opposed all the way by the Coalition.

Every Labor attempt to rein in middle-class welfare has been resisted by the Coalition: means testing the private health insurance rebate; freezing the upper income thresholds of family payments; reducing the Baby Bonus for second and subsequent children (likened by opposition Treasury spokesman Joe Hockey to China's one child policy); and limiting superannuation tax on cessions for the wealthiest 16,000 Australians. Only belatedly has the Coalition indicated it will support the reining in of middle class welfare, while promising to revisit those savings if it were to win government. Logan City in Queensland has been in the news in the past year or two.

Eleven people lost their lives when their over crowded rented house caught fire. A neighbourhood dispute escalated into street fighting and was billed as race riots. A boy lobbed a sandwich near a Prime Ministerial entourage. Less well known is that the LNP government, with the full support of the federal Coalition, has cancelled elective surgery at Logan Hospital, closed wards, abolished travel assistance to hospital for dialysis patients and called on nurses to come forward for redundancy. And the Newman government has axed skills funding for BoysTown, which was helping Logan kids get back on to the rails by assisting them to gain a trade qualification. In these service cutting endeavours, Campbell Newman has described Abbott as being "incredibly supportive".

But when it comes to a bit of support for the poor and the vulnerable, Abbott would prefer to administer what he describes as "tough love" while considering the middle class welfare of a universal private health insurance rebate and family payments to be "tax justice".

Since Abbott rejects the notion that downward revisions to revenue can mean a government falls short of a surplus in the short term, he must regard the Queensland government's spending as excessive, even after Newman's savage cuts to jobs and services. Hockey has foreshadowed further big cuts in income support payments if the Coalition wins government. But instead of having the political courage to set out those cuts for the Australian people to judge before September 14, Hockey has indicated they'd be revealed only after the event, through an audit commission. The Newman government used the device of a post election audit commission to conceal the full savagery of its cuts from the people of Queensland before it went to the polls. Abbott and Hockey are adopting the same contrivance. These birds of a feather have the same Tea Party economic philosophy as the Newman government: cut quickly, cut hard, hurt the vulnerable and shelter the wealthy. 

The LNP policy prescription is to flatten the economy and watch a surplus disappear over the horizon. In the aftermath of the state LNP government's deep cuts to jobs and services, the Queensland economy is struggling. If the Coalition were to win the federal election, Newman's Queensland would become Abbott's Australia.

Craig Emerson is the Minister for Trade. His electorate is in Logan City, Queensland.